By: Melanie Berkowitz
Did you know: If you are paying your hourly employees the Federal minimum wage of $7.25 per hour, you may be violating the law?
It’s true! While the Federal minimum wage rose to its current level on July 24, 2009, some states require employers to pay their employees a higher rate. Federal law says that if a state’s minimum wage is higher than the Federal level, employees must be paid the higher rate.
Do all employers have to pay their hourly employees minimum wage?
Just about all. The Federal minimum wage law is part of the Fair Labor Standards Act (FLSA.) The FLSA applies to employees of the following types of employers:
- Those with an annual gross volume of sales or business of at least $500,000
- Smaller companies, if they are engaged in interstate commerce or in the production of goods for interstate commerce. This includes workers who regularly use the telephone or mail for interstate communications
- Workers such as guards, janitors and maintenance employees who perform duties related to interstate activities
- Federal, state and local government and agency employees
- Hospital, school and most domestic workers
Employers that are not subject to the Federal minimum wage requirements may still have to pay their employees according to their state’s minimum wage. Currently only five states (Louisiana, South Carolina, Tennessee, Mississippi and Alabama) do not have state minimum wage laws.
Is your state’s minimum wage rate higher than $7.25 per hour? Check this list:
- California: $8.00
- Colorado: $7.28
- Connecticut: $8.00 Increases to $8.25 on 1/1/10
- District of Columbia: $8.25
- Illinois: $8.00 Increases to $8.25 on 7/1/10 (Rate applicable to employers with four or more employees)
- Maine: $7.50
- Massachusetts: $8.00
- Michigan: $7.40 (Rate applicable to employers with two or more employees)
- New Mexico: $7.50
- Ohio: $7.30
- Oregon: $8.40
- Rhode Island: $7.40
- Vermont: $8.06 (Rate applicable to employers with two or more employees)
- Washington: $8.55
What if your state’s minimum wage level is lower than the Federal rate?
Your employees are entitled to the higher Federal rate. The Department of Labor publishes an interactive map showing every state’s minimum wage rate and other information that is useful to employers.
Will minimum wage rates continue to rise?
That is unclear. The 2006 mid-term elections resulted in big changes to both Federal and state minimum wage laws. When the Democrats gained control of the House of Representatives, they were able to pass the law raising the Federal minimum wage from $5.15 to its current level of $7.25. Voters in six states voted to increase their state minimum wage levels as well. Many citizens agreed that the increases were needed to make sure that the country’s lowest-paid hourly workers were able to earn enough money to support themselves and their families.
But with the current economic crisis, some small businesses are finding it difficult to pay the higher wage rates. While the Federal minimum wage cannot change without Congress passing another law, a number of states are exploring ways to ease the burden for employers.
For example, Colorado’s minimum wage is tied to the Consumer Price Index (CPI). The state’s department of labor is considering lowering the rate from $7.28 to $7.24 as allowed by law, as the state is currently experiencing negative inflation and the CPI has dropped. Of course, even if the law passes, most workers in Colorado will still have to be paid $7.25, pursuant to Federal law. But some employees who work in the retail and service, food and beverage, commercial support service or health and medical industries would be paid the lower rate.
A number of other states (Oregon, Washington, Vermont, Ohio, Nevada, Montana, Missouri, Florida, Missouri, Colorado and Arizona) also adjust their minimum wage pursuant to inflation and the CPI. Most of these states have announced that there will be no increase in state minimum wage rates for 2010 because the CPI has not risen. Whether any other state will follow Colorado’s lead and lower its minimum wage remains to be seen.
Aren’t some employees exempt from minimum wage requirements?
Yes. They are known as “exempt” employees making in most cases more than $455 per week (already in excess of the minimum wage). The laws explaining what types of employees are exempt from minimum wage (and overtime) requirements are extremely complex. The Department of Labor has information to help employers determine which of their employees may be exempt. An experienced labor and employment attorney can also answer questions.
Confused? More information is available from the Department of Labor’s website.
Employers are also required to post a poster about employees’ rights under the FLSA. The poster is available from the Department of Labor.
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Nothing herein constitutes legal advice by Monster upon which you can rely.