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Federal Government May Follow States By Raising Minimum Wage

On March 5, 2013, Sen. Tom Harkin, D-Iowa, and Rep. George Miller, D-Calif., introduced legislation that would raise the federal minimum wage.  If enacted, the recently-proposed Fair Minimum Wage Act would amend the Fair Labor Standards Act to raise the federal minimum wage to $10.10 per hour over three years.  The increase would be accomplished by establishing a minimum wage of $8.20 per hour on the first day of the third month after enactment - an increase of 95 cents over the current federal minimum wage - followed by a minimum wage of $9.15 per hour one year after the initial bump and then $10.10 per hour a year later.

The proposed increase in the federal minimum wage would effectuate President Obama’s recently-announced State of the Union desire to raise the federal minimum wage to $9.00 per hour.  The increase would further mirror state legislative action.  As of Jan. 1, 2013, 10 states increased their minimum wage from between 10 and 35 cents per hour.  These states include Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Rhode Island, Vermont and Washington, which now join nine other states and the District of Columbia in having a minimum wage exceeding the federal minimum.

Specifically, for Ohio employers, the minimum wage was increased to $7.85 per hour for those employers with $283,000 or more in gross revenue.  For those employers operating outside of Ohio, it remains ever-important to review not only state law but local regulations which may govern minimum wage.  For example, Washington D.C., San Jose, San Francisco, Long Beach, CA, Albuquerque, and Santa Fe have instituted a minimum wage higher than the federal minimum for at least some industries. 

In light of the new state wage and hour laws, and in anticipation of an increased federal minimum wage, employers should make sure that they are in compliance with any posting requirements, which often require posting of the new laws in conspicuous and accessible locations in the workplace.  Employers should also review their pay practices, employee job descriptions and exempt/non-exempt classifications as well as independent contractor status.

Such attention to proper classification and pay practices now will benefit an employer later if the Department of Labor comes calling with its ever more ubiquitous audits.  These measures may also ward off costly wage and hour litigation and ever increasing damage claims, which in some jurisdictions include liquidated damages and attorneys’ fees.

In sum, the proposed federal minimum wage increase and the increase in state minimum wages across the country places the burden on employers to work proactively to comply with these ever-changing laws.

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