On November 3, 2020, Florida voters approved Amendment 2, which will amend Florida’s constitution to gradually increase the state’s minimum wage to $15 an hour by the year 2026.  In Florida, a constitutional amendment must be passed by a “super-majority” (equal to or greater than 60%). Amendment 2 passed with 60.8% of the vote. Florida joins California, Connecticut, Illinois, Maryland, Massachusetts, New Jersey, and New York to become the eighth state in the country to raise its minimum wage to $15 an hour over the next several years.  Currently, Florida’s minimum wage is $8.56 an hour, $1.31 higher than the federal minimum wage of $7.25 an hour.

What does this mean for Florida employers?

On January 1, 2021, the minimum wage in Florida will increase $.09 to $8.65 per hour as scheduled. Amendment 2’s gradual increase to $15 per hour does not take effect immediately: on September 30, 2021, the minimum wage will rise from $8.65 an hour to $10.00 an hour (a $1.35 per hour increase). After September 30, 2021, the minimum wage will increase $1.00 per year through 2026, according to the following schedule:

• $11.00 on September 30, 2022
• $12.00 on September 30, 2023
• $13.00 on September 30, 2024
• $14.00 on September 30, 2025
• $15.00 on September 30, 2026

After 2026, the minimum wage will be adjusted annually for inflation, as it has been since 2004.  Employers can still apply a tip credit of $3.02 per hour.  Therefore, by 2026, the minimum wage for tipped employees will be $11.98 an hour.

Many lobbied against the increase to the minimum wage due to the potential negative effects on jobs and businesses.  Others supported the measure due to the financial relief it could bring to families. Some employers have already raised the hourly wage of their workers to $15 per hour, or more. Even so, many businesses are concerned about maintaining profitability and managing issues of wage compression when longer-term employees earn close to the same wage as newer employees.  Despite these concerns, some small businesses have seen positive effects of voluntary increases, such as improved employee retention, worker performance, and job satisfaction.

What can Florida employers do now to prepare for the wage increase on September 30, 2021?

• Assess compensation and the effects the increase in minimum wage will have on the payment of overtime, exempt employees’ compensation, and salary compression.  Start planning for ways to deal with these issues, such as changing business models, making gradual pay increases, hiring additional employees to reduce overtime hours, or reducing non-monetary benefits.

• Update minimum wage posters by the time the new rates take effect (starting on January 1, 2021, when the rate increases to $8.65).

• Inform employees about new pay rate(s).

• Train human resources, payroll, and managerial employees on the increases and how to respond to employees’ inquiries regarding wage rate changes.