The federal minimum wage will increase to $5.85 per hour on July 24, 2007. President Bush signed The Fair Minimum Wage Act of 2007 on May 25, 2007, thereby raising the federal minimum wage for the first time since 1997.
The federal minimum wage increase occurs in three stages over two years. As stated above, the first increase is scheduled to occur on July 24, 2007, and will raise the minimum wage by 70 cents per hour. On July 24, 2008, the federal minimum wage will increase to $6.55 per hour. Then, on July 24, 2009, the minimum wage will increase again, to $7.25 per hour.
Coverage under the federal minimum wage laws has not changed. Employers with at least two employees and an annual dollar volume of at least $500,000 are covered under federal law. If employers do not meet this threshold, they still may be covered if they are engaged in interstate commerce or produce goods that travel in interstate commerce. Finally, the federal minimum wage law still covers federal, state, and local governments; hospitals; schools; and most domestic workers.
Employers should note that the federal minimum wage provides the “floor,” or the lowest wage rate that covered employers may pay their workers. Many states, like Ohio, have adopted their own, separate minimum wage laws that provide for a higher rate of pay. If employers are located in one of these states, the higher rate of pay applies. The current Ohio minimum wage is $6.85 per hour. Thus, most Ohio employers already are paying their employees more than the new federal standard.
In addition, the Ohio minimum wage will continue to increase on the first of January each year. The amount of the increase will depend on the rate of inflation according to the consumer price index. The rate, however, will never be less than the federal minimum wage.
This means that Ohio employers can expect to pay employees at least $7.25 per hour by July 24, 2009. Although state law already requires most Ohio employers to pay their employees at a rate higher than the federal minimum wage, the federal minimum wage increase is still significant. One political group estimated that the increased minimum wage will affect approximately 5.6 million American workers.