Federal Minimum Wage Increase

A Federal minimum wage increase of 70 cents per hour is now in effect. The new minimum wage is $7.25 per hour, effective July 24, 2009.

The Federal minimum wage is also referred to as the national minimum wage. States may set their own. More about that is below.

In May of 2007, former President George Bush signed a new minimum wage law that authorized three annual increases in increments of 70 cents, beginning on the effective date of July 24, 2007.

As a result, the increase of 70 cents on the effective date of July 24, 2009 was the third and final of the three increases authorized under the new law. The current minimum wage of $7.25 per hour will remain in effect until new legislation changes it.

President Obama signed an executive order to raise the minimum wage to $10.10 per hour for eligible employees working under new Federal contracts, effective 1/1/2015. The minimum wage for the same employees will increase to $10.15 per hour beginning 1/1/2016.

The new minimum wage law, entitled the Fair Minimum Wage Act of 2007 and incorporated into Public Law 110–28, amended the older minimum wage law under the Fair Labor Standards Act of 1938 (FLSA). The FLSA also regulates equal pay, overtime pay and child labor.

The Federal minimum wage is the least hourly amount that employers may pay workers who are covered by the FLSA. Before President Bush authorized the new minimum wage and subsequent increases, workers who relied on it to make ends meet had not seen a minimum wage increase since 1997. Needless to say, the minimum wage increases were a long time coming.

Despite that, the Federal minimum wage is likely to stay at $7.25 for awhile; but, the state or municipality in which you work might have implemented a higher rate since the last Federal increase. For example, San Francisco's minimum wage law (ordinance) mandates $10.55 per hour through 2013, while California's minimum wage law mandates $8.00 across the state.

If you're eligible for the minimum wage, then your employee rights entitle you to whichever is the most generous amount among the Federal, state and municipal hourly rates, based on the state or municipality in which you work.

Typically, municipalities simply adopt the current state minimum wage, as the one in which you work might have. In turn, the state in which you work might have simply adopted the current Federal minimum wage, as several have.

• To discover the current minimum wage in your work state, contact the wage and hour (or equivalent) division of the state labor department or browse its Web site.
• For the current minimum wage in the municipality in which you work, contact the municipal equivalent of the state labor department (such as the city council).
• To compare the minimum wage rate in your work state with that in other states, see Minimum Wage Laws in the States by the U.S. Department of Labor. It also indicates the minimum wage increases planned by each state, if any, including future effective dates.

The new minimum wage law did not change worker eligibility requirements or employer compliance requirements. It was designed solely to implement a Federal minimum wage increase.

• For more information about worker eligibility and related matters, read Minimum Wage.
• For employer compliance requirements and related matters, browse the site of the U.S. Department of Labor's Wage and Hour Division.
• For legal advice, consult a lawyer.