Tech Flex. December 2016, Volume XII NATIONAL ACCOUNT SERVICES

Tech Flex December 2016, Volume XII NATIONAL ACCOUNT SERVICES

Topics Covered In This Issue Benefits: 21 st Century Cures Act Permits HRA Benefit Plans for Small Employers 2017 Medical Mileage Rate Announced by IRS Payroll: FLSA Overtime Rules Temporarily Blocked 2017 Percentage Method Withholding Tables Released by IRS IRS Releases 2017 Automobile Business Use Mileage Rates Reciprocity Between New Jersey and Pennsylvania Will Not End Wage s Announced by Two States Flagstaff Arizona Votes to Wage Numerous Locals Announce Wage s Barrington Opts Out of Cook County Wage- Paid Sick Leave Four Cities Opt Out of Linn County, Iowa Wage Upcoming Wage Round-Up

3 21ST CENTURY CURES ACT PERMITS HRA BENEFIT PLANS FOR SMALL EMPLOYERS On December 13, 2016, President Obama signed legislation (HR 34 the 21st Century Cures Act, or the Act) that will allow small employers to offer stand-alone health reimbursement arrangements (HRAs) to employees that have purchased a health plan in the individual market, as long as certain conditions are met. The law is effective January 1, 2017. Background Under the Affordable Care Act (ACA), employers that do not meet the definition of an Applicable Large Employer (ALE) are not required to either provide health plans that meet certain requirements to their full-time employees or pay a penalty to the Internal Revenue Service (IRS). Many employers that are not ALEs have wanted to offer limited health benefits to their employees, but have generally been prohibited from offering such benefits, including through HRAs that are not integrated with other employer coverage, and that do not meet ACA coverage and cost-sharing requirements. Employers faced significant IRS penalties of $100 per affected individual, per day, for offering HRAs to cover health insurance costs for the purchase of plans on the individual market. Under the 21st Century Cures Act, eligible small employers can now offer Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs) without being subject to these penalties. The Act stipulates that a QSEHRA is not a group health plan under the Internal Revenue Code or ERISA and is not subject to ACA coverage and cost-sharing requirements. Benefits under a QSEHRA are not subject to income or employment taxes. Provision of a QSEHRA may affect the amount of an individual s premium assistance tax credit for purchase of insurance on a health insurance Exchange/Marketplace. The following conditions must be met: Eligible Small Employers To be eligible, employers must: Not be an ALE (i.e., must have an average of fewer than 50 full-time and full-time equivalent employees, excluding seasonal workers, in the prior calendar year); and Offer no group health plan to any of its employees. Eligible s The QSEHRA must generally be offered to all employees, except those who are: Part-time; Seasonal; Under the age of 25; Within the first 90 days of service with the employer; or Part of a collective bargaining agreement.

4 QSEHRA Requirements Funds in a QSEHRA can generally be used to pay for medical expenses of the employee and their family members and reimburse health insurance premiums, provided the following conditions are met: The employee provides proof of coverage; The QSEHRA is funded solely by the employer without salary reduction contributions; Annual payments and reimbursements from the QSEHRA are limited to no more than $4,950 for individuals and $10,000 for QSERHAs that also reimburse the employee s family members. These limits will be prorated for employees who are not covered by a QSEHRA for the entire year, and will be adjusted annually for inflation; and, The QSEHRA is offered on the same terms to all eligible employees. Variation in benefits is permitted based on the variation in the price of a policy in the relevant individual health insurance market, based on the age of the employee and any eligible family members, if applicable, and the number of family members covered under such an arrangement. NOTE: If an employee does not have minimum essential coverage for a month, any payments or reimbursements under a QSEHRA for that month are taxable to the employee. Notice Requirements At least 90 days before each plan year (or, for new hires, on the first date the employee is eligible), a small employer offering a QSEHRA must provide a notice to employees that includes a statement: Of the amount of the employee s permitted benefit under the arrangement for the year; That the eligible employee should provide information about that amount to any health insurance Exchange/Marketplace to which the employee applies for advance payment of the premium assistance tax credit; and That if the employee is not covered under minimum essential coverage for any month, the employee may be subject to tax under Code Section 5000A for such month, and reimbursements may be included in gross income. Failure to provide such notices in a timely manner could subject the employer to a $50 penalty for each employee, up to $2,500 annually. As transition relief, no penalty will apply for notices required for 2017 if such notice is so provided not later than 90 days after the date of enactment; i.e., March 13, 2017. W-2 Reporting Required Employers will be required to report the value of any QSEHRA benefit on the employee s Form W-2, beginning in 2017 (i.e., Forms W-2 issued in January 2018 for 2017). The IRS will need to issue guidance as to how to report such amounts, but presumably a new code would be added to separately report such benefit amounts in Box 12 of Form W-2.

