Voter-approved law changes impacting employers: Is your company affected?

In 2022 about a dozen states put law changes – some at the constitutional level – directly into the hands of the voters on Election Day.

Here are some of the major measures that passed that may require you to adjust your payroll practices or rewrite your organization’s policies.

Employment law changes

In Washington DC, Initiative 82 gradually eliminates the tip credit. As of July 1, 2027, tipped employees will be entitled to at least minimum wage. Currently, the minimum wage for tipped employees is $5.35 per hour.

A collective bargaining rights amendment to the Illinois state constitution prohibits any law that restricts or interferes with employees’ ability to collectively bargain over wages, hours, and terms and conditions of employment.

Nebraska Initiative Measure 433 raises the state’s minimum wage from $9 per hour to:

• $10.50 on January 1, 2023
• $12 on January 1, 2024
• $13.50 on January 1, 2025
• $15 on January 1, 2026.

After that, the minimum wage will be adjusted for inflation.

Nevada Question 1 amends the state’s constitution to guarantee the right not to be discriminated against because of race, color, creed, sex, sexual orientation, gender identity or expression, age, disability, ancestry or national origin.

A majority of Nevada voters also approved raising the state minimum wage to $12 beginning July 1, 2024. At that point, a provision which allows employers that offer health benefits to pay a $9.50 hourly minimum wage would be rescinded. The amendment also gives the legislature permission to pass laws that establish a higher minimum wage.

A resolution officially declares Tennessee to be a “right to work” state and makes it illegal to deny employment to anyone because of membership in, affiliation with, resignation from, or refusal to join or affiliate with any labor union or employee organization.

Update the employee handbook?

Employers in two states may have to address recent legalization of recreational marijuana.

Maryland voters said yes to a constitutional amendment that goes into effect July 1, 2023. Missouri‘s recreational weed amendment referendum from the general election is already in effect.

Tax law changes

In Colorado, Prop. 121 will lower the income tax rate from 4.55% to 4.40% for tax years commencing on or after January 1, 2022. Payroll can relax – this won’t affect income tax withholding. However, employees in the Centennial State deserve a heads up that they’ll be getting a larger tax refund next winter.

Massachusetts Question 1 amended the state constitution as of January 1, 2023 to establish an additional 4% state income tax on a taxpayer’s annual taxable income in excess of $1 million. There’s currently a 5% flat-rate income tax on those taxpayers.

Another notable state tax change

It may not have been a voter referendum, but finance pros in the Gem State still need to get up to speed on this law change. Effective January 3, 2023, Idaho’s H.B. 1 changed the income and corporate tax rate structure to a 5.8% flat rate tax. It also exempts the first $2,500 from taxation for single filers or $5,000 for joint filers.