In May 2007, President Bush signed a bill to increase the federal minimum wage from $5.15 per hour to $7.25 per hour incrementally over the next two years. This will be the first federal minimum wage increase since 1997 when the wage rate was raised to $5.15 per hour.
The $2.10 minimum wage increase will occur in three stages:
- Effective July 24, 2007, the federal minimum wage increases to $5.85 per hour;
- Effective July 24, 2008, the federal minimum wage increases to $6.55 per hour; and
- Effective July 24, 2009, the federal minimum wage increases to $7.25 per hour.
For many Ohio employers, this increase will have little impact, because they are subject to the higher Ohio minimum wage of $6.85 per hour, effective January 1, 2007.
However, those employers who are exempt from Ohio’s minimum wage—namely, employers with gross annual receipts of $250,000 or less—are required under Ohio law to pay the federal minimum wage and must, therefore, comply with the above increases.
Regardless of size, all Ohio employers should stay tuned for anticipated increases in the Ohio minimum wage. Effective January 1, 2008, and each January 1 thereafter, Ohio’s minimum wage is scheduled to increase based on the rate of inflation according to the Consumer Price Index calculated on Sept 30th of the preceding year. The $250,000 gross annual receipts threshold for applicability of the Ohio minimum wage is also subject to the same percentage increase based on inflation.
Given the historical inflationary trends, by the time the federal minimum wage reaches $7.25 per hour, the Ohio minimum wage is expected to have increased sufficiently such that it will still be higher than the federal rate.