5 Compliance Recommendations Small employers that wish to offer QSEHRAs and would like to learn more about requirements, limitations, and notice obligations should visit https://www.congress.gov/114/bills/hr34/bills-114hr34enr.pdf. Employers should also watch for related guidance from the IRS. For a copy of HR 34 please click on the link provided below. https://www.congress.gov/114/bills/hr34/bills-114hr34enr.pdf 2017 MEDICAL MILEAGE RATE ANNOUNCED BY IRS Transportation expenses, such as automobile mileage, that qualify as tax deductible medical expenses under Internal Revenue Code Section 213 generally can be paid or reimbursed on a tax-free basis by a health flexible spending arrangement, health reimbursement arrangement, or health savings account if the expense is primarily for, and essential to, medical care. On December 13, 2016, the Internal Revenue Service issued Notice 2016-79 announcing that the standard mileage rate, effective January 1, 2017, for use of an automobile to obtain medical care is 17 cents per mile. This represents a decrease of two cents from the 2016 rate of 19 cents per mile. For a copy of Notice 2016-79 please click on the link provided below: https://www.irs.gov/pub/irs-drop/n-16-79.pdf FLSA OVERTIME RULES TEMPORARILY BLOCKED FLSA Changes No Longer Effective December 1, 2016 On November 22, 2016, a federal judge in Texas issued an injunction and temporarily blocked changes to the regulations governing the Fair Labor Standards Act (FLSA) set to go into effect on December 1, 2016. The court s action stops the overtime rule changes from going into effect nationwide, while the court decides the case. Background On May 18, 2016, the United States Department of Labor (DOL) released final regulations that modify certain provisions of the FLSA. Specifically, the final regulations increase the minimum salary required to be earned by an employee in order for that employee to be exempt from the FLSA overtime requirements from $455 per week ($23,660 per year) to $913 per week ($47,476 per year). The current levels have been in place since 2004. The final regulations also established a mechanism for automatically updating the salary and compensation levels every three years, starting on January 1, 2020. Additionally, the final regulations increased the total annual compensation requirement for highly compensated employees (HCEs) subject to a minimal duties test to $134,004 per year from the current threshold of $100,000, which was also in place since 2004. Under the final regulations an employee earning at least the required threshold is exempt from overtime if the employee customarily and regularly spends time on one or more exempt duties and the employee does not engage in manual work.

6 Challenge to FLSA Overtime Rules Several business groups and twenty-one states filed lawsuits against the DOL in federal court (the United States District Court, Eastern District of Texas, Sherman Division) challenging the FLSA changes. On October 12, 2016, the twenty-one states asked the court for emergency preliminary injunctive relief and argued that the FLSA s overtime changes violate the Constitution by regulating the states and coercing them to adopt wage policy choices that adversely affect the states priorities, budgets, and services. The court agreed with the states and granted an injunction delaying the overtime rule scheduled to go into effect on December 1. The delay is temporary while the case continues to be litigated and the court determines whether the DOL had the authority to make the FLSA changes and whether the FLSA changes are valid. The delay applies to employers nationwide. The new FLSA overtime changes will not take effect on December 1, 2016. The court s preliminary injunction delays the effective date of the FLSA changes until the court makes a final decision. In addition, it is possible that the next administration could modify or repeal the FLSA changes separate and apart from what the court decides. What Should Employers Do Now? Many employers have spent months preparing for the FLSA changes, identifying workers affected by the final regulations, determining whether to increase their salaries to comply or reclassify them as nonexempt employees, and communicating those changes to their employees. Employers rapidly need to assess what actions to take. For example, if an employer has already notified an employee of a salary increase effective December 1 or has already made the change, it may be too difficult to reverse that change or communicate that the change will not be made. Applicable state laws may require advance notice of any changes in pay and state laws may also govern the overtime exempt status of employees. Employers should consult their legal counsel to discuss options available before making and communicating decisions related to this latest development. While the rule is delayed, employers should continue to evaluate the FLSA status of their employees by reviewing job duties and descriptions and ensuring that they have employees classified properly. Whether the rule is upheld or not, all employers are subject to current FLSA requirements that dictate proper classification and payment methods. 2017 PERCENTAGE METHOD WITHHOLDING TABLES RELEASED BY IRS The Internal Revenue Service (IRS) has released the 2017 Percentage Method Withholding Tables (Notice 1036) that employers may use to determine the amount of federal incomes taxes that it must withhold form its employees pay each pay period. When using the percentage method of withholding, the tax for the pay period may be rounded to the nearest dollar. If rounding is used, it must be used consistently. Note the IRS has developed a number of withholding methods in addition to the percentage method of withholding. Background: An employee s taxable wages under the percentage withholding method are determined by the employer multiplying the value of one withholding allowance, as adjusted for inflation, for the pay period by the number of allowances the employee has claimed on his or her Form W-4. Once the total value of an employee's withholding allowances is determined, that amount is subtracted from the employee's gross wages for the pay

