The New Federal Minimum Wage

Federal Minimum Wage raised to $6.55; goes to $7.25 in July 2009

By Daniel Kehrer, Founder & CEO, BizBest Media Corp.

Small employers hit with soaring energy costs and falling revenue may have another expense to consider: A Federal minimum wage increase, from $5.85 to $6.55 per hour effective July 24, 2008. That's up from $5.15 per hour in early 2007, and by law will go to $7.25 per hour on July 24, 2009. The three-step series of increases will have raised the Federal minimum wage by some 40 percent over a three-year period.

Some states have already set higher minimum wage levels, so the impact of changes to federal minimums depends on what state you do business in. What's more, states often raise their minimums to reflect federal changes, so state levels may soon shift as well. If employees are subject to both state and federal minimum wage laws, they are entitled to the higher amount. The website Business & Legal Reports has an excellent state-by-state breakdown of mimum wage laws.

The minimum wage, as well as overtime pay, recordkeeping requirements and youth employment standards are set by the Fair Labor Standards Act (FLSA). The U.S. Department of Labor FLSA compliance web page has detailed guidance on which workers are covered under minimum wage and overtime pay standards, along with a helpful Q&A.

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Check the latest on minimum wage laws in your state

State laws are seldom simple, but generally, businesses in 19 states faced minimum wage increases with the first round of federal changes in 2007.
Try: According to the HR site at Business & Legal Reports, employers in these states face higher minimum wages right now: AL, GA, ID, IN, KS, LA, MS, NE, NH, NM, ND, OK, SC, SD, TN, TX, UT, VA and WY. Check the site's breakdown for state-by-state variations. The U.S. Dept. of Labor has a handy color-coded online map showing states with higher, lower and the same as the federal standard, as well as those with no minimum.

Download and display the new minimum wage poster

Free posters are available from the U.S. Dept. of Labor, or for purchase from numerous private legal compliance firms.
Try: Every employer subject to the Fair Labor Standards Act (FLSA) minimum wage provisions must post and keep posted a notice explaining the Act in a conspicuous place where employees can easily read it. You can view and download a free poster at the DOL website. Posters are in PDF format, in large or small size, and your choice of color or black-and-white.

Answer all your minimum wage questions

How does the federal minimum apply to workers who receive tips? What about young or full-time student workers? What are the requirements on overtime?
Try: The Wage and Hour Division of the U.S.Department of Labor has a good minimum wage FAQ section that will answer these and other common questions about minimum wage laws. You can also find a selection of helpful and free compliance assistance materials and information at the DOL site.

Know what workers are covered and which are exempt

Certain types of employees are exempt from FLSA rules, including minimum wage and overtime.
Try: Review the FairPay Fact Sheet at the DOL Wage and Hour division site for details on exemptions.

Federal rules do not require extra pay for weekend or night work. However, covered, nonexempt workers must be paid at least time-and-a-half for time worked over 40 hours in a workweek.
The Full-time Student Program is for full-time students employed in retail or service stores, agriculture, or colleges and universities. Employers obtaining special certificates from the DOL allowing payment at 85% of the minimum wage.
Some states have minimum wage laws specific to tipped employees. Employees subject to both federal and state wage laws are entitled to the provisions of each law that provide the greater benefits.
Pay raises to amounts above the federal minimum wage are not required by the Fair Labor Standards Act (FLSA).
The Fair Labor Standards Act (FLSA) has no requirement for double time pay. This is a matter of agreement between an employer and employee.