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On November 5, 2024, voters in several states will decide on ballot measures that could significantly increase minimum wage rates and alter paid leave requirements for employers. Based on our assessment of historical trends, nearly all minimum wage initiatives put to voters since 1996 have been approved, making it crucial for businesses to understand the potential changes.
In Alaska, Ballot Measure 1 proposes a multi-step increase to the state minimum wage, reaching $15 per hour by 2027, followed by annual adjustments for inflation. A critical addition for employers to note is the mandated paid sick leave provision: 40 hours for small employers (15 or fewer employees) and 56 hours for large employers (15 or more).
Arizona's Proposition 138 focuses on tipped employees. It would allow employers to pay a lower direct cash wage if an employee's wage plus tips averages at least $2 more than the minimum wage per hour. This represents a shift from the current fixed tip credit system. A tip credit is the difference between the minimum cash wage an employer must pay a tipped employee and the full minimum wage. If passed, the 2025 minimum direct cash wage for a tipped employee meeting the criteria could be $11.03 per hour, compared to the standard $11.70 per hour under the current law.
| State | Measure | Key Change for Employers | Effective Timeline |
|---|---|---|---|
| Alaska | Ballot Measure 1 | Increase to $15/hr + Paid Sick Leave | Phased in by 2027 |
| Arizona | Proposition 138 | Alters tip credit calculation for tipped workers | Effective Jan 1, 2025 |
California's Proposition 32, the Living Wage Act, would establish a two-tiered minimum wage system based on company size. For large employers (26+ employees), the wage would rise to $18 per hour by 2026, while small employers (25 or fewer) would reach that rate a year later. This measure has downstream effects, meaning it would automatically raise the minimum salary thresholds for overtime-exempt employees (those not eligible for overtime pay) and could supersede many local wage ordinances, simplifying compliance for multi-location businesses but raising overall labor costs.
The Massachusetts measure, Question 5, aims to phase out the state's tip credit entirely by 2029, gradually increasing the direct cash wage for tipped employees to 100% of the minimum wage. It would also expand tip pooling rules, allowing non-tipped workers (like kitchen staff) to share in tip pools, which is currently restricted.
Missouri's Proposition A proposes raising the minimum wage to $15 per hour by 2026 and would also introduce a statewide paid sick leave mandate. Employees would accrue one hour of sick leave for every 30 hours worked, with minimum annual allowances of five days for small employers and seven days for large employers.
The city of Everett, Washington, is considering Initiative 24-02, which would set a local minimum wage of $20.24 per hour for large employers effective July 1, 2025. This would place Everett among the cities with the highest minimum wages in the United States. Smaller employers would see the rate phased in over two years, with annual inflation adjustments for all businesses thereafter.
For employers, the key takeaways are to monitor these election results closely and begin proactive planning. If these measures pass, businesses should:
