labor lawAdivision of labor law center

On July 24, 2009 the federal minimum wage increased 70 cents from $6.55 per hour to $7.25 per hour. This increase will affect many, but not all, employees in Arkansas.

 

The Arkansas minimum wage remains at $6.25 per hour. Employers should update both their Arkansas and federal minimum wage posters, if necessary.

 

When both the federal and Arkansas minimum wage apply to an employee, the employee is entitled to protection under whichever confers the greater benefit. In this case, an employee covered by both the Arkansas and federal minimum wage is entitled to the higher federal minimum wage of $7.25 per hour.

 

The federal minimum wage does not cover every Arkansas employee. The federal minimum wage and overtime law is the FLSA or Fair Labor Standards Act. The FLSA applies to every employee of a business with $500,000 or more in annual revenue.

 

In addition, individual employees who engage in interstate commerce are covered by the FLSA and entitled to the federal minimum wage.

 

Myriad business activities qualify as engaging in interstate commerce including: 

• Buying from out-of-state vendors
• Receiving goods from out-of-state vendors
• Accepting long-distance phone calls
• Accepting credit card or debit card payments
• Accepting out-of-state checks
• Manufacturing goods to be sold out of state
• Mailing catalogs, packages or letters out of state
• Accepting or sorting mail from out of state
• Using the internet, a website or email 

Even an employer who does not sell products out of state may have many employees who engage in interstate commerce. For example, a small hair salon with annual revenue under $500,000 might have only local customers and buy only from local vendors. However, if the receptionist accepts credit or debit cards for payment, she is engaging in interstate commerce – and entitled to the federal minimum wage rather than the Arkansas minimum wage.

 

A “shampoo girl” in the same salon who does not accept payments may be entitled only to the Arkansas minimum wage.

 

The July 2009 federal minimum wage increase is the last in a series of 3 annual 70-cent increases. In early 2007, Congress passed the Fair Minimum Wage Act of 2007, which increased the federal minimum wage from $5.15 per hour to $7.25 per hour in two years. This was the first minimum wage increase in more than 10 years. In 2006, the $5.15 per hour minimum wage had less purchasing power than the $1.60 minimum wage did in the 1960s.

 

During the decade between minimum wage increases, the wage landscape in the US changed. A federal law was passed that made it legal for states to impose a higher minimum wage than the federal minimum wage. By 2006, about 30 US states had taken matters into their own hands and passed minimum wages that were higher than the federal rate at that time, which was $5.15 per hour. Wisconsin, Minnesota and Arkansas were among those states.

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