With California, because the state minimum wage is already higher than what the federal minimum wage could be if the new law gets passed in Washington DC, employers there do not have to really watch the goings on in the federal capital all that closely. That is not to say that you won’t be affected at all by a new federal minimum wage law. California employers will have to buy a new federal minimum wage poster if the new law gets passed in Washington DC.
But it is to say that you will not have to pay the new federal minimum wage of $5.85 per hour if and when it gets passed. And you will not have to pay the $6.50 per hour or the $7.25 per hour that the federal minimum wage will become when it increases in 2008 and 2009. That is because when a federal and state minimum wage are not the same, in many cases the employers of the state must pay the higher of the two to all of their eligible employees.
The one exception to that rule is when the federal minimum wage is higher, and the employer is a local and small company that brings in less than $500,000 in revenue per year. That amount is the cut off for whether or not an employer has to follow the Fair Labor Standards Act and thus pay the federal minimum wage. The other cut off is if the employer is local, because once an employer operates, sells, has an office, or does any work in another state, they become an interstate employer and thus are also eligible and liable to follow the Fair Labor Standards Act and pay the federal minimum wage.
But when the case is that the state minimum wage is higher than the federal minimum wage, which is the case with the California minimum wage, then employers of all sizes must pay the higher of the two, the state minimum wage.