7 period. The remaining amount of wages are subject to income tax withholding. The percentage method tables are divided into pay periods and by marital status. For example, there are separate tables for single employees and married employees, and separate tables for weekly, biweekly, and semimonthly pay periods. Once an employer finds the correct table for the employer's pay period, the employee's marital status and taxable wages, the following steps apply. 1. Find the appropriate taxable wage bracket on the left side of the table. 2. Record the dollar amount of the tax to withhold. 3. Subtract the amount of the employee's taxable wages that exceed the figure shown in the right hand column. 4. Multiply this result by the appropriate percentage. 5. Add the results from Steps 3 and 4 to arrive at the amount of income taxes to withhold from the employee's pay under the percentage method of withholding. 2017 Percentage Method Withholding Allowances The withholding allowance amounts by payroll period for 2017 have not changed from 2016. The 2017 amounts are as follows: Payroll Period One Withholding Allowance Weekly $ 77.90 Biweekly 155.80 Semimonthly 168.80 Monthly 337.50 Quarterly 1,012.50 Semiannually 2,025.00 Annually 4,050.00 Daily or Miscellaneous (each day of the payroll period) 15.60 2017 Tax Rates: Tax rates will remain the same in 2017 as in 2016 (10%, 15%, 25%, 28%, 33%, 35%, and 39.6%), but the range of wages subject to each tax rate will change in 2017.

8 Non Resident s: Updated for 2017 (from 2016) are the amounts that employers should add to the wages paid to nonresident alien employees who perform services in the United States as follows. Weekly $44.20. Biweekly $88.50. Semimonthly $95.80. Monthly $191.70. Quarterly $575.00. Semiannually $1,150.00. Annually $2,300.00. Daily or Miscellaneous $8.80. It is important to note that this computation does not have to be made for nonresident alien students and business apprentices from India. Rates for withholding on supplemental wages for 2017 There is a two-tiered system for withholding income tax from supplemental wages at a flat rate: Optional flat rate: 25% for supplemental wages up to and including $1 million (no other percentage allowed), and Mandatory flat rate: 39.6% for supplemental wages over $1 million. 2017 Rate for backup withholding Payers of reportable payments generally must backup withhold 28% for federal income tax if the payee fails to provide a correct Taxpayer Identification Number (TIN). To access the 2017 Tables, please click on the link to the IRS provided below. Then find Other Items You May Find Useful. Click on the link All revisions for Notice 1036 then open the first link titled: Product Number: Notc 1036 Title: Early Release Copies of the Percentage Method Tables for Income Tax Withholding Revision Date: 2016. https://www.irs.gov/uac/about-notice-1036

