The torso of a woman holding an electronic tablet in an office setting.

15 Best States for Employers in 2023

Last Updated: September 07, 2023

Written by


Reviewed by


|

Fact checked by


Key Takeaways:

  • Factors such as minimum wage, overtime pay, and sick leave mandates shape a state's friendliness for employers.
  • Employer-friendly states have lower government regulations, enabling employers to manage employees efficiently.
  • The Fair Labor Standards Act (FLSA) sets standards for minimum wage, overtime pay, and employee treatment.

The United States is a great place to start a business for many reasons. Forming a business is relatively easy and there is a strong entrepreneurial spirit throughout the country.
Some states are better for businesses and employers than others. The freedom with which you can employ and manage staff varies from state to state.
We’ve put together a list of the states that regulate employers the least when it comes to things like minimum wage, overtime, paid sick leave, and more.

What makes a state good for employers?

Deciding what makes a state employer-friendly is somewhat subjective. People have varying ideas about what laws and qualities benefit employers most.
Some people may argue that a state’s economy determines if it’s a good place for employers while others may look to a state’s business taxation practices.
To compile this list, we investigated the amount of government regulation in each state’s labor practices to determine the best states for employers.
With less regulation, employers can make their own rules and determine the best ways to manage employees.
For this article, we analyzed the following five aspects of employment regulation.
  • Minimum wage: A lower minimum wage can keep an employer’s labor costs down. Most of the state minimum wages in this list are equal to or less than the federal minimum wage of $7.25 per hour.
  • Overtime pay regulations: Overreaching premium pay requirements can negatively affect employers. In states without an overtime pay law, eligible employees receive the federal minimum overtime pay.
  • Paid sick leave: Paid sick lease is left completely to the state. If a state mandates paid sick leave, it can put financial stress on employers, especially small businesses.
  • Payday requirements: States sometimes have payday requirements. If a state government regulates how and when employers have to pay employees, it limits the freedom of employers.
  • Fair scheduling laws: Fair scheduling laws minimize an employer's ability to switch around schedules, and assign schedules with shorter notice.

What is the Fair Labor Standards Act (FLSA)?

TheFair Labor Standards Act (FLSA)establishes standards for minimum wage, overtime pay, employer recordkeeping, and more. It aims to ensure eligible employees receive fair compensation and treatment.
The FLSA is federally binding. When a state hasn’t passed its own labor laws or its labor laws don’t meet the FLSA’s minimum requirements, the standards of the FLSA apply.
Under the FLSA, nonexempt workers are entitled to the federal minimum wage of $7.25 per hour. Overtime pay at a rate not less than one and one-half times the regular rate of pay is required after 40 hours of work in a workweek.

When does the FLSA apply?

Some employers are subject to the FLSA while others aren’t. For example, some small businesses may be exempt.
As an employer, you must abide by the FLSA if you:
  • Have an annual volume of sales of $500,000 or more
Employees may be protected by the FLSA if their role includes interstate commerce. Also, the FLSA usually applies to domestic service workers, such as housekeepers, full-time babysitters, and cooks.
Some workers may not be eligible for FLSA protections, including:
  • Farm workers
  • Seasonal workers
  • Tipped employees
  • Personal companions
  • Caregivers to seniors
  • Casual babysitters
  • Apprentices
Also, freelancers and independent contractors are not covered by the FLSA, as they aren’t employees.

Best states for employers

Map that highlights LawDepot
Okay, let’s get to it. Here are fifteen of the best states for employers. We’ve listed the states alphabetically, so their order is not a ranking.

