U.S. Minimum Wage Increase 2026: New Hourly Pay Rates

Overview: What changes on February 27, 2026

Many employers and workers will see changes related to minimum wage rules starting February 27, 2026. These changes can come from federal updates, state law adjustments, or local ordinances that index wages to inflation or scheduled increases.

This article explains who is affected, how to find the exact new hourly pay rates, and practical steps employers and employees should take to remain compliant.

Which workers are affected by the U.S. minimum wage increase 2026

Not every worker will be affected in the same way. Federal, state, and local laws intersect, so the applicable rate depends on where an employee works and their job classification.

• Federal nonexempt employees covered by the Fair Labor Standards Act (FLSA).
• State-covered workers where state minimum wage exceeds federal.
• Workers in cities or counties with local minimum wage laws.
• Tipped employees or youth employees who may have different statutory rates.

How to find the new hourly pay rates effective February 27

Use official sources to confirm exact rates. Rates can vary by jurisdiction and by job category (for example, tipped versus non-tipped).

• Check the U.S. Department of Labor (DOL) website for federal updates and guidance.
• Visit your state labor department site for state-specific rates and effective dates.
• Contact your city or county government website for local ordinances and schedules.

Quick checklist to confirm your rate

Follow this short checklist to determine the correct rate for each employee.

1. Identify the work location (state and municipality).
2. Determine employee classification (exempt vs. nonexempt, tipped, youth).
3. Compare federal, state, and local rates—use the highest applicable rate.
4. Document the source (link or screenshot) showing the new rate and effective date.

Calculating payroll after the wage increase

When the new rate takes effect, employers must update payroll systems, timekeeping rules, and employee communications. Simple calculations help estimate the impact on labor costs and take-home pay.

How to calculate gross pay with the new hourly rate

Use this formula for nonexempt employees: gross pay = hourly rate × hours worked. For overtime, use the new regular rate to compute 1.5× time for hours over the state or federal threshold.

Example (hypothetical): If the new hourly rate is $15.75 and an employee works 42 hours in a week, calculate pay as follows.

• Regular pay for 40 hours = 40 × $15.75 = $630.00
• Overtime pay for 2 hours = 2 × ($15.75 × 1.5) = 2 × $23.63 = $47.25
• Total gross pay = $677.25

Practical steps for employers to comply with the U.S. minimum wage increase 2026

Implement these actions before the effective date to avoid payroll errors and potential penalties.

• Update payroll software and timekeeping settings with the new rate and effective date.
• Audit all job classifications and tipped employee records to ensure correct application.
• Communicate changes in writing to affected employees, including the new rate and start date.
• Recalculate budgets and forecasts to reflect higher labor costs if necessary.
• Train managers on overtime and break rule implications so they do not mis-classify hours.

Recordkeeping and notices

Keep records that show compliance: payroll reports, updated employee notices, and links to official rate notices. Some states require posting an updated workplace minimum wage poster—check local requirements.

Small case study: Retail shop adjusts payroll on Feb 27

Green Street Books is a small retail shop with 12 hourly staff. Their payroll team followed a four-step approach when a local ordinance raised the minimum wage effective February 27, 2026.

• Confirmed the exact rate and effective date on the city website and saved the notice.
• Updated payroll software and set automated alerts to use the new rate starting Feb 27.
• Sent a written notice to employees explaining new hourly rates and how overtime would be calculated.
• Reworked the shift schedule to limit overtime exposure during the first payroll cycle after the increase.

Result: Payroll ran smoothly and employees received clear information about their pay adjustments. The shop avoided rushed manual corrections and a potential compliance fine.

Common questions and quick answers about the 2026 increase

Below are short answers to recurring questions employers and employees ask.

• Will all states follow federal changes? No. States can set higher rates and maintain them regardless of federal changes.
• Do tipped employees get the same increase? Tipped minimums can increase differently; employers must ensure the combined tipped credit and tips meet the required floor.
• What about contractors? Independent contractors are paid under contracts and typically not covered by minimum wage laws—classification must be correct.

Next steps for employees and employers

Employees should check local labor department pages and ask HR for written confirmation of the new rate. Employers should document every step taken to comply and keep proof of communication and payroll updates.

Stay proactive: schedule a payroll validation the first pay cycle after February 27 and set a reminder for any future scheduled rate changes in your jurisdiction.

For authoritative confirmation, consult the U.S. Department of Labor and your state or local labor department websites. If you have complex classification or multi-state payrolls, consider consulting a labor attorney or payroll specialist.