Summer is upon us. Beaches, barbecues, and wage increases for non-exempt, exempt, and tipped employees! While some might not be as thrilled about the last item, we are excited to help employers across the United States understand their upcoming wage obligations. So lotion up (we don’t want you to get burned) and let’s talk numbers.
Notable Post-January 1, 2025 Rate-Related Developments
California (Los Angeles): On May 27, 2025, Los Angeles Mayor Karen Bass signed into law Ordinance No. 188610, which, among many other things, increases the minimum wage applicable to workers at hotels with 60 or more rooms. On July 1, 2025, the minimum wage will be $22.50, and will increase on July 1 in future years to $25.00 (2026), $27.50 (2027), and $30.00 (2028), with annual adjustments based on inflation occurring on July 1, 2029 and on July 1 in subsequent years. The ordinance also revises the monetary amount of health benefits an employer must provide workers on an hourly basis. Notably, the amendments will reach beyond the geographic boundaries of Los Angeles, as the rates are incorporated by reference in hotel minimum wage ordinances in neighboring Glendale and Santa Monica.
California (Malibu): Although Malibu was scheduled to adjust its minimum wage due to inflation-tied increases, due to the considerable economic effects of recent wildfires, on May 27, 2025, the city amended its ordinance to forego the adjustment for July 1, 2025. The city will resume adjustments on July 1, 2026.
District of Columbia: On June 3, 2025, the D.C. Council passed and sent to the mayor B26-0274, the Tipped Minimum Wage Increase Clarification Emergency Amendment Act of 2025, which proposes to delay from July 1, 2025, to October 1, 2025, the upcoming increase to the minimum cash wage for tipped employees. In advance of a hearing on the bill, the mayor sent a letter to the Council expressing her support and her separate plan – in the D.C. budget – to repeal changes made to tipped employee pay standards by a November 2022 ballot measure. If, as expected, the mayor signs the bill, although the minimum wage would increase (see further below), for tipped employees the minimum cash wage would remain $10 instead of increase to $12, which would result in the maximum tip credit increasing to $7.95 rather than decreasing to $5.95.
Illinois (Cook County): Although an adjusted-for-inflation increase on July 1, 2025 was a possibility, Cook County’s Commission on Human Rights announced, “Beginning July 1, 2025, the minimum wage in Cook County will remain $15.00 per hour for non-tipped employees and will remain $9.00 per hour for tipped employees.” Although the agency did not explain why, arguably this is because the local rates, adjusted for inflation, remain lower than the state rates (the county uses the higher of the two rates as the official county rate).
Maine: On June 3, 2025, the legislature passed and sent to the governor LD 589. The bill, if enacted, would create an agricultural worker minimum wage beginning on January 1, 2026 (something the governor herself proposed last year). What the “official” rate would be is to be determined, but it would be $14.65 (same rate as current generally applicable minimum wage) plus an inflation adjustment based on changes to the consumer price index (CPI). On January 1, 2027, and each following January, further CPI adjustments would occur (just like under the generally applicable law). Interestingly, rather than amend an agriculture-related exemption under the generally applicable minimum wage law, Maine is proposing to create a standalone minimum wage law just for agriculture.
Maryland (Prince George’s County): On February 3, 2025, amendments to the minimum wage ordinance took effect without the mayor’s signature. Beginning in 2026, the county will adjust its minimum wage rate due to inflation, but may temporarily suspend an increase based on economic conditions. The change breathes life into an ordinance that had been largely a non-factor since 2021 when the state minimum wage overtook its local counterpart (the official local rate is the county-set or state minimum wage, whichever is higher). As currently there are no scheduled increases to the state minimum wage, 2026 could be the first time in half a decade that employers need to pay attention to what the local rate will be in the county.
Michigan: On February 21, 2025, Governor Gretchen Whitmer signed Senate Bill 8, which, effective immediately, revised minimum wage and tip standards Michigan employers were expecting to take effect that day due to a July 2024 Michigan Supreme Court decision. Although the minimum wage rate did not change, the minimum cash wage for tipped workers decreased from 48% of the minimum wage to 38%, resulting in a cash wage rate of $4.74, with a maximum tip credit of $7.74. Additionally, the amendments changed the date future rate changes would occur from February 1 to January, undid the tip credit’s eventual elimination while gradually increasing it 50% of minimum wage, and revised the formula the state would use when eventually making annual adjustments to the minimum wage due to inflation.
Missouri: On April 29, 2025, the Missouri Supreme Court rejected a legal challenge to the voter-approved Proposition A that established increases to the state minimum wage. However, a month later, on May 30, 2025, the Missouri Legislature sent HB 567 to the governor, which proposes to remove annual adjustments to the minimum wage based on inflation that the ballot measure requires for 2027 and subsequent years.
Oklahoma: Pay standards will change for employers covered by the Oklahoma Minimum Wage Act but not the federal Fair Labor Standards Act as a result of SB 250, which was passed without the governor’s signature and will take effect on November 1, 2025. Currently the state law establishes a tip credit of 50% of the $7.25 state minimum wage, but beginning November 1, 2025, it will instead establish a minimum cash wage that is the same rate as under federal law: $2.13 per hour.
Vermont: Via SB 117, signed by the governor on May 28, 2025, Vermont made a tiny change to how it determines the applicable rate of inflation for its annual (January 1) minimum wage adjustments. Generally, the adjusted rate is five percent or the percentage increase to the consumer price index (consumers) U.S. city average (CPI-U), whichever is less. For the latter, Vermont will use only one decimal point, rounded up (e.g., 1.1%), which is how the U.S. Bureau of Labor Statistics (BLS) represents a 12-month change, compared to how BLS generally reports the monthly figures (three decimal points).