1. Alabama

  • No state-mandated minimum wage
  • No state-mandated overtime pay
  • No payday regulations for hourly employees
  • Local governments cannot set a higher minimum wage
  • Local governments cannot require employers to provide paid sick leave
  • Local governments cannot pass fair scheduling laws
Alabama is a good state for employers because of the lack of government regulation on labor practices.
There is no state minimum wage law. Therefore, employers subject to the FLSA must pay eligible employees the federal minimum wage of $7.25 per hour. Those who aren’t subject to the FLSA have complete freedom in determining employee pay rates.
There’s also no premium overtime pay requirement. Therefore, employers subject to the FLSA must provide eligible employees with overtime pay for more than 40 hours worked in a workweek at a minimum rate of time and one-half their regular pay rate. Therefore, the overtime minimum wage is $10.88 per hour, which is one and a half times the $7.25 per hour wage.
Alabama employers exempt from the FLSA, such as some small businesses, can benefit from lower labor costs and determine the minimum wage that works best for their business. In addition, counties and municipalities cannot set their own minimum wage regulations.
There are no payday regulations that require employers to pay their staff at a certain frequency (weekly, biweekly, semimonthly, monthly, etc.). Without regulations, employers may determine what works best for them.
In Alabama, municipalities and counties cannot require employers to provide paid sick leave or pass fair scheduling laws.

2. Arkansas

  • $11.00/hour minimum wage
  • $16.50/hour overtime minimum wage
  • Semimonthly payday requirement for hourly employees
  • Local governments cannot set a higher minimum wage
  • Local governments cannot require employers to provide paid sick leave
  • Local governments cannot pass fair scheduling laws
In Arkansas, the minimum wage rate, the overtime rate, and the semimonthly payday requirement only apply to employers with four or more employees. Therefore, you may be able to financially benefit if you’re a small business with only a few employees.
Arkansas has a minimum wage of $11.00 per hour. If you have one to three employees, you could be entitled to pay them the FLSA rate of $7.25 per hour.
Arkansas has mandated that eligible employees who work more than 40 hours in a workweek must be paid a minimum overtime rate of time and one-half their regular pay rate. For employees receiving a standard rate of $11.00 per hour, the minimum overtime rate is $16.50 per hour.
Employers have to pay most hourly employees on a regular payday schedule, scheduled at a minimum semimonthly basis.
In Arkansas, municipalities cannot set a higher minimum wage, require employers to provide paid sick leave, or pass fair scheduling laws.

3. Georgia

  • $5.15/hour minimum wage
  • No state-mandated overtime pay
  • Semimonthly payday requirement for hourly employees
  • Local governments cannot set a higher minimum wage
  • Local governments cannot require employers to provide paid sick leave
  • Local governments cannot pass fair scheduling laws
Georgia is on this list because of its low minimum wage of $5.15 per hour. This rate only applies to certain employers and employees.
The minimum wage rate does not apply to:
  • Any employer that has sales of $40,000.00 per year or less
  • Any employer having five employees or less
  • Any employer of domestic employees
  • Any employer who is a farm owner, sharecropper, or land renter
  • Any employee whose compensation consists wholly or partially of gratuities
  • Any employee who is a high school or college student
  • Any individual who is employed as a newspaper carrier
There are also exceptions for individuals who work for nonprofit child-caring institutions or long-term care facilities serving children or mentally disabled adults.
Since the minimum wage only applies to employers with six or more employees, you may have the freedom to set a lower pay rate if you’re a small business with only a few employees.
Like every other state, employers subject to the FLSA must pay staff the federal minimum wage of $7.25 per hour instead of $5.15.
Georgia does not have overtime laws. If employees in Georgia are covered by the FLSA then they will get overtime at a rate of one and one-half their regular wage.
Employers have to pay most hourly employees on a regular payday schedule, scheduled at a minimum semimonthly basis.
In Georgia, counties and municipalities cannot set a higher minimum wage, require employers to provide paid sick leave, or pass fair scheduling laws.

4. Indiana

  • $7.25/hour minimum wage
  • $10.88/hour overtime minimum wage
  • Biweekly or semimonthly payday requirements for hourly employees
  • Local governments cannot set a higher minimum wage
  • Local governments cannot require employers to provide paid sick leave
  • Local governments cannot pass fair scheduling laws
Indiana’s minimum wage matches the federal minimum wage of $7.25 per hour. This wage only applies to employers with at least 2 employees.
Employees who work more than 40 hours in a workweek must be paid a minimum overtime rate of time and one-half their regular pay rate. For employees receiving a standard rate of $7.25 per hour, the minimum overtime rate is $10.88 per hour.
Employers have to pay most hourly employees on a regular payday schedule, scheduled at a minimum biweekly or semimonthly basis.