9 IRS RELEASES 2017 AUTOMOBILE BUSINESS USE MILEAGE RATES On December 13, 2016, the Internal Revenue Service issued via Notice 2016-79 the 2017 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, and moving purposes. As of January 1, 2017, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be: 53.5 cents per mile for business miles driven; 17 cents per mile driven for moving purposes; and 14 cents per mile driven in service to a charitable organization. 2017 versus 2016 Mileage Rates: Type of Mileage Driven 2017 Rate 2016 Rate Difference Business Miles 53.5 cents per mile 54 cents per mile -0.5 cents per mile Moving Miles 17 cents per mile 19 cents per mile -2.0 cents per mile Service of Charitable 14 cents per mile 14 cents per mile No change The standard mileage rates for business and moving purposes are based on an annual study of the fixed and variable costs of operating an automobile. The mileage rate for charitable miles is set by statute and remains at 14 cents per mile. For a copy of Notice 2016-79 please click on the link provided below. https://www.irs.gov/pub/irs-drop/n-16-79.pdf RECIPROCITY BETWEEN NEW JERSEY AND PENNSYLVANIA WILL NOT END On November 22, 2016, New Jersey Governor Chris Christie announced that the reciprocity agreement between New Jersey and Pennsylvania will continue. Christie had announced previously that he intended to end the reciprocity agreement between the two states effective January 1, 2017. A reciprocal agreement between two states impacts employees living in one state and working in another and allows an employer to withhold taxes for the employee s state of residence rather than the employee s work state. The change of position came about when the Governor signed bipartisan legislation, S- 2749/A-4328, that streamlines and modifies the State s pharmacy benefits system that is designed to save New Jersey taxpayers up to an additional $200 million. In signing the bill, Christie stated the following:

10 This action will save State taxpayers hundreds of millions of dollars in health care benefit costs, and I m proud my administration was again able to work with elected officials from both sides of the aisle and many labor union representatives to achieve these savings, Governor Christie said. By addressing a potential $250 million budget deficit from growing healthcare costs, we are now able to save an income tax reciprocity agreement with Pennsylvania that protects tens of thousands of hard working New Jerseyans from having to pay more income taxes. For a copy of the Governor s announcement please click on the link provided below: http://nj.gov/governor/news/news/552016/approved/20161122a.html MINIMUM WAGE INCREASES ANNOUNCED BY TWO STATES The states of Alaska and Missouri have announced increases to their state minimum wage effective January 1, 2017 as follows. Alaska On December 5, 2016, the State of Alaska Department of Labor announced that the minimum wage in the state will increase to $9.80 per hour. This is an increase of 5 cents per hour over the current minimum wage of $9.75 per hour. The state of Alaska does not allow employers to take a tip credit when paying tipped employees so the city minimum wage is the same for tipped and non-tipped employees. For a copy of the announcement please click on the link provided below http://www.labor.state.ak.us/news/2016/news16-44.pdf Missouri The State of Missouri Department of Labor announced that the minimum wage in the state will increase to $7.70 per hour for non-tipped employees effective January 1, 2017. This is an increase of 5 cents per hour over the current minimum wage of $7.65 per hour. Under Missouri law, tipped employees must be paid half of the state minimum wage. However, if the tipped employee does not make up the other half of the minimum wage in tips, the employer is required to pay the difference so that the tipped employee is paid at least the state minimum wage. Consequently, as of the January 1, 2017 tipped employees must be paid at least $3.85 in cash wages. ly, tipped employees must be paid at least $3.825 in cash wages. For a copy of the Missouri announcement please click on the link provided below https://labor.mo.gov/dls/wage

11 FLAGSTAFF ARIZONA VOTES TO INCREASE MINIMUM WAGE The recent certification of the passage of Flagstaff, Arizona Proposition 414 results in an increase in the minimum wage for non-tipped employees based upon the following schedule. Effective July 1, 2017 - $10.00 per hour or $2.00 above the state minimum wage, whichever is greater. Effective January 1, 2018 - $11.00 per hour or $2.00 above the state minimum wage, whichever is greater. Effective January 1, 2019 - $12.00 per hour or $2.00 above the state minimum wage, whichever is greater. Effective January 1, 2020 - $13.00 per hour or $2.00 above the state minimum wage, whichever is greater. Effective January 1, 2021 - $15.00 per hour or $2.00 above the state minimum wage, whichever is greater. The Flagstaff minimum wage will be increased on January 1, 2022 and on January 1 of successive years by the increase in the cost of living. For any tipped employee, the employer may pay a cash wage up to the following amounts if combined wages plus tips are not less than the minimum wage rate. $3.00 per hour less than the minimum wage as of July 1, 2017. $2.50 per hour less than the minimum wage as of January 1, 2022. $2.00 per hour less than the minimum wage as of January 1, 2023. $1.50 per hour less than the minimum wage as of January 1, 2024. $1.00 per hour less than the minimum wage as of January 1, 2025. As a result of the passage of Arizona Proposition 2016, the Arizona state minimum wage (currently $8.05 per hour) will be increased as follows: Effective January 1, 2017 - $10.00 per hour Effective January 1, 2018 - $10.50 per hour Effective January 1, 2019 - $11.00 per hour Effective January 1, 2020 - $12.00 per hour The Arizona state minimum wage will be increased on January 1, 2021 and on January 1 of successive years by the increase in the cost of living. Employers are allowed to pay tipped employees $3.00 less per hour, if combined wages plus tips are not less than the minimum wage rate.

