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HB 2123

Transportation; creating the Transportation Reform Act of 2025; effective date.

2025 Regular Session Introduced by Danny Sterling

Kansas HB 2123 raises tipped workers' cash wage from $2.13 to $6.15, keeps $7.25 total minimum; employers pay the gap if tips+cash fall short, affecting about 20k workers.

Second Reading referred to Rules
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Bill Summary · HB 2123

Bill Summary — HB 2123 (Kansas)

Title: Increasing the minimum wage for employees that receive tips and gratuities
Introduced: January 27, 2025
Current status: Referred to Committee on Commerce, Labor and Economic Development

Purpose / Intent

HB 2123 would raise the minimum hourly cash wage employers must pay to employees who receive tips and gratuities. The intent is to increase the guaranteed cash wage for tipped workers while maintaining the existing combined minimum wage framework (cash wage + tips).

Key provisions

  • Amends K.S.A. 44-1203 (and repeals the existing section) to change the employer-paid minimum for tipped employees:
    • Current statutory tipped minimum: $2.13 per hour.
    • Proposed tipped minimum: $6.15 per hour.
  • Maintains the state’s standard combined minimum wage of $7.25 per hour:
    • If an employee’s tips plus the new cash wage meet or exceed $7.25/hr, no additional employer payment is required.
    • If tips plus the cash wage are less than $7.25/hr, the employer must pay the difference to reach $7.25/hr.
  • Section excludes employers and employees covered by the federal Fair Labor Standards Act (FLSA) where applicable.
  • Effective date: the act takes effect upon publication in the statute book (per bill language).

Who is affected

  • Primary: Employers and employees in tipped occupations (restaurants, bars, hotels, salons, certain service workers) in Kansas who are paid a tipped cash wage.
  • Secondary: State fiscal accounts (tax revenue) and unemployment insurance programs, as increased wages affect taxable income and potentially UI tax bases.

Fiscal impact (from Kansas Division of the Budget fiscal note, Feb 16, 2025)

  • Estimated number of Kansas employees affected: ~20,600.
  • Estimated increase in taxable wages: $174.2 million annually.
  • Projected State General Fund revenue increase: approximately $2.9 million in FY 2026 and about $3.6 million per year beginning FY 2027 (based on an effective tax rate of 2.1%).
  • Department of Revenue administrative costs: estimated one-time increase of $1,340.
  • Kansas Department of Labor: notes unemployment compensation taxes and the Unemployment Trust Fund would likely be affected by higher wages, but a total fiscal effect could not be estimated.

Procedural / timeline notes

  • Filed: January 27, 2025; introduced January 28, 2025.
  • Referred to the House Committee on Commerce, Labor and Economic Development (January 29, 2025).
  • Fiscal note prepared and submitted February 16, 2025.
  • Further legislative action will determine whether the bill advances out of committee and proceeds to floor votes.

Practical considerations

  • The increase substantially reduces the gap between the tipped subminimum ($2.13) and the full minimum wage ($7.25), reducing employers’ required make-up pay when tips are low.
  • Employers should assess payroll, accounting, and pricing implications if the bill becomes law; workers would see higher guaranteed cash wages.

Compiled from official sources — confirm details with the bill’s official record.

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