Federal Minimum Wage Increased

The Federal minimum wage increased on July 23rd from $6.55 per hour to $7.25 per hour. This wage increase is proscribed by 2007 amendments to the Fair Labor Standards Act. While the increase brings good news to workers making minimum wage, it also creates an added burden on business owners who must now pay higher wages in a struggling economy. Some small business asked Congress to defer the wage increase to some time after the U.S. recovers from the recession.

As a reminder, employers must update their labor law posters to reflect the new wage increase.

Interestingly, even with the increase to $7.25 per hour, a full-time employee making minimum wage only earns about $15,080 per year, hardly enough to live on.

Thirty states, including Georgia, have had to raise their minimum wage as well (states can have a higher minimum wage than the Federal, but not less). Nineteen states already have minimum wages laws that mandate a higher minimum wage than the Federal.

Some economists are predicting that the increase in minimum wage will have a negative effect on the consumer, as many businesses are expected to raise prices to offset increased labor costs.

Federal Min. Wage to Increase Soon

The federal minimum wage is currently $6.55 per hour. It will increase to $7.25 per hour effective July 24, 2009. Many states have also raised their minimum wage rates.

Employers in these 17 states will see their minimum wage increase the same as above:

Alabama
Georgia
Idaho
Indiana
Kansas
Louisiana
Mississippi
Nebraska (State law is not tied to federal law, so employers covered by state but not federal law will not be required to pay federal minimum wage.)
North Dakota
Oklahoma
South Carolina
South Dakota
Tennessee
Texas
Utah (The state's minimum wage does not apply to anyone entitled to the federal minimum wage.)
Virginia
Wyoming (Like Nebraska, Wyoming’s law is not tied to federal law, so employers covered by state but not federal law will not be required to pay federal minimum wage.)

Is Your Company Wage & Hour Compliant?

In case you thought that wages and hour cases were rare, think again. Through April 2008, almost 1,900 wage and hour cases had been filed in federal district courts. If this trend continues, the number of wage and hour cases will exceed 2007 levels. Plus, these figures do not include state court filings.

• How do you avoid wage and hour claims? Best practices to avoid such claims include:
• Auditing all positions classified as exempt from overtime.
• If you have not conducted an audit in the past few years, it's time for a follow-up review of lower level managers and supervisors should to ensure there have been no changes in duties.
• Making sure your company has adopted and published a "safe harbor" policy on deductions from salaried employees.
• Reviewing timekeeping policies to avoid or reduce the possibility of an employee claiming to have been working, eliminating such things as "standard" or "automatic" deductions for lunch, rounding hours, and similar practices.
• Reviewing policies and procedures to review deductions from wages and salaries to ensure that they comply with the minimum wage and overtime requirements of state and federal law.