Employers Should Prepare For an Increase in Federal Minimum Wage, Regardless of Who Becomes President

The federal minimum wage will likely soon be changing.  Both Democratic Presidential Nominee Hillary Clinton and Republican Presidential Nominee Donald Trump have announced they intend to increase the federal minimum wage.[1]  The question is, by how much?  This article analyzes both current federal and state minimum wages, and the process required to increase the minimum wage.

Federal and State Minimum Wages

The federal minimum wage is currently $7.25 per hour.[2]  However, many states have enacted legislation increasing the minimum wage in their states, as shown in the following table:

STATE    MINIMUM WAGE
Alaska    $9.75
Arizona    $8.05
Arkansas    $8.00
California    $10.00
Colorado    $8.31
Connecticut    $9.60
Delaware    $8.25
District of Columbia    $11.50
Florida    $8.05
Hawaii    $8.50
Illinois    $8.25
Maine    $7.50
Maryland    $8.75
Massachusetts    $10.00
Michigan    $8.50
Minnesota    $9.50
Missouri    $7.65
Montana    $8.05
Nebraska    $9.00
Nevada    $8.25
New Jersey    $8.38
New Mexico    $7.50
New York    $9.00
Ohio    $8.10
Oregon    $9.25
Rhode Island    $9.60
South Dakota    $8.55
Vermont    $9.60
Washington    $9.47
West Virginia    $8.75 [3]

New York and California have enacted legislation to gradually increase the minimum wage in those states to $15.00 (See Related Article).  Many municipalities (most notably, Seattle, Washington) have also enacted local ordinances to increase the minimum wage within the municipality.  Where the state or local minimum wage is higher than the federal minimum wage, employers must pay their employees whichever minimum wage is highest.  For example, Seattle employers must pay their employees $15.00 per hour, while an employer in Spokane, Washington must pay their employees $9.47 per hour (Washington’s state minimum wage), and an employer in Coeur d’Alene, Idaho—which is approximately thirty (30) miles from Spokane, Washington—would pay $7.25 per hour (federal minimum wage).  Some states have minimum wages below the federal minimum wage (e.g. Georgia ($5.15) and Wyoming ($5.15)), however, employers in those states must pay at least the federal minimum wage of $7.25 per hour.[4]

Increasing the Minimum Wage

While both Presidential Candidates have indicated their intent to increase the federal minimum wage, the process required to do so is more complex and cannot be done through a President’s unilateral action.  Raising the federal minimum wage requires an act of Congress to amend the Fair Labor Standards Act of 1938 (“FLSA”) before the President can sign the bill into law.[5]  The last FLSA increase was in 2009.  While both Hillary Clinton and Donald Trump intend to increase the federal minimum wage, such an increase will not be done immediately and will likely require significant debate in Congress before an act is passed to increase the federal minimum wage.  Campbell Litigation will continue to follow any potential changes to the federal minimum wage and report back when further updates are available.

 

[1] Steven T. Dennis, Trump’s Minimum-Wage Reversal Is Latest Headache for Republicans, Bloomberg BNA Daily Report (July 27, 2016).  Hillary Clinton supports a minimum wage increase up to $15 per hour, while Donald Trump supports an increase up to $10 per hour.

[2] 29 U.S.C. § 206.  For tipped employees, the federal minimum wage is $2.13 per hour provided that amount plus the employee’s tips equal the minimum wage.

[3] See National Conference of State Legislatures, State Minimum Wages – 2016 Minimum Wages by State, NCSL (Available at: http://www.ncsl.org/research/labor-and-employment/state-minimum-wage-chart.aspx) (last accessed July 28, 2016).

[4] Employers in Georgia and Wyoming who are not covered by the FLSA may pay their employees at $5.15 per hour.  The FLSA covers businesses with two or more employees that have an annual sales volume of $500,000.00; organizations such as hospitals, schools, and government agencies; and individual workers who are “engaged in commerce or in the production of goods for commerce.”  See Wage and Hour Division Fact Sheet #14: Coverage Under the Fair Labor Standards Act (FLSA) (available at: https://www.dol.gov/whd/regs/compliance/whdfs14.htm) (last accessed July 28, 2016).

[5] While the process varies at the state and local level, the state or municipality must pass legislation or an ordinance in order to increase the state or local minimum wage.

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