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Many state and local minimum wage rates are tied to inflation and will be raised in the new year. In the Employers Council region, Idaho, Utah, and Wyoming have minimum wage rates lower or equal to the federal rate of $7.25 per hour and are not anticipated to rise in the near future. However, Arizona, Colorado, and New Mexico have increases pending for 2023 as follows:

• Arizona: The state minimum wage is scheduled to rise to $13.85 from $12.80 on January 1, 2023, and will be adjusted for inflation annually after that. In addition, the hourly tipped minimum wage will rise from $9.80 to $10.85, based on a $3 hourly tip credit. The local rate for Tucson will rise from $13.00 to $13.50 in 2023. Since the state rate is higher, it prevails. However, in Flagstaff, the local rate is higher than the state rate at $15.50 and is scheduled to increase to $16.80 on January 1, 2023.

• Colorado: The state rate will increase from $12.56 to $13.65 on January 1, 2023. The tipped rate will be $10.63. The rate for the City and County of Denver is tied to inflation and will be increased on January 1, 2023, from $15.87 to $17.29. The minimum wage for tipped workers will increase to $14.27 per hour if they earn at least $3.02 in tips per hour.

• New Mexico: The state rate will increase from $11.50 to $12.00 on January 1, 2023. Tipped employees will have a minimum wage of $3.00 per hour. Albuquerque will raise its rate above the state at $12.50 and $7.50 for tipped employees. In Las Cruces, the local rate will rise to the state rate of $12.00, but the tipped employee rate will be $4.78. Santa Fe and Santa Fe County will raise their rates on March 1, 2023, based on inflation. They are currently at $12.95 per hour.

Higher minimum wages may be required for those performing work on or in connection with federal contracts. Those covered by Executive Order 14026 will be paid at least $16.20 per hour beginning on January 1, 2023. The required minimum cash wage that generally must be paid to tipped employees performing work on or in connection with covered contracts will increase to $13.75 per hour. The applicable minimum wage rate for workers performing work on or in connection with federal contracts covered by Executive Order 13658 will increase to $12.15 per hour beginning January 1, 2023. The minimum wage rate that generally must be paid to tipped employees performing work on or in connection with covered contracts will increase to $8.50 per hour.

Consequences for violating minimum wage laws can be costly. In all cases where multiple wages apply, the highest wage for the jurisdiction prevails. Updated minimum wage posters for 2023 are available on government websites or through the Employers Council poster service. If you have questions, please reach out to Employers Council.