Client Bulletin #374 - For PDF version of this Client Bulletin, click here.

President George W. Bush has signed legislation that will phase in a higher federal minimum wage. Many state legislatures have already increased their minimum wages to more than the federal minimum, which is currently $5.15 an hour and had not been increased since 1997.

Effective July 24, 2007, the federal minimum wage will increase to $5.85 an hour. A year from that date, the minimum will increase to $6.55 an hour. The final increase, to take effect July 24, 2009, will raise the federal minimum to $7.25 an hour.

If your employees are in a state with a higher minimum wage than the effective federal minimum, you should continue paying the minimum wage in accordance with applicable state law. Employers in the hotel and restaurant industries who have tipped employees should ensure that their employees receive enough in tips to ensure satisfaction with both the federal and applicable state tip credit requirements. It should also be noted that a number of states now require a higher cash minimum wage for tipped employees than the $2.13 per hour required under the federal law.

The "Fair Minimum Wage and Tax Relief" law was part of a spending bill that authorized more funds for the war in Iraq. The bill also extended federal minimum-wage protection to American Samoa and the Commonwealth of the Northern Mariana Islands, and provided tax relief to small businesses.

If you have any questions about the applicability of federal or state minimum wage laws to your company, please contact any member of Constangy's wage and hour practice group, or the Constangy attorney of your choice.

Constangy, Brooks & Smith, LLC has counseled employers, exclusively, on labor and employment law matters since 1946. The firm represents Fortune 500 corporations and small companies across the country. More than 100 lawyers work with clients to provide cost-effective legal services and sound preventive advice to enhance the employer-employee relationship. Offices are located in Georgia, South Carolina, North Carolina, Tennessee, Florida, Alabama, Virginia, Missouri, and Texas. For more information about the firm's labor and employment services, visit www.constangy.com, or call toll free at 866-843-9555.

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