The New Minimum Wage

An update on the current federal minimum wage.

The Fair Minimum Wage Act of 2007 included phased increases to the federal minimum wage, as follows:

  • For work performed prior to July 24, 2007, the federal minimum wage is $5.15 per hour.
  • For work performed from July 24, 2007 to July 23, 2008, the federal minimum wage is $5.85 per hour.
  • For work performed from July 24, 2008 to July 23, 2009, the federal minimum wage is $6.55 per hour.
  • For work performed on or after July 24, 2009, the federal minimum wage is $7.25 per hour.

Church leaders should be sure that the church is paying at least the current minimum wage to all non-exempt employees. The new rate, which took effect on July 24 of this year, is $6.55 per hour. Also, note that this rate lasts only for one year. On July 24, 2009 the minimum wage increases to $7.25 per hour.

Many states also have minimum wage laws. If an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher of the two minimum wages.

KEY POINT. Various minimum wage exceptions apply under specific circumstances to workers with disabilities, full-time students, youth under age 20 in their first 90 consecutive calendar days of employment, tipped employees and student-learners. There are also exemptions for professional, executive, and administrative employees.

Don’t forget about overtime

The Fair Labor Standards Act also ensures that overtime is properly paid when employees work more than 40 hours in a week. Churches are not exempt from these regulations. Be sure you’re calculating overtime correctly, using the appropriate minimum wage amount at one-and-a-half times per hour for non-exempt employees.

RESOURCE. The application of the federal minimum wages and overtime law to churches and church employees is addressed fully in volume 3 of Richard Hammar’s new Pastor, Church & Law, 4th edition. To order, call 1-800-222-1840.

This article first appeared in Church Finance Today, September 2008.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations." Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

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