Back in 2007, the federal government passed a minimum wage increase to be implemented in three steps, ending with an increase to $7.25 per hour (from $6.55) in July 2009. Many small businesses employ workers at minimum wage – especially during the summer when they use seasonal and student help. If your business employs workers at minimum wage, it’s critical to know the rules.
Between July 2007 and July 2009, the three-step series of federal minimum wage increases boosted the hourly rate nearly 40 percent, placing even more pricing pressure on small firms already dealing with recession and pricing pressures of all kinds.
A few states have ever higher minimum wage levels, so the impact of changes to federal minimums depends on what state you do business in. What’s more, states often raise their minimums to reflect federal changes, so state levels may shift as well. If employees are subject to both state and federal minimum wage laws, they are entitled to the higher amount.
But minimum wage mandates don’t affect only those paid the minimum wage. If you have other workers who earn wages somewhat above the minimum, you might have to raise their pay accordingly if they have more experience and skills.
The minimum wage, as well as overtime pay, record-keeping requirements and youth employment standards are set by the Fair Labor Standards Act (FLSA). The U.S. Department of Labor FLSA compliance Web page has detailed guidance on which workers are covered under minimum wage and overtime-pay standards, along with a helpful Q&A. Visit www.dol.gov/esa.
State laws are seldom simple, but generally, businesses in 19 states faced minimum wage increases when the first round of federal changes started in 2007. The U.S. Department of Labor (DOL) Web site has a handy, color-coded, online map showing states with higher, lower and the same as the federal standard, as well as those with no minimum.
An easy way to find minimum wage information is to search that term at the DOL home page (www.dol.gov).
How does the federal minimum apply to workers who receive tips? What about young or full-time student workers? What are the requirements on overtime?
The Wage and Hour Division of the U.S. Department of Labor has an excellent minimum wage FAQ section that will answer these and other common questions about minimum wage laws. You can also find a selection of helpful and free compliance assistance materials and information at the DOL site. •
Daniel Kehrer can be reached at
editor@business.com.
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