Key Considerations for Employers Before Implementing Pay Increases

By Kirsten Ellis posted 01-05-2024 08:51 AM


With the arrival of 2024, state and local minimum wage increases took effect in many parts of the country. Employers should know that some states and local jurisdictions, such as the State of Colorado and the City of Denver, will raise their minimum wage again in 2025 and subsequent years based on inflation. 

This Employers Council article lists the minimum wage increases in our region and for federal contractors. If you are a multi-state employer with employees outside of our region, please contact one of our HR consultants if you need assistance with other minimum wage rates. Members may also access a tool that provides minimum wage rates in all 50 states here.

The following are some key considerations employers should be mindful of before implementing increases, mandated or voluntary: 

  • Some large businesses are raising their starting wages well above minimum wage, while some are reducing their once higher-than-average rates to manage costs. It is crucial to maintain transparency and effective communication with employees before implementing changes. This approach fosters a trusting and open environment. 

  • If you are subject to collective bargaining, make sure to speak with the union as wages are a mandatory bargaining item. While they won’t be upset you are raising wages due to the law, you still should notify them well in advance to discuss the wages. 

  • For those in states where pay equity laws have been adopted, such as Colorado, it is important to take these laws into consideration. While some wages may be raised automatically due to the law, you’ll need to ensure that you have consistent pay practices. Wage compression is often an issue and should be addressed early on to create a strategic plan. Ignoring wage compression likely will lead to poor employee morale and turnover along with potential pay practice issues. A pay equity analysis is a highly recommended service that we offer. Please email the Employers Council Member Experience Team for more information. 

  • Federal contractors are experiencing a notable rise in minimum wage rates. The specific minimum wage to adhere to depends on the executive order applicable to your contract, which can be found in the contract from your government customer. Please remember that if you are subject to a wage determination under the Service Contract Act or Davis-Bacon Act, the prevailing wage may be higher. These wage increases generally occur when a new option year is exercised. It is important to adhere to the highest applicable wage. 

  • Employers that find it difficult to take on the expense of hiring additional employees may want to consider incorporating artificial intelligence (AI) into their operations to enhance productivity. Doing so provides employees with the opportunity to receive cross-training in different departments when they are not occupied with routine administrative duties. This article discusses the factors to consider when utilizing AI technology, and Employers Council offers a valuable AI guide to members.  

As the minimum wage continues to increase in many states, cities, and counties, employers have the opportunity to take a proactive approach in anticipating and adapting to the changes. If you need assistance or have any questions, please emailthe Employers Council Member Experience Team.