5. Iowa

  • $7.25/hour minimum wage
  • $10.88/hour overtime minimum wage
  • Weekly, biweekly, semimonthly, or monthly payday requirements for hourly employees
  • Local governments cannot set a higher minimum wage
  • Local governments cannot require employers to provide paid sick leave
  • Local governments cannot pass fair scheduling laws
Iowa’s minimum wage also matches the federal minimum wage of $7.25 per hour.
Overtime is governed by the FLSA, not Iowa law. Employees who work more than 40 hours in a workweek must be paid a minimum overtime rate of time and one-half their regular pay rate. For employees receiving a standard rate of $7.25 per hour, the minimum overtime rate is $10.88 per hour.
Employers have to pay most hourly employees on a regular payday schedule. The schedule can be weekly, biweekly, semimonthly or monthly. Employees must be paid at least monthly.

6. Kansas

  • $7.25/hour minimum wage
  • $10.88/hour overtime minimum wage
  • Monthly payday requirement for hourly employees
  • Local governments cannot set a higher minimum wage
  • Local governments cannot require employers to provide paid sick leave
  • Local governments cannot pass fair scheduling laws
Like Indiana and Iowa, Kansas’s minimum wage matches the federal minimum wage of $7.25 per hour.
Employees who are covered by the FLSA and work more than 40 hours in a workweek must be paid a minimum overtime rate of time and one-half their regular pay rate. This means the minimum overtime rate is $10.88 per hour for employees receiving a standard rate of $7.25 per hour.
Those not covered by the FLSA receive overtime after 46 hours of work in a week.
Employers must pay most hourly employees on a regular payday schedule, scheduled at a minimum monthly basis.
Kansas law dictates that municipalities cannot set a higher minimum wage, require employers to provide paid sick leave, or pass fair scheduling laws.

7. Louisiana

  • No state-mandated minimum wage
  • No state-mandated overtime pay
  • Biweekly or semimonthly payday requirement for certain employees
  • Local governments cannot set a higher minimum wage
  • Local governments cannot require employers to provide paid sick leave
  • Local governments can pass fair scheduling laws
There is no state minimum wage law in Louisiana. Therefore, employers subject to the FLSA must pay eligible employees the federal minimum wage of $7.25 per hour. Those who aren’t subject to the FLSA have complete freedom in determining pay rates.
There’s also no premium overtime pay requirement. Therefore, the FLSA applies. Employers subject to the FLSA must provide eligible employees with overtime pay for more than 40 hours worked in a workweek at a minimum rate of time and one-half their regular pay rate. Therefore, the overtime minimum wage is $10.88 per hour for employees earning $7.25 per hour.
In Louisiana, some employers have to pay hourly employees on a regular payday schedule, scheduled at a minimum biweekly or semimonthly basis. However, this requirement only applies to certain employers (i.e., public service corporations, and companies that employ ten or more employees and are engaged in manufacturing, boring for oil, or mining).
Louisiana law states that municipalities cannot set a higher minimum wage or require employers to provide paid sick leave. Individual counties and municipalities can however pass their own fair scheduling laws.

8. Mississippi

  • No state-mandated minimum wage
  • No state-mandated overtime pay
  • Biweekly or semimonthly payday requirement for certain employees
  • Local governments cannot set a higher minimum wage
  • Local governments cannot require employers to provide paid sick leave
  • Local governments can pass fair scheduling laws
In Mississippi, there is no state minimum wage law. Therefore, employers subject to the FLSA must pay eligible employees the federal minimum wage of $7.25 per hour. Those who aren’t subject to the FLSA can determine their own pay rates that best suit their business.
There’s also no premium overtime pay requirement. Therefore, the guidelines specified in the FLSA apply. Employers subject to the FLSA must provide eligible employees with overtime pay for more than 40 hours worked in a workweek at a minimum rate of time and one-half their regular pay rate. Therefore, the overtime minimum wage is $10.88 per hour for employees earning $7.25 per hour.
In Mississippi, some employers have to pay employees on a regular payday schedule, scheduled at a minimum biweekly or semimonthly basis. However, this requirement only applies to certain employers (i.e., those engaged in manufacturing and employing 50 or more employees and public labor, or public service corporations).
Mississippi law dictates that local governments cannot set a higher minimum wage or require employers to provide paid sick leave. Individual counties and municipalities can however pass their own fair scheduling laws.