Washington (Burien): At a special election on February 11, 2025, voters approved Initiative Measure 1. Rather than simply revise the minimum wage ordinance the city enacted, the ballot measure created an entirely new law without eliminating the original one. Shortly thereafter, the city sued, asking a court to determine which law is applicable in Burien.
Minimum Wage, Minimum Cash Wage & Tip Credit Changes
Changes Occurring Post-January 1, 2025 but Pre-July 1, 2025
Changes on July 1, 2025
In the below chart we include the generally applicable minimum wage (MW) that will change on July 1, 2025, along with a few industry-specific minimum wage rates.1 We list the rate that will apply after the change. In certain jurisdictions – excluding, e.g., Alaska, Minnesota, Oregon, and Washington State – employers may be able to count tips an employee receives toward the minimum wage. In those jurisdictions that permit a tip credit (TC), an employer has satisfied its minimum wage obligation if a tipped employee receives at least the direct “cash” wage paid by the employer (minimum cash wage or MCW) in addition to a sufficient number of tips to equal the minimum wage. If, however, the direct wage plus tips does not equal the minimum wage, an employer must pay the employee the difference.
Post-July 1, 2025 but Pre-January 1, 2026
Exempt Employee Pay Increases on January 1, 2025
Executive, Administrative and/or Professional Employees
Under federal law, where employees must be paid on a salary or fee (if administrative or professional only) basis, the weekly minimum salary is $684 per week. Additionally, the following states have pay requirements that would exceed the $684 per week federal rate.
In Alaska, where employees must be paid on a salary or fee basis at a rate of not less than twice the state minimum wage for the first 40 hours of employment each week, excluding employer-furnished board or lodging, the weekly minimum salary will increase from $952.80 to $1,040 on July 1, 2025.
In California, where certain health care employees must earn a monthly salary equivalent to no less than 150% of the health care worker minimum wage or 200% of the general minimum wage – whichever is greater – for full-time employment (40 hours per week), the weekly minimum salary under Tier 1 will increase from $1,380 to $1,440 on July 1, 2025.12
White Collar Employees Covered by Minimum Wage
In various states, employees covered by the executive, administrative, professional, or outside sales exemptions are exempt from state overtime requirements, but not exempt from state minimum wage requirements. In these jurisdictions, such employees must earn at least the applicable minimum wage for each hour worked in a workweek. Of these states, in Illinois there will be increases to a local minimum wage on July 1, 2025.
Commissioned Employees
To qualify under the FLSA’s 7(i) overtime exception, the regular rate of pay for an employee of a retail or service establishment must exceed one-and-a-half times the federal minimum wage, and more than half of the employee’s compensation for a representative period (not less than one month) must represent commissions on goods or services. In the following states with upcoming July 1, 2025 rate changes, the 7(i)-type exemption requires – in part – an employee’s pay to either equal or exceed one-and-a-half times the state minimum wage: District of Columbia and Oregon.
Footnotes
1 We do not, however, discuss standards that apply to various “gig” workers, such as those established by California’s Proposition 22, Washington State’s standards for transportation network companies and drivers, or New York City rules concerning minimum pay for app-based restaurant delivery workers. Additionally, we do not discuss sub-minimum wage rates that might apply.
2 To learn more about which entities qualify as Tier 1 or 2 – our terminology, not the law’s – see California Labor Commissioner, Health Care Worker Minimum Wage Frequently Asked Questions. There are separate rates for Tier 3, 4, and 5 employers, but those do not change again until July 1, 2026.
3 There is a separate rate for government supported employees of $16.97.
4 There is a separate rate for employers not related to a hotel, but it does not change again until January 1, 2026.
5 There is a separate rate for “subsidized temporary youth employment programs,” “subsidized transitional employment programs,” “employees under 18 years of age,” and “employees subject to Section 6 of the Illinois Minimum Wage Law” (i.e., learners). See Chicago Minimum Wage Ordinance.
6 An employer with 11 or more employee that either is tax-exempt under Internal Revenue Code § 501(c)(3) or provides home health services or home or community-based services and receives at least 75% of gross revenues through state and federal Medicaid programs.
7 There is a separate rate for employers with 101 or more employees anywhere, but that will not change until January 1, 2026.
8 To understand the geographic differences between General, Urban, and Nonurban, see Christine Sargent, Oregon Minimum Wage Increase Takes Effect July 1, 2025, Littler ASAP (May 14, 2025).
9 There is a separate rate for employers with 500 or more full-time equivalent employees in King County of $21.16, but that will not change until January 1, 2026. The rate listed in the chart comes from the City-Created Ordinance rather than the Voter-Approved Ordinance, which set rates (that do not change on July 1, 2025) at $21.10 (≥501 Employees Anywhere), $19.10 (16-500 Employees Anywhere), and $18.10 (≤15 Employees Anywhere).
10 There is a separate rate for employers with 501 or more employees anywhere, but it does not change until January 1, 2026.
11 On July 1, 2025, one rate applies to all employers, which is the rate that was applicable to employers with 501 or more employees anywhere as of January 1, 2025.
12 Although there is also an increase to the Tier 2 minimum wage, the “general” salary rate of $1,320 per week remains the higher of the two salary rates.
