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Small Business Payroll Checklist for the 2027 Minimum Wage Raises

By The Trends Incoming team · Published Oct 19, 2026 · Last updated Oct 19, 2026

Running payroll in one of the 16 states raising pay on January 1, 2027? Here's a friendly ten-step checklist to get it right the first time. Grab a coffee, it's quicker than it looks. ☕

✅ The checklist

1. Find every rate that applies. List each work location. Pay the highest rate that covers each worker: federal, state or local. Cities like Denver ($19.84 in 2027) and many California cities go well above the state rate.
2. Update pay rates for January 1. Set the new rates in payroll before your first 2027 pay period so hours worked from January 1 are paid at the new minimum.
3. Recheck tipped staff. If you take a tip credit, update the cash wage (for example Michigan $6.30, New Jersey $6.61, Colorado $12.69) and make sure tips plus cash wage reach the full minimum every workweek. California and Washington don't allow a tip credit.
4. Check youth, training and special rates. Some states have separate rates: Michigan under 18 ($12.75), Washington ages 14 and 15 ($15.07), Minnesota training wage ($9.68), New Jersey small and seasonal employers ($16.25).
5. Recheck salaried exempt staff. Some states tie the overtime-exempt salary to the minimum wage. In 2027 it's $72,384 a year in California, and $92,196 (51+ employees) or $82,976.40 (up to 50) in Washington.
6. Fix overtime math. Overtime is time and a half of the regular rate. When the base rate goes up, overtime pay goes up too.
7. Put up the new posters. States issue new minimum wage posters when the rate changes. Arizona, Ohio, South Dakota and Montana have already posted their 2027 versions.
8. Update pay stubs and notices. Make sure pay stubs show the new rate where your state requires it (California does), and tell affected workers about the change.
9. Budget for payroll taxes. The raise also raises employer payroll taxes such as Social Security and Medicare. Build that into your 2027 budget, not just the hourly bump.
10. Watch for wage compression. When the floor moves up, workers just above it may now earn the same as new hires. Decide early whether you'll adjust those rates too.

🧮 Quick cost math

Extra wage cost per worker = new rate minus old rate, times hours. One full-time worker at the Michigan minimum costs about $2,642 more a year in wages ($1.27 x 2,080 hours), before payroll taxes. Use the paycheck calculator for any state.

⚠️ Special cases worth knowing

• Ohio: employers grossing under $419,000 pay at least the federal $7.25, per the state poster.
• Montana: some small businesses not covered by federal wage law with $110,000 or less in yearly sales may pay $4.00, per the state poster.
• New Jersey: small (under 6 employees) and seasonal employers pay $16.25; farm employers $15.00.
• Vermont: the 2027 rate isn't posted yet. Watch the state labor department.

See every state's rate and official source on the 2027 minimum wage by state hub.

Quick answers

When do I have to start paying the 2027 minimum wage?

For the January 1 states, from January 1, 2027. Set the new rate in payroll before your first pay period of the year.

Which minimum wage do I pay if my city has a higher one?

Generally the highest rate that applies to the worker: federal, state or local.

Do I need a new minimum wage poster for 2027?

In most states that change their rate, yes. Download the free official poster from your state labor department.

Is this checklist legal advice?

No. It's a general starting point built from official sources. Confirm the rules for your business with your state labor department or a qualified professional.

Related on Trends Incoming

• 2027 tax numbers: brackets, 401(k), HSA and mileage
• Social Security 2027: 3.6% COLA calculator
• HealthCare.gov open enrollment 2027
• All money trends

Sources

• U.S. Department of Labor: state minimum wage laws (federal $7.25)
• CA DIR release 2026-66 ($72,384 exempt salary, posting and pay stub rules)
• WA L&I news release 26-17: $17.73 and overtime-exempt salaries (Sep 30, 2026)
• Michigan LEO minimum wage FAQ
• NJDOL release, Sep 29, 2026
• CDLE release (Denver $19.84)
• Ohio Commerce 2027 poster
• Montana DLI 2027 poster
• Industrial Commission of Arizona posters
• SD DLR 2027 poster
• MN DLI release (training wage)

By The Trends Incoming team · Fact-checked Oct 19, 2026. Dates and rates change, so double-check with the official source.