Minimum Wage Increase, Tax Changes Take Effect Jan. 1

Connecticut’s minimum wage rises from $9.60 to $10.10 per hour as of January 1, 2017.
That marks the last step in the three-stage legislation legislators approved in 2014 that incrementally increased the state’s minimum wage from $8.70 to $9.15, then $9.60, and now $10.10.

Connecticut’s minimum wage will be $2.85 higher than the federal standard and among the highest in the country.

However, at least eight other states plan to raise their minimum wages to higher levels, including Massachusetts, which goes to $11 an hour on January 1.

New York will raise the hourly minimum wage for New York City to $13 next December, then to $15 from December 31, 2018.

California’s minimum wage will go to $11 in January 2018, then increase by $1 each year until hitting $15 in 2022.

Colorado, Oregon, Arizona, Maine and Washington state also have plans to increase their hourly minimum wages above the $11 mark.

The District of Columbia is set to raise its highest-in-the-nation $11.50 minimum wage to $12.50 effective July 1, 2017.

Since approving the incremental increase to $10.10 in 2014, the Connecticut General Assembly has debated measures in every subsequent legislative session designed to set a $15 hourly mark.

The 2017 legislative session will be no different, following the Connecticut Low Wage Employer Advisory Board’s recommendation this month to reach $15 by 2022. The minimum wage would then be indexed to inflation.

Tax Changes

As of January 1, service businesses can source sales receipts to a customer’s location rather than the company’s location when determining state corporate and personal income taxes.
Under Public Act 16-3 (Sections 201-204), service business no longer face the possibility of being taxed twice on the same income, remedying a situation that placed those companies at a competitive disadvantage.
Neighboring states, including Massachusetts, New York, and Rhode Island, have already adopted market-based sourcing.
Out-of-state companies that sell to customers here will also pay state income tax resulting from their sales in the Connecticut marketplace.
In addition, SB 502 spreads single-sales factor apportionment to the personal income tax, also making Connecticut more attractive to service companies.

‘Ban the Box’

Also from January 1, employers will no longer be allowed to ask about a prospective employee’s prior arrests, criminal charges, or convictions on an initial employment application.
There are exceptions to the new law, including where state or federal law prohibits hiring someone with a criminal conviction, or if the position requires an employer obtain a security or fidelity bond.
That legislation also created a task force to study issues regarding employment opportunities available to individuals with criminal histories, and then report to the General Assembly’s Labor and Judiciary committees.
However, that task force faces an uncertain future, as the staff from the African American Affairs Commission, later consolidated into a new commission on equity and opportunity, was supposed to provide administrative support.
It is unclear if this task force will be a priority for this new commission, or if it will be abandoned due to resource limitations.

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For more information on labor and employment issues, contact CBIA’s Eric Gjede (860.244.1931) | @egjede
For more information on tax issues, contact CBIA’s Louise DiCocco (203.589.6515) | @LouiseDiCocco