9. Montana

  • $4.00/hour or $9.20/hour minimum wage
  • $6.00/hour or $13.80/hour overtime minimum wage
  • No payday regulations for hourly employees
  • Local governments can set a higher minimum wage
  • Local governments can require employers to provide paid sick leave
  • Local governments can pass fair scheduling laws
Despite Montana allowing municipalities to pass some of their own labor laws, we had to include Montana in this list because of its minimum wage practices.
Employers not covered by the FLSA with gross annual sales of $110,000 or less may pay employees a minimum of $4.00 per hour. This lower minimum could benefit small businesses and allow them to operate with lower labor costs.
On the other hand, employers with gross annual sales of more than $110,000 must pay employees a minimum of $9.20 per hour.
In Montana, certain employers could be subject to even higher minimum wage rates because counties and municipalities can set a higher minimum wage.
Montana’s overtime practices dictate that employees who work more than 40 hours in a workweek must be paid a minimum rate of time and one-half their regular pay rate.
Montana has no payday regulations that require employers to pay their staff at a certain frequency (weekly, biweekly, semimonthly, monthly, etc.). Without regulations, employers determine what works best for them.
Unlike most of the other states on this list, Montana's local governments can require employers to provide paid sick leave and pass their own fair scheduling laws.

10. North Carolina

  • $7.25/hour minimum wage
  • $10.88/hour overtime minimum wage
  • No payday regulations for hourly employees
  • Local governments cannot set a higher minimum wage (for private employees)
  • Local governments cannot require employers to provide paid sick leave (for private employees)
  • Local governments can pass fair scheduling laws
North Carolina’s minimum wage matches the federal minimum wage of $7.25 per hour. Employees who work more than 40 hours in a workweek must be paid a minimum overtime rate of time and one-half their regular pay rate. This means the minimum overtime rate is $10.88 per hour for employees receiving a standard rate of $7.25 per hour.
The authority of local governments applies differently to private and public employees. Local governments cannot require private employers to pay a higher wage or provide sick leave but they can require a higher minimum wage and sick leave for their own public employees. However, local governments can pass fair scheduling laws for all employees.
There are no payday regulations that require employers to pay their staff at a certain frequency (weekly, biweekly, semimonthly, monthly, etc.). Without regulations, employers can determine a payday schedule that best works for them.

11. Ohio

  • $7.25/hour or $10.10/hour minimum wage
  • $10.88/hour or 13.95/hour overtime minimum wage
  • Semimonthly payday requirement for hourly employees
  • Local governments cannot set a higher minimum wage
  • Local governments cannot require employers to provide paid sick leave
  • Local governments cannot pass fair scheduling laws
In 2023, Ohio minimum wage laws dictate that employers with annual gross receipts under $372,000 can pay staff $7.25 per hour. This higher threshold of business income means the lower minimum wage could apply to many small businesses in Ohio.
Employers with gross annual sales of $372,000 or more must pay employees a minimum of $10.10 per hour.
Luckily for employers, political subdivisions in Ohio cannot set their own higher minimum wage rates. Political subdivisions include cities, counties, and municipalities.
In Ohio, employers must pay most hourly employees on a regular payday schedule, scheduled at a minimum semimonthly basis.
Ohio law dictates that counties and municipalities cannot require employers to provide paid sick leave or pass fair scheduling laws.

