Minimum Wage Increases to $7.25
Mary Elizabeth Davis
On May 24, 2007, Congress passed legislation to increase the federal minimum wage and the President signed it into law on May 25, 2007. The current minimum wage of $5.15 per hour will increase to $7.25 in three steps over two years. The first increase, to $5.85 per hour, will take effect on July 24, 2007. A second step minimum wage increase, to $6.55 per hour, will occur on July 24, 2008. The final increase, to $7.25 per hour, will take effect on July 24, 2009.
The law also provides $4.84 billion in tax relief. A portion of that relief will pay for an expansion of a tax credit program for employers that hire employees from certain targeted groups: two such groups are welfare recipients and at-risk youths. Legislation also increases the amount that small businesses may deduct for equipment purchases to $125,000.00. The law also includes a tax incentive for rebuilding areas affected by Hurricane Katrina.
Employers must notify their HR professionals and payroll coordinators regarding the July 2007 minimum wage increase and ensure that their pay practices are in compliance with the law. Employers should also study the federal minimum wage law tax benefits for applicability to their businesses.
For more information regarding the minimum wage laws or other employment law issues, please contact Mary Elizabeth Davis.