12 Consequently, the Flagstaff minimum wage for non-tipped employees will be increased as follows: Effective January 1, 2017 - $10.00 per hour Effective July 1, 2017 - $12.00 per hour Effective January 1, 2018 - $12.50 per hour Effective January 1, 2019 - $13.00 per hour Effective January 1, 2020 - $14.00 per hour Effective January 1, 2021 - $15.00 per hour or $2.00 above the state minimum wage as of January 1, 2021, whichever is greater. The Flagstaff minimum cash wage for tipped employees will be as follows if combined wages plus tips are not less than the minimum wage rate. Effective January 1, 2017 - $7.00 per hour Effective July 1, 2017 - $9.00 per hour Effective January 1, 2018 - $9.50 per hour Effective January 1, 2019 - $10.00 per hour Effective January 1, 2020 - $11.00 per hour Effective January 1, 2021 - $3.00 less than the greater of two following amounts: 1. $15.00 per hour. 2. The state minimum wage per hour plus $2.00 per hour as of January 1, 2021. NUMEROUS LOCAL JURISDICTIONS ANNOUNCE MINIMUM WAGE INCREASES The following local jurisdictions have announced minimum wage increases. Albuquerque, New Mexico Starting January 1, 2017, the minimum wage will be $8.80. Starting January 1, 2017, the minimum wage will be $7.80 if the employee's employer provides healthcare and/or childcare benefits to the employee during any pay period and the employer pays an amount for these benefits equal to or in excess of an annualized cost of $2,500.00. Starting January 1, 2017, the minimum wage for tipped employees will be $5.30. For a copy of the announcement please click on the following: https://www.cabq.gov/legal/news/albuquerque-minimum-wage-2016-2017

13 Los Altos, California Los Altos, California ( City ) has adopted Ordinance No. 2016-424 which raises the minimum wage from the current level of $10.00 per hour as follows: January 1, 2017 $12.00 January 1, 2018 $13.50 January 1, 2019 $15.00 Beginning on January 1, 2020 and each January 1 st thereafter, the minimum wage will increase corresponding to the increase of the cost of living, if any, not to exceed 5 percent. The Ordinance applies to employees who perform at least two hours of work in the City and to all employers who are subject to the City s licensing requirements or who maintains a business facility in the City. For a copy of the Ordinance please click on the link provided below1 https://www.municode.com/library/ca/los_altos/ordinances/code_of_ordinances?nodeid=7 92032 Oakland, California Oakland, California has announced that the city minimum wage will increase to $12.86 per hour effective January 1, 2017. This is an increase of 31 cents per hour over the current rate of $12.55 per hour. The state of California does not allow employers to take a tip credit when paying tipped employees so the city minimum wage is the same for tipped and non-tipped employees. For a copy of the announcement please click on the link provided below. http://www2.oaklandnet.com/government/o/cityadministration/d/wage/index.htm

