Minimum Wage and Exempt Salary Thresholds by Location

Most minimum wage errors are not the result of anyone deciding to underpay. They come from a rate table that was right when it was built and has quietly gone stale: a city raised its floor in July, a state indexed its rate on January 1, an employee moved from one site to another, or a salaried role that cleared the federal exemption threshold never cleared the state one. Each of these produces a register line that looks normal and is wrong.

This guide describes the layers of minimum wage and exempt salary rules that apply to a multi-location employer, the specific figures that change most often, and the checks that catch a breach on the preview register before the payroll is processed. Dollar figures were checked against the federal, state, and city sources listed at the end of this guide as of September 2026. Each carries its effective date. A small number could not be confirmed on an official page and are marked "verify".

Three layers, one rule

Minimum wage is set at three levels:

• Federal. The Fair Labor Standards Act sets the floor at 7.25 dollars per hour. It has not changed since July 24, 2009.
• State. Thirty states and the District of Columbia set a rate above the federal floor. Many index it to inflation and adjust on January 1 or July 1.
• Local. Cities and counties in roughly a dozen states set rates above their state, sometimes by several dollars.

The rule that resolves them is simple: the highest applicable rate wins, and the rate that applies is the one for the place where the work is performed, not where the company is headquartered or where the employee lives. Everyone with more than one site needs a table that maps each work location to its rate and effective date. Note that effective dates are not uniform: Oregon and Alaska change in July, Florida in September, and many cities on July 1.

The state layer

States above the federal floor fall into two groups. The first set a fixed schedule in statute, with step increases on known dates until a target is reached. The second index the rate to a consumer price measure and publish the new figure each autumn for the following January, or each spring for July. Both groups change more often than most rate tables get reviewed.

The table below shows the pattern with examples, taken from the Department of Labor's state minimum wage table as updated July 1, 2026, and from the state agencies named in the sources.

The local layer

Local ordinances are where a rate table most often goes wrong, because they are numerous, they change on their own schedules, and they key on a work address rather than a state code. Examples of cities and counties with rates above their state:

The operational consequence is that an employer with sites in more than one of these places needs a location-to-rate table with effective dates, maintained as configuration and reviewed on a calendar. The table is keyed on the work location on the employee record, which means the work location has to be right. A remote employee whose record still shows the office they were hired at, or a site that was recoded in the HR system without a corresponding change in the rate table, will be paid at the wrong floor without anyone noticing.

Tipped employees

Federal law allows an employer to pay tipped employees a cash wage of 2.13 dollars per hour and take a tip credit of up to 5.12 dollars, provided tips actually bring the employee to the full 7.25 minimum for every workweek. If they do not, the employer must make up the difference in that week.

Seven states prohibit the tip credit entirely and require the full state minimum in cash: Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington. Others allow a credit but set a cash wage well above the federal 2.13. New York's hospitality wage order, the only sector in that state permitted a credit, sets the 2026 cash wage at 11.35 for food service workers and 14.15 for other service employees downstate, and 10.70 and 13.30 upstate. Chicago is phasing its credit out entirely by July 2028.

Where the credit is allowed, the check is weekly, not per pay period: cash wage plus reported tips for the workweek, divided by hours worked in that week, must reach the applicable minimum for the work location.

Exempt salary thresholds

An employee classified as exempt from overtime under the executive, administrative, or professional exemptions must be paid on a salary basis at or above a threshold, and must meet a duties test. The salary figure is the part that goes stale.

Federal. The FLSA threshold is 684 dollars per week, 35,568 dollars per year, and the highly compensated employee threshold is 107,432 dollars per year. The 2024 rule that would have raised both in two steps was vacated by the U.S. District Court for the Eastern District of Texas on November 15, 2024, and the Department of Labor states that it is enforcing the 2019 figures. Computer employees may alternatively be paid hourly at not less than 27.63 dollars.

State. Several states set thresholds far above the federal figure, and most of them change every year because they are tied to the state minimum wage.

An employee who is exempt under federal law and non-exempt under state law is non-exempt. That means overtime, meal and rest break rules, and in some states timekeeping requirements apply. A salaried employee in California earning 60,000 dollars is not exempt regardless of title or duties.

The duties tests still apply at every salary level except the federal highly compensated tier. A salary above the threshold does not make an employee exempt on its own. But a salary below the threshold makes the duties irrelevant, which is why the salary check is the one that can be automated from the register.

