New federal minimum wage: How does it interact with state law?


Your company currently has operations in six different states. You know a new federal minimum wage is scheduled to take effect soon, but are confused about how it interacts with the minimum wages required under state law. Which rate must you pay—the new federal rate or the state rates?


On May 25, 2007, President Bush signed the Fair Minimum Wage Act of 2007, which raises the federal rate in three steps: from $5.15 to $5.85 per hour on July 24, 2007, to $6.55 per hour on July 24, 2008, and to $7.25 per hour on July 24, 2009. Employers of employees who are subject to both state and federal minimum hourly wage rates will have to comply by paying the employee the greater of the two rates.

Alabama, Louisiana, Mississippi, South Carolina and Tennessee do not have state laws specifying minimum wage rates, thus the federal minimum wage rate applies in these states.

In Georgia, Kansas, Nebraska, New Hampshire, New Mexico, Utah and Wyoming, the state minimum wage rates are lower than the revised federal rate. Employers in these states will need to pay the new federal rate beginning July 24, 2007.

In Idaho, Indiana, North Dakota, Oklahoma, South Dakota, Texas and Virginia, the state rates are tied to the federal rate and will therefore increase to $5.85 per hour on July 24, 2007.

The remaining states have minimum wage rates that, on July 24, 2007, will exceed (or equal) the new federal rate. Employers in these states must continue to pay the state rate: Alaska ($7.15); Arizona ($6.75); Arkansas ($6.25); California ($7.50); Colorado ($6.85); Connecticut ($7.65); Delaware ($6.65); District of Columbia ($7.00); Florida ($6.67); Hawaii ($7.25); Illinois ($7.50); Iowa ($6.20); Kentucky ($5.85); Maine ($6.75); Maryland ($6.15); Massachusetts ($7.50); Michigan ($7.15); Minnesota ($6.15 for large employers); Missouri ($6.50); Montana ($6.15 for large employers); Nevada ($6.33 without health benefits); New Jersey ($7.15); New York ($7.15); North Carolina ($6.15); Ohio ($6.85); Oregon ($7.80); Pennsylvania ($7.15; $6.65 for small employers); Rhode Island ($7.40); Vermont ($7.53); Washington ($7.93); West Virginia ($6.55); and Wisconsin ($6.50).

[ Return to top of document ]