Wisconsin, with its rolling landscapes and industrious spirit, stands as a beacon of opportunity for its residents. At the heart of this opportunity is the workforce, the backbone of the state’s prosperity. Employers play a pivotal role in shaping this workforce, and at the core of the employer-employee relationship lies the critical factor of understanding the complexities of the Wisconsin minimum wage law.
To support you on this journey, we have put together this comprehensive guide to the Wisconsin minimum wage. We will explore the history of the WI minimum wage, current and upcoming rates, and additional wage laws that employers in “The Badger State” need to be aware of. We will also share a list of essential best practices to help you comply with these regulations and nurture a happy and thriving workforce.
- Minimum Wage in the US: How It Works
- Wisconsin Minimum Wage: Historical Timeline
- Wisconsin Minimum Wage Rates
- Exemptions & Special Cases
- Additional Wisconsin Wage Laws
- Wage Law Compliance Best Practices for Employers
- How Factorial Can Help You Comply with Wisconsin’s Wage Laws
- What Does Our Automated Payroll System Allow You to Do?🚀
The minimum wage in the United States is a complex system. This is because, although there is a federal minimum wage, many states and cities have their own higher minimum wages. As a result, there are different minimum wage rates in different parts of the country.
The federal minimum wage is the lowest hourly wage that employers are legally permitted to pay their employees. It is set by the Fair Labor Standards Act (FLSA) and applies to all businesses across the country. The current federal minimum wage is $7.25 per hour.
In addition to the federal minimum wage, some states have their own minimum wage rates that are higher than the federal minimum wage. State minimum wages apply to all businesses within a particular state. As of January 1, 2023, there were 30 states with minimum wage rates higher than the federal minimum wage. The highest state minimum wage is in Washington, D.C., at $16.11 per hour.
Municipal minimum wages apply to businesses within a particular city or municipality. This is done to reflect the unique economic circumstances of their local communities. If an employee works in a city with a higher minimum wage, they are entitled to be paid the higher rate, regardless of the state minimum wage.
A final consideration that impacts the minimum wage is that there are a number of exemptions to the minimum wage laws. These exemptions apply to certain types of employees or jobs. More on this below.
Wisconsin’s minimum wage journey began in 1913, not with a fixed dollar amount, but with a concept: a “living wage” for women and minors. The Industrial Commission held the reins, determining this wage based on living costs and industry input. It wasn’t until 1943 that a concrete figure emerged for the WI minimum wage: a humble 16-22 cents per hour.
The post-war era saw steady Wisconsin minimum wage increases, mirroring the national trend. By 1952, Wisconsin workers earned an hourly wage of $1.15, still lagging behind the federal minimum of $1.25. Finally, in 1967, Wisconsin adopted the federal rate, tying its fate to national fluctuations.
From the 70s to the 90s, Wisconsin kept pace with federal hikes, reaching $5.15 in 1992. But then, stagnation set in. While the federal minimum ticked upwards, Wisconsin remained frozen. This disconnect widened the gap between Wisconsin and neighboring states like Illinois and Minnesota, with higher minimums attracting workers and businesses.
Calls for an increase to the Wisconsin state minimum wage grew louder. In 2007, after years of legislative deadlock, a compromise was reached: a gradual rise to the Wisconsin minimum wage tied to the Consumer Price Index. This mechanism, though criticized for its slow pace, finally pushed the minimum wage in Wisconsin above the federal floor in 2011.
Since then, the fight for a living wage continues. Today, at $7.25, Wisconsin’s minimum wage remains behind several neighboring states and struggles to keep pace with rising costs. The debate over future increases promises to be a defining struggle in the state’s economic landscape.
So, what is the minimum wage in Wisconsin?
As of December 2023, the Wisconsin minimum wage stands at $7.25 per hour, aligning with the federal minimum. However, the landscape for workers varies based on tip eligibility. For tipped workers, employers must pay at least $2.33 per hour in wages, with tips making up the difference to reach the $7.25 minimum. If tips fall short, the employer must compensate accordingly. For non-tipped workers, $7.25 is the guaranteed minimum.
Is the minimum wage going up in Wisconsin?
Unfortunately, there are currently no plans to raise the Wisconsin minimum wage, which has been set since 2009. However, the majority of Wisconsin residents do support raising the minimum wage.
What about municipal variations?
It’s crucial to note that Wisconsin currently allows municipalities to set their own minimum wages above the state minimum. Some cities have implemented higher rates, recognizing the rising cost of living in certain areas, such as Madison where the local minimum wage is $8.75 per hour. This patchwork system creates wage inconsistencies within the state, leading to complex considerations for both employers and workers navigating different municipalities.
