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A Primer On Missouri Minimum Wage Increases in 2020

Meredith Galante, Writer

Small-business owners across the country are adapting to the new minimum wage laws. If you’re an employer in Missouri, it’s important to stay up to date on Missouri minimum wage laws to ensure the financial health of your business. We’re here to help with our guide.

What is the minimum wage in Missouri?

The minimum wage in Missouri in 2020 is $9.45 an hour, according to the Missouri labor files. The Missouri minimum wage increase is a bit higher than the federal minimum wage. The last time the minimum wage increased in Missouri was 2019, when it increased by $.75 from $7.85 in 2018.

Some cities in Missouri enacted a higher minimum wage to more closely align with the cost of living in the area. In 2015, St. Louis mandated a minimum wage increase to $10 an hour. However, in 2017, the legislature dropped the minimum wage to $7.70 to more closely match the state minimum at the time.

There are some minimum wage exemptions for certain industries and employees:

Some employees who are exempt from this minimum wage rate include:

  • Tipped employees, who must be paid at least $3.925—half of the current minimum wage.
  • Any business doing gross annual sales or business of less than $500,000 are allowed to pay employees less than the federal minimum wage.
  • Most agricultural and farm employees are exempt from the Missouri minimum wage.

Keep in mind that counties, cities, and towns may have their own minimum wage laws. Be sure to check what local wage laws may apply to you.

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Are there plans to change the minimum wage in 2021?

In recent years, there have been some attempts in the state legislature to raise the Missouri minimum wage to $10.

In November 2018, voters approved Proposition B, which increases the statewide minimum wage from $7.75 to $12 over the course of five years.

What’s happening to the minimum wage beyond 2020?

With the passage of Proposition B, Missouri’s minimum wage is set to increase from $7.85 in 2018 to the following:

  • $9.45 in 2020
  • $10.30 in 2021
  • $11.15 in 2022
  • $12 in 2023

Additionally, Proposition B requires employers to pay tipped employees at least 50 percent of the Missouri minimum wage, plus any amount necessary to bring the employee’s total compensation to the minimum wage in 2020 of $9.45 per hour.

How should small-business owners prepare for potential changes to the minimum wage?

The Missouri minimum wage increase is set to give over 675,000 workers a raise, so there is a chance that you will be affected as a small-business owner. Square has plenty of employer resources to help you navigate these changes. Here are some to help you get started right away.

  • Audit your expenses: Check your cash flow in detail and create a hiring plan that you can afford. Since Missouri’s minimum wage will continue to rise through 2023, it’s best to plan ahead. In some cases, you may find that hiring temporary workers as needed is less expensive than taking on full-time regular staff.
  • Make sure you hire and keep the right employees: Replacing an employee can cost a lot. You can decrease the total cost associated with recruiting and training when you hire (and then retain) the right people to do the job. Look for candidates with good track records, who come recommended, and who fit in with the company culture. Use our employee checklist to make sure that they are the best fit for your business. (Before you start hiring, make sure to get your EIN.)

  • Update tech: Consider automating certain aspects of the work (like payroll), and utilize the payroll features to avoid payroll mistakes so you can better prepare if wages need to increase.

As always, to make sure your business is prepared and stays in compliance, you should discuss Missouri’s minimum wage laws with your accountant and lawyer.

Meredith is a freelancer writer based in New York City. She’s been writing for Square since 2017 where she’s covered everything from the best software for restaurants to use to maximize profit, minimum wage laws across the country, and tips for entrepreneurs to maximize their impact.