Most employers in the United States are subject to the minimum wage provisions of the Federal Labor Standards Act (FLSA).
These employers are required to pay their employees the current federal minimum wage rate of at least $7.25 per hour. Federal service contractors are subject to a new minimum wage of $10.10 per hour, which was enacted through an executive order signed by President Obama on Feb. 12, 2014.
Additionally, proponents of an increased minimum wage are pushing for the federal minimum wage to be raised to $10.10. Although this has not been enacted at the federal level, states can have their own minimum wages that are different than the federal one, and state wage increases have recently passed in various states.
Some states have adopted minimum wage rates that are higher than the federal rate. When state rates and the federal rate are different, employers must pay their employees the higher rate. As of Jan. 1, 2015, 29 states and the District of Columbia will have minimum wages that are higher than the federal minimum wage. Twenty-one states will see increases to their current minimum wages on Jan. 1. Additional increases to state minimum wages are expected in the District of Columbia, Delaware and Minnesota for the summer of 2015.
Proponents of a higher minimum wage assert that benefits of higher wages will include decreasing employee turnover rates, increasing morale, helping minimum-wage full-time workers stay above the poverty line and helping the economy because workers have more money to spend.
Opponents of a higher minimum wage argue that negative results will include inadvertently limiting job growth, jeopardizing small businesses, increasing unemployment and increasing price of goods and services to accommodate higher labor costs.
Regardless of the anticipated effect of higher minimum wages, employers should be prepared for possible wage changes at either the state or federal level. Although not all states have increased minimum wages, this is a trend that employers should watch carefully in all states. Employers should periodically review employee wage rates and workplace required postings to ensure compliance with state and federal law.
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