Please note that the information contained in this article is limited in scope and is only intended as a high-level overview of the topics discussed. The information is current as of the publication date only, and the laws (and associated agency and/or judicial interpretations) on the topics discussed could change at any point in the future. Block, Inc. (including its affiliates, subsidiaries, employees, officers, directors, attorneys, and tax advisors) undertakes no obligation to update this article for future changes in the law. In addition, laws vary by jurisdiction, and this article does not attempt to address all jurisdictions – for example, states, counties, or cities often have requirements that differ from federal law. Nothing in this article is or should be used as tax or legal advice. In particular, this article cannot be relied upon for the purposes of avoiding taxes, penalties, or other obligations under applicable law. For guidance or advice specific to your business, you should consult with a qualified tax and/or legal professional.
Vermont is one of the many states that have passed a law to gradually raise the minimum wage. For small business owners in the state, this is an essential topic.
As an employer, it’s important to keep on top of these changes so you’re paying your employees what is legally required. We pulled together an overview of Vermont’s minimum wage increases as well as some ideas about how to prepare for those costs.
What is the minimum wage in Vermont?
The minimum wage in Vermont will increase to $13.18 on January 1, 2023, up from $12.55 per hour in 2022.
Vermont does have a set of exceptions for the state minimum wage. Vermont allows tipped employees at hotels, tourist attractions, and restaurants who earn more than $120 a month in tips to be paid a unique minimum wage of $6.59 per hour, effective January 1, 2023. Additionally, employees that are high school students, nonprofit employees, taxi drivers, agricultural and domestic workers, and government employees may be exempt from Vermont’s minimum wage laws. To further understand the minimum wage in Vermont, you can refer to the 2023 minimum wage poster.
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Is Vermont’s minimum wage changing beyond 2023?
While a lot of states have set forth a plan to reach a $15 minimum wage within the decade, Vermont has not yet passed a bill proposed to reach this same goal. In 2019, Vermont passed a bill leading to the 2021 and 2022 minimum wage increases. In 2023 and beyond, minimum wage increases will be tied to the Consumer Price Index.
How can Vermont business owners prepare for changes to the minimum wage?
It’s time to get prepared. Here are some things to put on your to-do list for avoiding mistakes many new business owners make:
Know your stuff: Make sure you are doing research and staying up to date with upcoming changes with the minimum wage in Vermont. If you’re unsure which wage regulations apply to you, talk to your city’s Chamber of Commerce or other business liaisons at city hall. It’s also important to know the differences between salaried employee payroll vs. hourly employees.
Look at your budgets: Check your budgets and cash flow in detail and create a hiring plan that you can afford. The good news is that minimum wage increases are posted a long way out, so you can look over several years and create a conservative employee growth plan. You may also think about hiring other types of workers—like seasonal workers in the winter or summer—to supplement your staff at busy times, instead of hiring full-time employees. Learn about affordable small business pricing for payroll services, which go a long way to help organize your employee costs.
Make smart hiring choices: You want to ensure you’re hiring the right people to begin with. After all, the cost of replacing employees is high, both in terms of time and money. You’ll save in the long run (and have more money for your growth) if you take time in hiring and training your employees.
Update your technology: Making operations more efficient can save you money and time in the long run. So, think about ways that technology can help reduce those costs. Systems like Square payroll software have many helpful payroll features, including automatic payroll.
Stay up to date: It’s crucial to the health of your business that you stay informed about current events. Seek out information on anything that may affect your bottom line, such as our COVID-19 small business resources, and protect your business’s future.