While the Wisconsin minimum wage rate is $7.25 per hour for most workers, there are a few exemptions and special cases that employers need to be aware of.
- Tipped workers. As we saw above, employers must pay tipped workers at least $2.33 per hour, with tips making up the difference to reach $7.25. If tips fall short, the employer must compensate to reach the minimum. This applies to waiters, bartenders, servers, and similar roles where tips are customary.
- Volunteers. Unpaid volunteers working for non-profit organizations are typically exempt from the WI minimum wage.
- Independent contractors. True independent contractors, not just misclassified employees, are exempt.
- Youth workers. Teens under 16 can receive a lower minimum wage for their first 90 days ($5.81 per hour).
- Seasonal workers. Some seasonal occupations like amusement parks and tourism have lower minimum wage allowances.
- Students in work-study programs. These programs often have specific wage agreements.
- Local ordinances. Some Wisconsin cities and municipalities have set higher minimum wages than the state, superseding the state-level minimum in those areas. Check local laws for details.
The state’s wage laws extend far beyond the Wisconsin minimum wage, encompassing a spectrum of regulations designed to promote fairness, protect workers’ rights, and create a level playing field for businesses. Navigating these laws requires diligence and a proactive approach from employers.
Here are all of the additional Wisconsin wage laws that employers in the state need to be aware of.
Wage Payment and Payment Methods
Firstly, according to Wisconsin Statutes 109.03, 103.455, 103.455 and Wisconsin Administrative Code DWD 274.04, employers must comply with the following requirements relating to wage payment and payment methods:
- Frequency. Employers must pay wages at least monthly, with no more than 31 days between pay periods. Exceptions exist for specific industries like logging and seasonal work.
- Deductions. Only authorized deductions (taxes, insurance, approved voluntary contributions) are permitted. Written authorization is required for all other deductions, and proper documentation must be maintained.
- Pay stub requirements. Pay stubs must clearly state hours worked, rate of pay, overtime pay (if applicable), deductions, and net pay.
- Methods: Wisconsin generally allows various payment methods, including cash, check, direct deposit, and pay cards. However, some restrictions apply to pay cards, and employers must obtain written consent for their use.
In addition, and according to both state and federal laws, employers must comply with the following overtime obligations:
- Overtime coverage. Overtime pay regulations apply to most Wisconsin employers, including state and local government entities. However, certain occupations and individual workers may be exempt.
- Overtime rate. Unless an exemption applies, overtime must be paid at 1.5 times the regular rate of pay for all hours worked in excess of 40 hours per week (time and a half). This applies to salaried employees meeting specific criteria as well as hourly workers.
- Daily overtime. Finally, some sectors like factories and mercantile establishments require daily overtime pay for work exceeding 10 hours per day.
Equal Pay Law
In Wisconsin, and in line with the federal Equal Pay Act, employers have a legal obligation to provide equal pay for equal work, regardless of gender.
This applies to:
- Similar work: Same tasks, skills, and effort.
- Equivalent work: Different but requiring comparable skill and responsibility.
- Work of equal value: Based on objective factors like skill, effort, responsibility, and working conditions.
Employers must avoid pay discrimination based on sex and ensure fair and objective job evaluations, transparent pay structures, and equal access to promotions and bonuses. This is known as pay parity. Violations can lead to lawsuits and hefty fines. Remember, treating all employees fairly and equally strengthens your workforce and avoids legal trouble.
Wage Deductions and Garnishments
While employers can make authorized deductions (taxes, insurance, approved contributions), wage garnishment for debts requires stricter regulations.
Specifically, your right to deduct from employee wages is limited to authorized items such as:
- Mandatory withholdings. Federal and state taxes, Social Security and Medicare contributions.
- Voluntary payroll deductions. Employee-authorized deductions for insurance premiums, retirement plans, charitable contributions, etc.
- Written authorization. All non-standard deductions require written consent from the employee.
In the event of receiving a court-ordered garnishment, your responsibilities include:
- Verification. Carefully verify the order’s authenticity and ensure it originates from a competent court and pertains to a legally permissible debt category (e.g., child support, student loans, certain back taxes).
- Compliance. Following the order’s instructions, accurately withhold the specified amount from the employee’s wages on each pay period and maintain meticulous records of the deductions.
- Timely remittance: Forward withheld funds to the creditor as stipulated in the order.
- Employee communication. Finally, inform the affected employee about the garnishment promptly, offering resources and support if desired.
As a result of all the above, employers must maintain clear and accurate records of all deductions, including their purpose, amount, and authorization basis. They must also provide employees with detailed pay stubs that transparently itemize deductions alongside their gross and net pay.