14 San Jose, California The San Jose, California City Council has announced that the minimum wage for the city will be $10.50 per hour. This is an increase of.20 cents per hour from the current rate of $10.30 per hour. It is important to note that San José had previously announced an increase in the minimum wage rate to $10.40 per hour, effective January 1, 2017, in accordance with the community initiative approved by San José voters in 2012. The City Council voted to increase the rate by an additional 10 cents per hour to be consistent with the State of California wage schedule for employers of all sizes. In addition, the San Jose City Council approved a two-year phased approach to increase to the minimum wage in order to reach $15 per hour by January 1, 2019 as follows: $10.50 per hour effective January 1, 2017; $12.00 per hour effective July 1, 2017; $13.50 per hour effective January 1, 2018; and $15.00 per hour effective January 1, 2019. For a copy of the San Jose announcement please click on the link provided below. https://www.sanjoseca.gov/documentcenter/view/62598 SeaTac, Washington The City of SeaTac, Washington has announced that the minimum wage effective January 1, 2017 is $15.35 per hour. The current SeaTac minimum wage is $15.24 per hour. The state of Washington does not allow employers to take a tip credit when paying tipped employees so the city minimum wage is the same for tipped and non-tipped employees. For a copy of the announcement please click on the link provided below. http://www.ci.seatac.wa.us/modules/showdocument.aspx?documentid=13475 Santa Clara, California Santa Clara, California has announced that the city minimum wage will increase to $11.10 per hour effective January 1, 2017. This is an increase of 10 cents per hour over the current rate of $11.00 per hour. The state of California does not allow employers to take a tip credit when paying tipped employees so the city minimum wage is the same for tipped and non-tipped employees. For a copy of the announcement please click on the link provided below. http://santaclaraca.gov/government/departments/city-manager/minimum-wage-ordinance

15 BARRINGTON OPTS OUT OF COOK COUNTY MINIMUM WAGE - PAID SICK LEAVE The village of Barrington, Illinois has passed an ordinance that opts out of the Cook County, Illinois minimum wage increase and paid sick leave ordinances. The Cook County ordinance that provides for a minimum wage increase and paid sick leave for county residents set to be effective July 1, 2017 provided an opt out option as required by Illinois state law for city and villages within Cook County. As a result of the Barrington choice to opt out, employers within the Village are only required to comply with federal and Illinois state laws regarding the minimum wage and paid sick leave. Therefore employers within the village need only pay the Illinois state minimum wage of $8.25 per hour rather than the Cook County minimum wage of $10.00 per hour effective July 1, 2017. In addition, Village employers do not need to comply with the Cook County paid sick leave ordinance that requires employers to provide their workers with one hour of paid sick time for every 40 hours worked. For a copy of the Barrington Ordinance please click on the link provided below. http://www.sterlingcodifiers.com/codebook/index.php?book_id=576 FOUR CITIES OPT OUT OF LINN COUNTY, IOWA MINIMUM WAGE Four Iowa cities have opted out of the Linn County minimum wage ordinance. The Iowa Constitution allows cities to enact ordinances that conflict with county ordinances under the city home rule provisions. The cities are as follows: Alburnett Ely Lisbon Robins As a result of the opt out, employers in the cities listed above will be required to pay nontipped employees $7.25 per hour and tipped employees $4.35 per hour in accordance with Iowa state law. Had the cities not opted out of the Linn County minimum wage ordinance, the minimum wage would have been $8.25 per hour for non-tipped employees and $4.95 per hour for tipped employees effective January 1, 2017

16 UPCOMING MINIMUM WAGE INCREASE ROUND-UP The following chart shows the current minimum wage for non-tipped and tipped employees and the next scheduled increase (if any) for each state, the District of Columbia and numerous local jurisdictions. It is important to note that the rates reflected are those basic rates required to be paid by large private sector employers subject to the Fair Labor Standards Act. Rates that may be paid in certain states by small employers as defined by applicable state law, to individuals under a certain age (e.g. youth wage), to a certain classification of employees (e.g. fast food workers), or to employees during a training period are not reflected. State / Local Wage Per Hour Wage Alabama $7.25 $2.13 None None Alaska $9.75 $9.75 $9.80 (1/1/17) $9.80 (1/1/17) Arizona $8.05 $5.05 $10.00 (1/1/17) $7.00 (1/1/17) Flagstaff $8.05 $5.05 $10.00 (1/1/17) $12.00 (7/1/17) $7.00 (1/1/17) $9.00 (7/1/17) Arkansas $8.00 $2.63 $8.50 (1/1/17) None California $10.00 $10.00 $10.50 (1/1/17) $10.50 (1/1/17) Berkeley $12.53 $12.53 $13.75 (10/1/17) $13.75 (10/1/17) Cupertino $10.00 $10.00 $12.00 (1/1/17) $12.00 (1/1/17) Emeryville $14.82 $14.82 Annual Indexing (7/1/17) Annual Indexing (7/1/17) El Cerrito $11.60 $11.60 $12.25 (1/1/17) $12.25 (1/1/17) Los Altos $10.00 $10.00 $12.00 (1/1/17) $12.00 (1/1/17) Los Angeles $10.50 $10.50 $12.00 (7/1/17) $12.00 (7/1/17) Los Angeles $10.50 $10.50 $12.00 (7/1/17) $12.00 (7/1/17) County Malibu $10.50 $10.50 $12.00 (7/1/17) $12.00 (7/1/17) Mountain View $11.00 $11.00 $13.00 (1/1/17) $13.00 (1/1/17) Oakland $12.55 $12.55 $12.86 (1/1/17) $12.86 (1/1/17) Palo Alto $11.00 $11.00 $12.00 (1/1/17) $12.00 (1/1/17)