Other floors that matter

• Youth minimum wage. Federal law allows 4.25 dollars per hour for employees under 20 during their first 90 consecutive calendar days. Many states do not allow it, and the 90-day clock has to be tracked.
• Training and learner wages. Some states permit a reduced rate for a defined training period; the period and the rate are both state-specific.
• California fast food. 20.00 dollars per hour since April 1, 2024 for limited-service restaurants that are part of a national chain with at least 60 locations. The Fast Food Council may raise it annually by the lesser of 3.5 percent or CPI.
• California health care. Tiered by facility type under the state schedule: large hospital systems and dialysis clinics 25.00 from July 1, 2026; community, rural, and urgent care clinics 22.00 from July 1, 2026; other covered facilities 23.00 from July 1, 2026; safety net hospitals on a slower schedule from 18.00. Each tier reaches 25.00 on its own date and is then indexed.
• Other industry minimums. New York's home care aide minimum above the general rate; hotel worker ordinances in Los Angeles, West Hollywood, Long Beach, and Santa Monica; airport worker rates at several large airports. Where one applies, it replaces the general local rate for that group of employees.

The checks to run on the preview register

Each of the rules above reduces to a comparison between a computed figure on the preview register and a value in the location-to-rate table. The checks below run against the preview payroll before it is processed, using the employee record for work location, exempt status, and tip status, and the earning history by code for hours and amounts.

Hourly rate below the floor. For every non-exempt employee, regular earnings divided by regular hours for the period, compared to the rate for their work location as of the period end. Flag anything below. Include shift differentials and other hourly premiums in the numerator only if the ordinance counts them; most do not.

Tipped employees below the floor. For employees with a tip credit, cash wage plus reported tips for each workweek in the period, divided by hours in that week, compared to the full minimum for the work location. Flag any week below. In no-tip-credit states, flag any tipped employee whose cash rate is below the full minimum.

Exempt salary below the state threshold. For every exempt employee, the period salary annualized by the pay frequency, compared to the threshold for their work location. Flag anything below, and flag separately anyone below the federal 684 dollars per week, which is a reclassification rather than a raise.

Work location changed without a rate change. From the change log, employees whose work location changed since the last processed payroll. Compare the old and new location rates; where the new rate is higher and the hourly rate did not change, flag.

Upcoming rate changes. From the location-to-rate table, any rate with an effective date inside the next pay period. List the employees at that location whose current rate is below the new one. This is the check that turns a January 1 or July 1 change from a correction into a planned adjustment.

Industry minimums. For employees in a department or job code covered by a health care, fast food, home care, or hotel minimum, the same hourly rate check against the industry rate rather than the general one.

How Praisidio helps

The rate rules in this guide become a handful of reports that run against the preview payroll every cycle, alongside the rest of the payroll preview audit.

The rate table is configuration. A location-to-rate table lives with the audit collection, one row per work location, rate, and effective date, plus a second table for industry minimums keyed on department or job code and a third for exempt thresholds by state. When the autumn announcements publish, the tables are updated once, and every check reads the new figures from the date they apply.

The employee record supplies the keys. Work location, exempt flag, tip status, pay frequency, and hourly rate come from the employee table as synced from ADP. Department and job code drive the industry minimums.

Earning history supplies the arithmetic. Regular hours and regular pay by earning code for the period give an effective hourly rate per employee, which is compared to the rate for the employee's location on the period end date. Tipped employees are tested on cash wage plus reported tips by workweek. Exempt employees are tested on salary annualized by pay frequency against the state threshold for their location, with a separate line for anyone below the federal figure.

The change log catches moves. Employees whose work location changed since the last processed payroll are listed with the old rate, the new rate, and whether their hourly rate moved with them.

The lookahead prevents the miss. Any rate with an effective date inside the next pay period produces a list of employees at that location who are still below it, before the payroll that needs the change is previewed.

Each check is an exception list with the employee, the location, the computed rate, the required rate, and the gap, ordered by gap. They sit in the same collection as the person presence, deduction, and garnishment checks, so the preparer works one list, and they can be scheduled for delivery to the payroll and HR leads on the day the preview opens.

Checklist

Before processing, confirm:

• The location-to-rate table has a row for every active work location, with the rate in effect at period end
• Industry minimums are mapped to the departments or job codes they cover
• No non-exempt employee's regular rate is below the floor for their work location
• No tipped employee's cash wage plus tips falls below the full minimum in any workweek
• No tipped employee in a no-tip-credit state is paid below the full minimum in cash
• No exempt employee's annualized salary is below the state threshold for their work location
• No exempt employee is below the federal 684 dollars per week
• Every work location change since last payroll has been checked against the new location's rate
• Rate changes effective in the next period have been applied or scheduled
• Youth, training, and certificate rates have the qualifying condition on file and the period still running

Frequently asked questions