Increased minimum wage battle: good for employees or killing small business?

On July 24, the federal minimum wage went from $6.55 an hour to $7.25, an increase of 10.7%. Seven states had existing laws mandating $7.25 minimum hourly pay, while fourteen states exceeded the new minimum and twenty-nine states had minimum wage requirements below the new rate. Employers are required to pay whichever is the highest: federal or state.

Some experts argue that this is the worst time to increase the minimum wage because most businesses are dealing with decreased revenues during the current recession. On the other hand, some experts argue the increased minimum wage is beneficial because putting more money into people’s pockets will boost the economy. Regardless, as business owners strive to comply with the new wage requirements, an array of new labor and employment issues are beginning to emerge.

Some of the emerging issues revolve around ways for employers to maintain profits, how the new wage will affect business operations, and cutting employee hours or the number of employees during a particular shift. However, it is important for employers to comply with employment laws that serve to protect employee rights. It is also important for employers to be cognizant of the potential for litigation.

Please contact an employment attorney for questions regarding the impact the new federal minimum wage requirements may have on you or your business.