FEDERAL MINIMUM WAGE

On May 24, 2007 Congress approved the first increase to the federal minimum wage in 10 years.  President Bush signed it into law on May 25, 2007.  The new law will increase the federal minimum wage from $5.15 to $7.25 per hour in three 70¢ per hour increments over two years.  The first increase is effective 60 days after the bill was signed into law (July 24, 2007).   The phased increases are as follows:

July 24, 2007:  $5.85

July 24, 2008:  $6.55

July 24, 2009:  $7.25

When an employee is subject to both state and federal minimum wage laws, the employee is entitled to the higher of the two.

Although many states are currently operating under a state minimum wage that is already higher than the federal minimum wage, employers in all states must still post the new federal notice reflecting the new rate.  It is anticipated the new notice will be available in the near future at www.dol.gov.  Additionally, to assure continued compliance, given the phased increases in the federal minimum wage, employers should, on a yearly basis, cross check the applicable federal wage rate with the minimum wage rate in the states in which they employ employees.  Also, keep in mind there are lower hourly rates under the federal and state laws for students, trainees and employees under 16 years of age.

Ohio’s hourly minimum wage, $6.85 (effective January 1, 2007), is higher than the federal minimum wage.  Each year Ohio’s minimum wage will increase by the rate of inflation for the prior 12 months. For example, if the rate of inflation for 2007 is 3%, the minimum wage will increase to $7.05 on January 1, 2008. 

If you have questions or need additional information regarding any aspect of state or federal wage and hour matters, please contact any member of the WH&V Labor Employment Group.

This Labor and Employment Law Client Alert is brought to you by Wegman, Hessler & Vanderburg’s Labor & Employment Group:

David R. Knowles                  drknowles@wegmanlaw.com            

Antoinette F. Gideon              afgideon@wegmanlaw.com              

Christopher A. Holecek          caholecek@wegmanlaw.com

Jennifer A. Corso                    jacorso@wegmanlaw.com

Telephone: 216.642.3342

Facsimile:  216.520.0145

WH&V Labor and Employment Law Client Alerts are intended as summarized reports on developments in labor and employment law and are not intended to provide legal advice.  The resolution of legal issues depends on the specific facts of each circumstance and the applicable laws. Readers should not act upon the information contained in these publications without professional legal counsel.