President Signs Minimum Wage Hike Legislation; Which Employers Are Affected?

On May 25, President Bush
signed legislation to boost the minimum wage that must be paid under the
federal Fair Labor Standards Act (FLSA) to $7.25 per hour in three steps over
26 months—starting this month. The legislation (H.R. 2206) marks the first time
the FLSA minimum wage, which currently stands at $5.15 per hour, has increased since
1997, and an estimated 13 million low-wage earners across the U.S. will see their wages go up as
a result.

The first increase will
raise the minimum wage to $5.85 per hour, effective July 24, 2007. On July 24,
2008, the rate will go to $6.55, and then it will rise to $7.25 on July 24,
2009.

California and Beyond

For employers in states
that already have a higher minimum wage—such as here in California—the new federal rate won’t have
an impact. California’s
minimum wage is currently $7.50 per hour and will go up to $8.00 on Jan. 1, 2008.

The HR Management & Compliance Report: How To Comply with California Wage & Hour Law, explains everything you need to know to stay in compliance with the state’s complex and ever-changing rules, laws, and regulations in this area. Coverage on bonuses, meal and rest breaks, overtime, alternative workweeks, final paychecks, and more.

In addition to California, seven other
states also have a minimum wage rate higher than the final $7.25 per hour FLSA
rate. These other states are: Connecticut, Hawaii, Massachusetts, Oregon, Rhode Island, Vermont, and Washington.
Another four states—Illinois, Iowa, Kentucky, and Michigan—currently have
a minimum wage that is lower than $7.25 but that will rise to or above that
level at a faster pace than the federal minimum wage.

If you have employees in
states that aren’t listed above, be certain to check the current minimum wage
rates there to determine whether, and when, you’ll be required to boost
employee wages to comply with the new FLSA rate. Note that while a number of
states currently have a minimum wage rate that is higher than the $5.85 FLSA
rate that takes effect later this month, minimum wages in some of those states
might not keep pace with the second and/or third steps of the FLSA hike.

Also, keep in mind that
some cities and counties, such as San Francisco,
have set their own minimum wage rates that are higher than either the California or FLSA rate.
And many cities and counties have living wage ordinances, which typically apply
only to businesses that have contracts with the city/county.

The DOL maintains a web
page with information on the state minimum wage rates. You can link to the page
at www.dol.gov/esa/minwage/america.htm.