For those of you who have not heard, on May 25, 2007, President Bush signed the Fair Minimum Wage Act of 2007, which raises the federal minimum wage to $7.25 per hour over the next two years.
To unravel the difference between the federal wage and state wage, states may assess that a higher wage is necessary for citizens to meet their needs and therefore adopt a higher wage. When a state adopts a higher wage than federal, then employers must pay the higher wage. Many states do not establish their own minimum wage and therefore follow the federal wage.
The new federal minimum wage will be phased in accordingly:
Current federal minimum wage $5.15
First increase 7/24/07 $5.85
Second increase 7/24/08 $6.55
Final increase 7/24/08 $7.25
There is no change to the federal regualtion for tipped employees, which remains at $2.13/hour.
So how will this affect us prior to July 24, 2009? Out of state clients who have different state minimums will require analysis and possible adjustments.
Out of state clients who fall under the current federal minimum wage of $5.15 will be raised to $5.85, $6.55 and ultimately $7.25.
This also runs concurrent with Arizona and other states who have established an annual increase (in January) in accordance with the cost of living increase.