Effective July 24, 2007, the federal minimum wage for covered non-exempt employees will be increased to $5.85 per hour.

On May 25, 2007, President George W. Bush signed into law the Fair Minimum Wage Act of 2007. This legislation will raise the current minimum wage of $5.15 per hour to $7.25 per hour by July 2009. The increase, which will occur in three phases, is the first increase in the federal minimum wage since 1997. The three phases are as follows:

  • Phase 1: Beginning on July 24, 2007, the federal minimum wage will be increased to $5.85 per hour;
  • Phase 2: Beginning on July 24, 2008, the federal minimum wage will be increased to $6.55 per hour; and
  • Phase 3: Beginning on July 24, 2009, the federal minimum wage will be increased to $7.25 per hour.

    A separate provision of the recently enacted law brings about phased increases to the minimum wage in American Samoa and the Commonwealth of the Northern Mariana Islands, with the goal of bringing the minimum wage in those locations up to the general federal minimum wage over a number of years.

    This minimum wage applies to all employees that meet the current criteria set forth in the Fair Labor Standards Act. The FLSA requires employers to pay covered non-exempt employees at least the federal minimum wage. However, certain exceptions do apply:
  1. Employees younger than 20 years of age may be paid $4.25 per hour during their first 90 consecutive calendar days of employment with an employer;
  2. Tipped Employees. The tip credit provisions of the FLSA remain the same under the recently enacted legislation. An employer is still required to pay $2.13 per hour in direct wages if that amount plus the tips received equals at the least the federal minimum wage, provided the employer has informed the employee of the tip credit being taken, the employee retains all tips except to the extent they participate in a valid tip pooling arrangement, and the employee customarily and regularly receives more than $30 a month in tips;
  3. Full-time students who are employed in retail or service stores, agriculture, or colleges and universities, but only if the employer first obtains a certificate from the Department of Labor under the “Full-time Student Program;”
  4. Student learners who are high school students at least 16 years of age and enrolled in vocational education courses, but only if the employer first obtains a student learner certificate from the appropriate Regional Office of the Department of Labor’s Wage and Hour Division;
  5. Handicapped workers whose earning or productive capacity is impaired by physical or mental deficiency or injury may be paid less than the standard minimum wage, but only if the employer first obtains a certificate from the appropriate Regional Office of the Department of Labor’s Wage and Hour Division.

    Many states also have minimum wage laws. If state and federal laws provide for different minimum wage rates, the employee must be paid the higher of the wage rates. To find the minimum wage applicable in your state, you can visit http://www.dol.gov/esa/minwage/america.htm.

    As of July 3, 2007, the federal government released the updated version of the new Federal Minimum Wage Poster which reflects the recently enacted minimum wage increases. Every employer of employees subject to the Fair Labor Standards Act’s minimum wage provisions must post, and keep posted, a notice explaining the Act in a conspicuous place in all of their establishments so as to permit employees to readily read it. This is a mandatory posting requirement and applies even in those states where the state’s minimum wage rate is higher than the federal minimum wage.

    A revised Federal Minimum Wage Poster, is now available free of charge on the Department of Labor’s website at www.wagehour.dol.gov.