While a number of counties in Maryland such as Montgomery and Prince George’s had an existing minimum wage rate higher than the federal minimum wage (which currently sits at $7.25 per hour), as of January 1, 2024, almost all employers in the state of Maryland are now required to compensate their employees at $15.00 an hour.
This new, across-the-board, Maryland state requirement came into effect when Maryland Governor Wes Moore signed Maryland Senate Bill 555, better known as the Fair Wage Act of 2023, into law in April 2023.
Importantly, the exceptions to the Fair Wage Act are very limited. For instance, small employers, defined as those with fourteen or fewer employees, now have to compensate employees at $13.40 an hour, unless required to pay a higher rate by county law or another locality requirement. Additionally, tipped workers must make at least $3.63 an hour (half the federal minimum wage), and with tips, now must earn a minimum of $15.00 an hour. So, if tipped workers are compensated, including with tips, at a rate less than $15.00 an hour, their employers have to fill in the gap until they get to at least $15.00 an hour. Finally, workers under the age of 18 must be paid at least at a rate of 85% of the minimum wage rate or $12.75 an hour.
As always, employers should make sure they are compensating employees consistent with all federal, state, and local laws and other regulatory requirements. Failure to follow all requirements can lead to hefty penalties for employers, including fines and up to double damages on top of the amount of compensation owed to their employees. As the Appellate Court of Maryland explained, employers “doing business in Maryland must be aware of the requirements affecting a Maryland business enterprise, including whether state and federal laws apply.” Pinnacle Grp., LLC v. Kelly, 235 Md. App. 436, 467 (2018).
