Federal Minimum Wage Hike!

On July 24, 2007, the federal minimum wage of $5.15 an hour will increase to $5.85 an hour.  This will be the first increase of the federal minimum wage in ten years.  President George W. Bush signed legislation passed by Congress titled the "Fair Minimum Wage and Tax Relief", which will gradually increase the federal minimum wage by $2.20 in three stages over the next two years.  Beginning July 24, 2007 the federal minimum wage will increase to $5.85 an hour.  A year from that date, July 24, 2008, the federal minimum wage will increase to $6.55 an hour.  The third and final increase to $7.25 an hour will take effect on July 24, 2009.

Despite the increase, if any state law provides a higher minimum wage than the federal rate, employers must comply with applicable state laws.  For example, as of July 1, 2007 employers in Illinois must pay their employees $7.50 an hour as the Illinois minimum wage rate will increase from $6.50 per hour.  The minimum wage in Illinois will increase by an additional 25 cents for the next 3 years to $7.75 on July 1, 2008; $8.00 on July 1, 2009; and $8.25 on July 1, 2010.

Further, employers in the hotel and restaurant industry who have tipped employees should make certain that their employees receive enough in tips to ensure compliance with the federal and applicable state tip credit requirements.  In Illinois for example, tipped employees must be paid 60% of the hourly minimum wage rate.