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Increase in Minimum Wage Effective July 24, 2008
Posted by: euser
June 17, 2008

We want to notify you about a change in the federal minimum wage and how it may impact you and your employees. On July 24, 2008, the federal minimum wage rate will increase from its current level of $5.85 to $6.55 per hour.

As a result of this change, employers in some states will see an increase in the minimum wage they are required to pay employees. By law, an employer must pay the higher of the federal or state minimum wage if the employee or the employer is covered under the Fair Labor Standards Act (FLSA).

Note: The federal tipped minimum wage rate of $2.13 per hour is not changing.

The FLSA federal tip credit amount will increase each time the federal minimum wage increases. For example, if the minimum wage is $5.85 per hour, the FLSA tip credit would be $3.72 ($5.85 - $2.13 = $3.72). When the minimum wage increases to $6.55, the FLSA federal tip credit amount will increase to $4.42 ($6.55 - $2.13 = $4.42). More information about the FLSA Tip credit can be found on the U.S. Department of Labor Web site at http://www.dol.gov/ela ws/faq/esa/flsa/002.htm.

States also increasing their minimum wage rate to $6.55 per hour effective July 24, 2008:

Idaho, Indiana, Maryland, Montana, Nebraska, New Hampshire*, North Carolina, North Dakota, Oklahoma, South Dakota, Texas, Utah, and Virginia

*Note: New Hampshire's state minimum wage will increase further to $7.25 on September 1, 2008.

States (and territories) with minimum wage rates below the federal minimum wage rate as of July 24, 2008, must pay employees covered under the FLSA at least $6.55:

Arkansas, Georgia, Kansas, Minnesota, New Mexico, Wisconsin, Wyoming, Puerto Rico, and the U.S. Virgin Islands

States with no minimum wage rate must pay employees covered under the FLSA at least $6.55 per hour effective July 24, 2008:

Alabama, Louisiana, Mississippi, South Carolina, and Tennessee

States with a minimum wage rate greater than or equal to $6.55 per hour as of July 24, 2008, must continue to pay employees at least the higher state minimum wage rate:

Alaska, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Hawaii, Illinois, Iowa, Kentucky, Maine, Massachusetts, Michigan, Missouri, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington

FICA Tip Credit

The IRS FICA Tip Credit amount you may be eligible to claim will not decrease as a result of the change in minimum wage. More information about the IRS FICA Tip credit can be found on the IRS Web site at http://www.irs.gov/businesses/small/industries/article/0,,id=98463,00.html.

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