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This article summarizes federal and state employment law changes already enacted that will affect employers in 2023. State information is included for Arizona, Colorado, New Mexico, and Utah. There are no significant changes on the books for 2023 in Idaho and Wyoming.

Federal

Effective January 1, 2023, the federal contractor minimum wage increases to $16.20 per hour under an annual adjustment required by Executive Order 14026. The minimum wage for tipped employees under the order increases from $10.50 per hour to $13.75.

Arizona

• Effective December 31, 2022, Arizona will allow individuals to petition to seal case records related to criminal offenses. In some cases, individuals are not eligible. If a petition to seal records is granted, the person may state that they have never been arrested in response to questions on an employment application. Certain sensitive positions are an exception. An employer’s liability for hiring under these circumstances is limited.

• Effective January 1, 2023, all Arizona employees must complete and submit to their employer a new 2023 Arizona Employee's Withholding Election, Form A-4. The form has been revised to reflect a reduction in the state income tax rates. If an employee doesn’t submit a new form, the employer must withhold 2% of the employee's wages for taxes until it receives a completed form A-4.

• Form W-4V, Voluntary Withholding Request for Arizona Resident Employed Outside of Arizona, has also been updated, and a new form for 2023 is required of those employees who file them.

• The Arizona 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 increase 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 Colorado state minimum wage 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 rise to $14.27 per hour if they earn at least $3.02 in tips per hour.

• Effective January 1, 2023, the minimum salary for employees exempt from the minimum wage and overtime provisions of the Colorado Overtime and Minimum Pay Standards (COMPS) Order increases from $865.38 per week to $961.54 per week.

• The COMPS poster requirement for handbooks and posting will be modified and updated to COMPS #39, and a separate posting for wage rates called PAYCALC 2023 will be issued. Employers Council will provide samples once they are published by the Colorado Department of Labor and Employment (CDLE).

• We have previously written about the Secure Savings program slated to begin registration on January 1, 2023. Some details of the program are still being created. Employers covered by the program are required to withhold employee payroll deductions for individual retirement accounts (IRAs) run by the state. Learn more about the program in this Employers Council article. We will provide more information as it becomes available.

• Small group health insurance policies issued on or after January 1, 2023, must include an annual mental health wellness examination of up to 60 minutes performed by a qualified mental health care provider. This was already required of large employers as of January 1, 2022. The coverage must be equal to the coverage provided for a physical examination and must comply with the requirements of the Mental Health Parity and Addiction Equity Act.

• We have written extensively on the Family and Medical Leave Insurance Program (FAMLI), which starts collecting premiums on January 1, 2023, with benefits beginning on January 1, 2024. The state-run program ensures that Colorado employees will have access to paid leave to care for themselves or their family members during a serious health event or to grow their family. Starting January 1, 2024, employees will be able to take up to 12 weeks of job-protected leave in a 12-month period for specified family and medical reasons. Those who experience pregnancy or childbirth complications will receive an additional four weeks. Public employers have the option to participate or opt out. Employers that provide an approved private paid leave program may opt out of the statewide program when rules are promulgated in spring 2023. Until then, all covered employers must remit premiums. If you want to learn more, access our helpful resources here, including a whitepaper that gives an overview of the program’s rules and requirements. The state also has numerous online resources, including a FAMLI Toolkit for Employers.

• Effective January 1, 2023, under Senate Bill 22-161, final wage payment laws are amended. If a terminated employee fails to properly pay or return property or funds entrusted to them to the employer upon termination, the employer must provide notice to the employee within 10 days after the termination before making a pay deduction for the amount of money or the value of the property not paid or returned. The notice must include specific information. If the employee repays the money or returns the property within 14 days after receiving the notice, the employer then has 14 days within which it must pay back the amount deducted to the employee. The amended law also expands provisions that apply if an employer violates certain final pay requirements. For more details see our whitepaper Payroll Deduction Authorization.

New Mexico

The state minimum wage 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. The following are some minimum wage changes in cities and counties:

• Albuquerque will raise its rate above the state’s, changing to $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.

Utah

Effective January 1, 2023, nonresidents who work in Utah for 20 or fewer days in the state during the tax year are exempt from Utah income tax withholding if their state of residence provides a reciprocal exemption or does not impose a state individual income tax.

If you have any questions about what the changes coming in 2023 mean for your organization, please email the Employers Council Member Experience Team.