Employers must pay final wages due to terminated employees within 24 hours if the employee is fired, or within 3 days if the employee quits.
Beyond wages and hours, Wisconsin employers must maintain detailed employee records for a minimum of three years.
These records must include:
- Employee information: Name, address, date of birth (if under 19), Social Security number.
- Timekeeping: Daily and weekly hours worked, including overtime and meal breaks.
- Pay records: Regular rate of pay, overtime rate, deductions, gross and net pay, pay frequency, pay date.
- Tax documents: Completed W-2 forms, federal and state tax withholding records.
- Deduction authorizations: Written consent for all non-standard deductions.
- Employee benefits: Details of health insurance, retirement plans, and other benefits offered.
- Personnel files: Performance reviews, disciplinary actions, training records.
Moreover, aside from compliance, accurate and organized recordkeeping safeguards both employers and employees, ensuring proper payroll calculations and protection against legal disputes. You should use reliable digital systems or well-maintained files to ensure secure storage and accessibility of vital employee information.
Meal and Rest Breaks
Finally, while Wisconsin doesn’t mandate meal or rest breaks for adults, exceeding 30 minutes without pay requires careful consideration to avoid potential wage theft claims.
Staying compliant with Wisconsin’s wage laws isn’t just about avoiding penalties; it’s about building trust and preventing costly lawsuits. Here are some key best practices to help you stay compliant and build a happy and productive workforce:
- Master the Wisconsin minimum wage. Firstly, while the baseline is $7.25, be aware of exemptions and local ordinances. Regularly revisit state updates and city regulations to avoid unintentional underpayment.
- Overtime accuracy is key. Secondly, clearly establish exempt employee categories (executives, administrators, etc.) and accurately track non-exempt employees’ hours. Implement an efficient timekeeping system and educate employees on overtime rules.
- Break time clarity. Thirdly, provide clarity on break policies and ensure adherence to avoid wage theft claims.
- Payday predictability. In addition, pay employees at least monthly, within one week of the pay period ending. Clearly state in pay stubs the hours worked, rate of pay, and deductions for transparency and record-keeping.
- Deduction diligence. Moreover, only deduct authorized amounts for taxes, insurance, or approved voluntary contributions. Obtain written authorization for any other deductions and maintain documentation.
- Posters. Furthermore, display required posters from the Wisconsin Department of Workforce Development in common areas to inform employees of their rights and wage regulations.
- Regular audits. In addition, conduct internal audits of your payroll practices periodically. This proactive approach helps identify and rectify any errors before they become compliance issues.
- Technology. Finally, use payroll software to automate calculations, track records, and simplify complex wage compliance tasks.
Ultimately, by taking these steps, you can navigate Wisconsin’s wage laws with confidence, fostering a compliant and positive work environment for your employees. Remember, wage law compliance is an ongoing process – stay informed, be proactive, and invest in maintaining a transparent and fair system for your workforce.
Ensuring compliance with Wisconsin’s wage laws is an integral aspect of responsible business management, and navigating the intricacies of these regulations can be a complex task for employers. Thankfully, Factorial’s comprehensive HR and payroll software solution offers a range of features that can help you manage payroll efficiently, effectively, and in compliance with Wisconsin wage laws.
Here are just a few of the benefits that you gain if you implement our platform in your business:
- Payroll made painless. Firstly, forget manual calculations and excel spreadsheets. Factorial’s automated payroll software handles everything from regular pay periods to Wisconsin state holidays like Labor Day and Martin Luther King Jr. Day. No more scrambling for holiday pay calculations – Factorial takes care of it all.
- Empower your employees. Secondly, give your team the freedom of on-demand pay. They can access earned wages before the next pay period, boosting morale and financial wellness. Plus, our intuitive employee portal lets them view paystubs, update personal information, and even request time off, all in one place.
- Security you can trust. Rest assured; your data is safe with Factorial’s robust payroll security measures. Multi-layered encryption and strict access controls safeguard sensitive employee information. Sleep soundly knowing your payroll is in good hands.
- Timekeeping compliance. In addition, comply with the state’s time tracking legal requirements with Factorial’s electronic time clock. Employees seamlessly clock in and out through web or mobile apps, ensuring accurate overtime calculations and adherence to Wisconsin minimum wage regulations.
- Streamlined recordkeeping. Finally, Factorial goes beyond payroll. Manage and store employee records electronically with our employee record management software. Easily access vital information like emergency contacts, tax forms, and performance reviews. Plus, create and share a company employee handbook to ensure everyone’s on the same page about important policies and procedures.