17 State / Local Wage Per Hour Wage Pasadena $10.50 $10.50 $12.00 (7/1/17) $12.00 (7/1/17) Richmond $11.52 $11.52 $12.30 (1/1/17) $12.30 (1/1/17) San Diego $10.50 $10.50 $11.50 (1/1/17) $11.50 (1/1/17) San Francisco $13.00 $13.00 $14.00 (7/1/17) $14.00 (7/1/17) San Jose $10.30 $10.30 $10.50 (1/1/17) $12.00 (7/1/17 $10.50 (1/1/17) $12.00 (7/1/17) San Leandro $10.50 $10.50 $12.00 (7/1/17) $12.00 (7/1/17) Santa Clara $11.00 $11.00 $11.10 (1/1/17) $11.10 (1/1/17) San Mateo $10.00 $10.00 $12.00 (1/1/17) $12.00 (1/1/17) Santa Monica $10.50 $10.50 $12.00 (7/1/17) $12.00 (7/1/17) Sunnyvale $11.00 $11.00 $13.00 (1/1/17) $13.00 (1/1/17) Colorado $8.31 $5.29 $9.30 (1/1/17) $6.28 (1/1/17) Connecticut $9.60 $6.07 $10.10 (1/1/17) $6.38 (1/1/17) Waitstaff $8.32 (1/1/17) Bartenders Delaware $8.25 $2.23 None None District of Columbia $11.50 $2.77 $12.50 (7/1/17 $3.33 (7/1/17) Florida $8.05 $5.03 $8.10 (1/1/17) $5.08 (1/1/17) Miami Beach $8.05 $5.03 $10.31 (1/1/18) $5.08 (1/1/17) Georgia $7.25 (if covered under FLSA) $5.15 (if not covered under FLSA) $2.13 None None

18 State / Local Wage Per Hour Hawaii $8.50 $7.75 ($0.75 tip credit only if employee earns $7.00 more than the minimum wage through tips and wages) Wage $9.25 (1/1/17) $8.50 ($0.75 tip credit only if employee earns $7.00 more than the minimum wage through tips and wages Idaho $7.25 $3.35 None None Illinois $8.25 $4.95 None None Chicago $10.50 $5.95 $11.00 (7/1/17) Annual Indexing (7/1/17) Cook County $8.25 $3.13 $10.00 (7/1/17) Annual Indexing (7/1/17) Indiana $7.25 $2.13 None None Iowa $7.25 $4.35 None None Johnson County $9.15 $5.49 $10.10 (1/1/17) $6.06 (1/1/17) Linn County $7.25 $4.35 $8.25 (1/1/17) $4.95 (1/1/17) Polk County $7.25 $4.35 $8.75 (4/1/17) $5.00 (4/1/17) Wapello County $7.25 $4.35 $8.20 (1/1/17) $4.92 (1/1/17) Kansas $7.25 $2.13 $2.13 None Kentucky $7.25 $2.13 None None Louisiana $7.25 $2.13 None None Maine $7.50 $3.75 $9.00 (1/7/17) $5.00 (1/7/17) Portland $10.10 $3.75 $10.68 (1/1/17) $5.00(1/1/17) Maryland $8.75 $3.63 $9.25 (7/1/17) None Montgomery County Prince George s County $10.75 $4.00 $11.50 (7/1/17) None $10.75 $3.63 $11.50 (10/1/17) None Massachusetts $10.00 $3.35 $11.00 (1/1/17) $3.75 (1/1/17)

