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2018 Minimum Wage Laws: Is Your Restaurant Affected?

Posted by Allie Tetreault on 1/5/18 5:00 PM in Industry News & Trends, Restaurant Training & Hiring

11 minute read Print

2018 minimum wage

In November 2016, fast food workers went on strike and protested for a livable minimum wage. This image is of 300 protesters gathered at Coffman Memorial Union, who called on the Minneapolis City Council to pass a $15/hour minimum wage for all Minneapolis workers. 

Now, in 2018, many states are inching towards that $15/hour minimum wage. On December 31 and January 1, 2018, there were 18 states and about 20 cities and counties that experienced a minimum wage increase, and in some cases a tipped wage increase.

Read on to see if your restaurant is affected by these new laws.

Overview of the New Restaurant Minimum Wage

The federal minimum wage is still $7.25 per hour, with a tipped wage of $2.13 per hour.

As Nation’s Restaurant News explains, none of these changes are unexpected. In 10 states, the increases are part of a phasing transition to reach a certain level, such as $15 an hour. Click through to see details about each state.

Eight more states are increasing the hourly minimum wage to adjust to the annual cost of living. Click through to see details about each state.

Additionally, Washington, D.C. and Oregon will see wage hikes in July, rather than January.

In Washington, D.C., the minimum wage of $12.50 per hour will increase to $13.25 per hour, and in Oregon the minimum wage of $10.25 will increase to $10.75, although wage rates are even higher for employers in the Portland area.

Seventeen more states and cities, including Massachusetts, New Jersey, Vermont, Illinois, Missouri, Michigan and Nevada, have campaigns underway to increase the state minimum wage, according to the National Employment Law Project.

2018 Minimum Wage Increases by State and City

Here’s a look at the 18 states affected by the increases on December 31 and January 1.

state minimum wage

1. Alaska - $9.84 an hour. 

Note: State requires employers to pay tipped employees full state minimum wage before tips.

2. Arizona - $10.50 an hour, $7.50 an hour tipped wage 

  • Flagstaff, Arizona - $11 an hour

3. California$11 an hour for businesses with 26 or more employees, $10.50 an hour for businesses with 25 or fewer employees. 

Note: State requires employers to pay tipped employees full state minimum wage before tips.

  • Cupertino, California$13.50 an hour
  • El Cerrito, California - $13.60 an hour
  • Los Altos, California - $13.50 an hour
  • Milpitas, California -$12 an hour
  • Mountain View, California - $15 an hour
  • Oakland, California - $13.23 an hour
  • Palo Alto, California - $13.50 an hour
  • Richmond, California - $13.41 an hour
  • San Jose, California -$13.50 an hour
  • San Mateo, California -$13.50 an hour for standard businesses; $12 an hour for nonprofits
  • Santa Clara, California -$13 an hour
  • Sunnyvale, California -$15 an hour

4. Colorado - $10.20 an hour, $7.18 an hour tipped wage

5. Florida - $8.25 an hour, $5.23 an hour tipped wage 

6. Hawaii - $10.10 an hour, $9.35 an hour tipped wage

7. Maine - $10 an hour, $5.00 an hour tipped wage

8. Michigan - $9.25 an hour, $3.52 an hour tipped wage 

9. Minnesota - $9.65 an hour for businesses with annual gross revenue of $500,000 or more; $7.87 an hour for businesses with annual gross revenue of less than $500,000. 

Note: State requires employers to pay tipped employees full state minimum wage before tips.

  • Minneapolis, Minnesota - $10 an hour for businesses with more than 100 employees

10. Missouri - $7.85 an hour, $3.93 an hour tipped wage 

11. Montana -$8.30 an hour for businesses with gross annual sales of $110,000; $4.00 for businesses not covered by the Fair Labor Standards Act with gross annual sales of $100,000 or less. 

Note: State requires employers to pay tipped employees full state minimum wage before tips.

12. New Jersey$8.60 an hour, $2.13 an hour tipped wage 

13. New York - $10.40 an hour, $2.90 an hour tipped wage. 

  • NYC - large employers (of 11 or more) - $13.00 an hour, $8.65 tipped wage for food service workers, $13.50 for fast food workers (defined below) 
  • NYC - small employers (of 10 or less) - $12.00 an hour, $8.00 tipped wage for food service workers, $13.50 for fast food workers (defined below) 
  • Long Island & Westchester - $11.00 an hour, $7.50 tipped wage for food service workers, $11.75 for fast food workers
  • Remainder of New York State - $10.40 an hour, $7.50 tipped wage for food service workers, $11.75 for fast food workers

According to the state's Department of Labor, the minimum wage increase for fast food workers applies to any employee whose job duties include customer service, cooking, food or drink preparation, delivery, security, stocking supplies or equipment, cleaning or routine maintenance. An establishment is considered a fast food restaurant if it "offers limited service where customers order and pay before eating, including restaurants with tables but without full table service and places that only provide take-out service," according to the state Department of Labor. However, the minimum wage increases only apply to restaurants that are part of a chain of 30 or more locations nationwide or in New York. 

14. Ohio - $8.30 an hour, $4.15 an hour tipped wage

15. Rhode Island - $10.10 an hour, $3.89 an hour tipped wage

16. South Dakota - $8.85 an hour, $4.325 an hour tipped wage

17. Vermont - $10.50 an hour, $5.25 an hour tipped wage

18. Washington state - $11.50 an hour. 

Note: State requires employers to pay tipped employees full state minimum wage before tips.

  • SeaTac, Washington: $15.64 an hour for hospitality and transportation employees
  • Seattle, Washington: $15.45 an hour for businesses with 501 or more employees that don't offer medical benefits; $15 an hour for businesses with 501 or more employees that do offer medical benefits; $14 an hour for businesses with 500 or fewer employees that don't offer medical benefits; $11.50 an hour for businesses with 500 or fewer employees that do offer medical benefits
  • Tacoma, Washington: $12 an hour

What This Means for Restaurant Employers and Workers

The National Restaurant Association has advocated that raising the tipped wage and the minimum wage would "limit hiring, increase prices, cut employee hours, or implement a combination of all three,” according to CBS News.

Of course, there are many pros and cons to raising the minimum wage. A few pros are bridging the front- and back-of-house wage gap and lowering your restaurant turnover rate. A few cons are that your restaurant may have to raise menu prices and thus reset guest expectations or cut employee hours to make up for the loss.

We gathered a group of restaurateurs in Seattle - Michael Pagana from Ethan Stowell, Andrew Friedman from Liberty & Scout Spirits, and Crellin Pauling from The Skillet Group - to chat about the rising minimum wage. For context, Seattle currently has the highest minimum wage in the entire U.S.: $11.50 for small employers (500 or fewer employees) if the employer pays $2.50/hour towards medical benefits or if the employee earns $2.50/hour in tips.

Follow us on Facebook for more Facebook Live conversations about pressing topics in your region.

What are your thoughts on the rising minimum wage? Comment below to join the conversation!

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toast restaurant management blog

Written by: Allie Tetreault

Allie Tetreault is the Content Strategist for Toast. When she's not managing the Toast Restaurant Management blog and creating valuable resources for restaurateurs, she's belting in an a cappella group and toiling over new recipes in the kitchen. Her favorite foods are sushi and pasta -- but not together!


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