Now That You’ve Adjusted to Ohio’s New Minimum Wage, the Federal Minimum Wage Law is Changing
Kegler Brown Labor + Employee Relations Newsletter August 1, 2007
On May 25, President Bush signed the “Fair Minimum Wage Act,” which became effective on July 24. Although it should not have an immediate impact in Ohio, it may cause some confusion in later years.
The new federal law provides that the federal minimum wage will increase in the following stages:
- July 24, 2007 - $5.85/hour
- July 24, 2008 - $6.55/hour
- July 24, 2009 - $7.25/hour
The legislation does not appear to affect “tipped employees,” who apparently are still only entitled to $2.13 per hour, as long as their tips make up the difference to the new minimum wage levels.
The increase in the federal minimum wage should not affect Ohio employers this year, since the state’s minimum wage was recently raised to $6.85 per hour. An employer who meets Ohio’s $6.85 per hour minimum will, by definition, meet the new federal requirement of $5.85 per hour, as well as next year’s $6.55 per hour requirement. However, under the state law the minimum wage will be increased in successive years, at January 1, in proportion to the Consumer Price Index. Therefore, it is possible that different minimum wage levels may be applicable, for different periods of time in the same calendar year. For example, if the Consumer Price Index drives a 2% increase in the Ohio minimum wage for each of the next two years, it would increase by $0.14 in 2008 and $0.14 in 2009, to $7.13 per hour, effective January 1, 2009. Then, six-and-a-half months later, in July, the federal minimum wage will require another increase to $7.25 per hour.
How employers choose to deal with the two different wage increase patterns is a matter of choice. However, at any given time, the employer must comply with both the Ohio and federal laws, meaning payment of whichever minimum wage requirement is the higher of the two.