19 State / Local Wage Wage Michigan $8.50 $3.23 $8.90 (1/1/17) $3.38 (1/1/17) Minnesota $9.50 $9.50 Annual Indexing Annual Indexing (1/1/18) (1/1/18) Mississippi $7.25 $2.13 None None Missouri $7.65 $3.83 $7.70 (1/1/17) $3.825 (1/1/17) Montana $8.05 $8.05 $8.15 (1/1/17) $8.15 (1/1/17) Nebraska $9.00 $2.13 None None Nevada $8.25 ($7.25 if employer provides employee opportunity to elect qualifying health insurance) $8.25 ($7.25 if employer provides employee opportunity to elect qualifying health insurance) Annual Indexing (7/1/17) Annual Indexing (7/1/17) New Hampshire $7.25 $3.26 None None New Jersey $8.38 $2.13 $8.44 (1/1/17) None New Mexico $7.50 $2.13 None None Albuquerque $8.75 $5.25 $8.80 (1/1/17) $7.80 (1/1/17) if the employee's employer provides healthcare and/or childcare benefits to the employee during any pay period and the employer pays an amount for these benefits equal to or in excess of an annualized cost of $2,500.00. $5.30 (1/1/17)

20 State / Local Bernalillo County Wage Per Hour Wage $8.65 $2.13 $8.70 (1/1/17) $7.70 (1/1/17) if the employee's employer provides healthcare and/or childcare benefits to the employee during any pay period and the employer pays an amount for these benefits equal to or in excess of an annualized cost of $2,500.00. None Las Cruces $8.40 $3.36 $9.20 (1/1/17) $3.68 (1/1/17) Santa Fe $10.91 $2.13 Annual Indexing None 3/1/17 Santa Fe County $10.91 $3.27 Annual Indexing 3/1/17 Annual Indexing 3/1/17 New York $9.00 $7.50 $9.70 (12/31/16) $7.85 (12/31/19) New York City $9.00 $7.50 $11.00 (12/31/16) Nassau, Suffolk, Westchester Counties $9.00 $7.50 $10.00 (12/31/16) $8.65 (12/31/17) $8.00 (12/31/18) North Carolina $7.25 $2.13 None None North Dakota $7.25 $4.86 None None Ohio $8.10 $4.05 $8.15 (1/1/17) $4.08 (1/1/17) Oklahoma $7.25 $2.13 None None Oregon $9.75 $9.75 $10.25 (7/1/17) $10.25 (7/1/17) Portland Urban Growth Boundary $9.75 $9.75 $11.25 (7/1/17) $11.25 (7/1/17)

21 State / Local Wage Wage Non-Urban Counties $9.50 $9.50 $10.00 (7/1/17) $10.00 (7/1/17 Pennsylvania $7.25 $2.83 None None Rhode Island $9.60 $3.39 None $3.89 South Carolina $7.25 $2.13 None None South Dakota $8.55 $4.28 $8.65 (1/1/17) $4.325 (1/1/17) Tennessee $7.25 $2.13 None None Texas $7.25 $2.13 None None Utah $7.25 $2.13 None None Vermont $9.60 $4.80 $10.00 (1/1/17) $5.00 (1/1/17) Virginia $7.25 $2.13 None None Washington $9.47 $9.47 $11.00 (1/1/17) $11.00 (1/1/17) Seattle $13.00 $13.00 $15.00 (1/1/17) $15.00 (1/1/17) SeaTac $15.24 $15.24 $15.35 (1/1/17) $15.35 (1/1/17) Tacoma $10.35 $10.35 $11.15 (1/1/17) $11.15 (1/1/17) West Virginia $8.75 $2.63 None None Wisconsin $7.25 $2.33 None None Wyoming $7.25 $2.13 None None ADP National Account Services does not make any representation or warranty that the information contained in this newsletter, when used in a specific and actual situation, meets applicable legal requirements. This newsletter is provided solely as a courtesy and should not be construed as legal advice. The information in this newsletter represents informational highlights and should not be considered a comprehensive review of legal and compliance activity. Your legal counsel should be consulted for updates on law and guidance that may have an impact on your organization and the specific facts related to your business. ADP, the ADP logo and IN THE BUSINESS OF YOUR SUCCESS are registered trademarks of ADP, LLC. Copyright 2016 ADP, LLC. All rights reserved. **Please note that the information provided in this document is current as of the date it is originally published.**