12. Oklahoma

  • $2.00/hour or $7.25/hour minimum wage
  • No state-mandated overtime pay
  • Semimonthly payday requirement for hourly employees
  • Local governments cannot set a higher minimum wage
  • Local governments cannot require employers to provide paid sick leave
  • Local governments can pass fair scheduling laws
It was a no-brainer to include Oklahoma on this list because of its low minimum wage and lack of requirements for overtime pay.
Oklahoma’s minimum wage laws state that employers of ten or more full-time employees at any one location and employers with annual gross sales over $100,000, irrespective of the number of full-time employees, must pay a minimum wage of $7.25 per hour.
All other employers not covered by the FLSA must pay a minimum wage rate of $2.00 per hour. Like in Montana, a lower minimum gives some small businesses more freedom and allows them to operate with lower labor costs.
Oklahoma's state law dictates that counties and municipalities cannot set their own higher minimum wage rates.
Oklahoma has no state law governing overtime pay. However, the federal FLSA still applies. Any non-exempt employees who work over 40 hours in a seven-day workweek must be paid a minimum overtime rate of time and one-half of their regular pay rate.
In Oklahoma, employers must pay most hourly employees on a regular payday schedule, scheduled at a minimum semimonthly basis.
Counties and municipalities cannot require employers to provide paid sick leave. However, they can pass fair scheduling laws.

13. South Carolina

  • No state-mandated minimum wage
  • No state-mandated overtime pay
  • No payday regulations for hourly employees
  • Local governments cannot set a higher minimum wage
  • Local governments cannot require employers to provide paid sick leave
  • Local governments can pass fair scheduling laws
South Carolina is a favorable place for employers because of the lack of government regulation on labor practices.
There is no state minimum wage law. Therefore, employers subject to the FLSA must pay eligible employees the federal minimum wage of $7.25 per hour. Those who aren’t subject to the FLSA can set their own pay rates.
Counties and municipalities in South Carolina cannot set their own higher minimum wage rates.
There’s also no premium overtime pay requirement. However, employers are still subject to the FLSA. They must provide eligible employees with overtime pay for more than 40 hours worked in a workweek at a minimum rate of time and one-half their regular pay rate. Therefore, the overtime minimum wage is $10.88 per hour, which is one and a half times the $7.25 per hour wage.
Employers exempt from the FLSA, such as some small businesses, can benefit from lower labor costs and determine the minimum wage that works best for their business.
South Carolina has no payday regulations that require employers to pay their staff at a certain frequency. Without regulations, employers determine what works best for them.
Cities and other political subdivisions cannot require employers to provide paid sick leave. However, they can pass fair scheduling laws.

14. Tennessee

  • No state-mandated minimum wage
  • No state-mandated overtime pay
  • Semimonthly payday requirement for hourly employees
  • Local governments cannot set a higher minimum wage
  • Local governments cannot require employers to provide paid sick leave
  • Local governments cannot pass fair scheduling laws
Tennessee is an advantageous place for employers because of the lack of government regulation on labor practices, including a minimum wage.
There is no state minimum wage law. Therefore, employers subject to the FLSA must pay eligible employees the federal minimum wage of $7.25 per hour. Those who aren’t subject to the FLSA can set their own pay rates.
In Tennessee, counties and municipalities cannot set their own higher minimum wage rates.
There’s also no premium overtime pay requirement. However, employers are still subject to the FLSA. They must provide eligible employees with overtime pay for more than 40 hours worked in a workweek at a minimum rate of time and one-half their regular pay rate. Therefore, the overtime minimum wage is $10.88 per hour, which is one and a half times the $7.25 per hour wage.
In Tennessee, employers must pay most hourly employees on a regular payday schedule, scheduled at a minimum semimonthly basis.
Employers may benefit from lower labor costs because cities cannot require employers to provide paid sick leave. They also cannot pass fair scheduling laws.

15. Wyoming

  • $5.15/hour minimum wage
  • No state-mandated overtime pay
  • Semimonthly payday requirement for hourly employees
  • Local governments can set a higher minimum wage
  • Local governments can require employers to provide paid sick leave
  • Local governments can pass fair scheduling laws
We included Wyoming on this list because its minimum wage is $5.15 per hour for employers who aren’t subject to the FLSA.
Unfortunately for Wyoming employers, counties and municipalities can set their own higher minimum wage rates. Therefore, some employers may have to pay a higher minimum wage.
Wyoming has no state law governing overtime pay. So, workers only get overtime if they are covered by the FLSA. If they are covered by the FLSA their standard rate of pay will be at least $7.25, not $5.15, and thus the overtime rate will be $10.88.
In Wyoming, employers must pay most hourly employees on a regular payday schedule, scheduled at a minimum semimonthly basis.
Wyoming municipalities can pass fair scheduling laws and require employers to provide paid sick leave.