Missouri Minimum Wage Changes: What You Need to Know

Starting January 1, 2025, Missouri’s minimum wage laws are undergoing key updates that may impact businesses across the state. HR and payroll departments need to prepare for these changes to ensure compliance and seamless payroll processing. Here’s a breakdown of what’s changing and how your team can adapt.

What’s Changing?

1. New Minimum Wage Rates:

   • The statewide regular minimum wage will increase to $13.75 per hour.
   • For tipped employees, the base wage rises to at least $6.88 per hour, provided their combined wages and tips equal the regular minimum wage.

2. Exemptions:

   • Retail and service employers with less than $500,000 in gross annual income remain exempt from these minimum wage laws under state regulations.

Implications for Payroll and Compliance

These adjustments bring both opportunities and challenges for HR and payroll teams. Here’s what to consider as you prepare for 2025:

1. Payroll Calculations

• Update payroll systems to reflect the new wage rates by January 1, 2025, ensuring both regular and tipped employee categories align with the updated standards.
• For tipped employees earning the $6.88 base wage, confirm their total earnings (base wage + tips) meet or exceed the $13.75 hourly minimum. If they fall short, employers must make up the difference in their paycheck.

2. Compliance Requirements

• Review state-specific laws to understand how these changes interact with federal minimum wage regulations, especially for businesses operating across multiple states.
• Ensure all payroll records accurately document hours worked, wages paid, and tip credits for tipped staff, as required by law.
• Validate whether your business qualifies for the exemption based on the $500,000 gross income threshold. Employers below this amount may not be obligated to follow the statewide minimum wage but must still comply with federal rules, if applicable.

3. Adjustments to Payroll Systems and Contracts

• Work with your payroll provider to adjust system settings for the updated wage rates. Automate calculations for tipped employee earnings to streamline compliance.
• Review and, if necessary, amend employee contracts to reflect the new minimum wage requirements and clearly define pay rates for tipped staff, especially if your company relies on tip credits to meet the minimum wage.

Actionable Tips for Smooth Implementation

To ensure a seamless transition, HR and payroll teams should consider the following best practices:

• Communicate with Employees:

  • Notify your workforce about the minimum wage changes to reinforce transparency and foster trust. This is especially important for tipped employees who may have questions about how these updates will affect their earnings.

• Provide Managerial Training:

  • Train managers and supervisors to understand the updated wage requirements and ensure accurate reporting of tipped employee earnings.

• Partner with Your Payroll Provider:

  • Engage with APlus Payroll to confirm system updates are in place before the January 1 deadline. We offer compliance tools and reporting features to help you track employee wages and tips accurately.

• Audit Payroll Practices:

  • Conduct an end-of-year audit to identify any discrepancies in wages, hours, or tip credits. Proactive adjustments now can prevent compliance issues once the new laws take effect.

• Monitor Ongoing Compliance:

  • Stay informed about other upcoming changes to labor laws, as wage regulations tend to evolve over time. Regularly review state and federal updates to avoid non-compliance risks.

For further guidance or questions about implementing these changes, feel free to contact our team. Together, we’ll ensure your payroll is accurate, efficient, and ready for the new year.

This blog does not constitute formal HR or legal advice and does not address local law. Our HR Resource Center by Mineral offers further advice on this and many other topics. For a small additional fee you can also speak to a live HR Specialist. Contact your friendly APlus Payroll CSS for further information (including login details) or login here. Wanting to know how we can help your Payroll process? Please contact us here. Advice is always free!