labor lawAdivision of labor law center

The Nebraska minimum wage will increase from $6.55 to $7.25 per hour on July 24, 2009. This is the same day as an increase to the federal minimum wage under the FLSA.

The federal Fair Labor Standards Act (FLSA) applies to employers who engage in interstate commerce, or who earn at least $500,000 per year. FLSA may also individual workers who are engaged in interstate commerce, even when the federal law does not apply to the entire business.

Federal, state and local government agencies are covered under FLSA, as are schools, hospitals and health care facilities. The U. S. Department of Labor’s Wage and Hour Division, www.dol.gov, enforces the FLSA.

In this struggling economy, an increase in the minimum wage could be a hardship to employers. The increase in 2009 is the last scheduled increase for at least a year. At present there is no federal minimum wage increase scheduled for 2010.

Many employers in Nebraska are covered by the FLSA. Those that do not fall under federal jurisdiction are covered by the Nebraska state minimum wage laws.

The Nebraska minimum wage mirrors the federal minimum. (more…)

The bottom line with the proposed Nebraska minimum wage bill is that even if it gets passed one day soon, the state’s employers might end up soon paying whatever the federal minimum wage is again soon. Remember, that is how the current Nebraska minimum wage law works—it basically says that employers in the state of Nebraska have to pay their lowest paid workers at least whatever the federal minimum wage is.

The new Nebraska minimum wage law, if passed, would increase the state minimum wage from $5.15 per hour to $6.26 per hour, over the course of three 37 cent increases over the course of three years. That would end up in the year 2009, if you do the math, after which the state would increase the minimum wage after that by the rate of inflation.

However, let’s say the federal minimum wage law gets passed soon this year. If you follow my logic here, then the federal minimum wage, before the end of 2007, will become $5.85 per hour—which would be higher than the new Nebraska minimum wage. Then many Nebraska minimum wage payers would end up paying the federal minimum wage.

Come 2008, when the federal minimum wage would go up to $6.50 per hour, that would also be higher than the new Nebraska minimum wage that year, and again, most employers in the state would be required to pay the higher federal minimum wage. The next year, in 2009, the same would be true—the Nebraska minimum wage would be $6.26 per hour and the federal minimum wage would be $7.25 per hour. The federal minimum wage would apply again for many employers in the state. So de facto, for most employers, their minimum wage would revert back to being the federal minimum wage.

We continue our look at Nebraska’s neighbors to get a better sense of why the state legislators in the Nebraska Senate have considered a $6.26 ceiling, arrived at over the course of the three years, as their new proposed Nebraska minimum wage. We move on to Illinois, which just passed a minimum wage that covers all employers with four or more employers.

The Illinois minimum wage is currently set at $6.50 per hour, but the newest minimum wage increase will occur in a few months on July 1, when the Illinois minimum wage will then go up to $7.50 per hour. Then on July 1, 2010, the Illinois minimum wage will increase again to the rate of $8.25 per hour. We know the situation in Missouri, another Nebraska neighbor, pretty well, where the voters last fall approved of a minimum wage increase to $6.50 per hour, which went into effect this past January 1.

South Dakota has a proposed minimum wage law in its legislature too. We shall talk about it later in more detail when we get around to reviewing the situation in that state, but in brief, the new law would increase the state minimum wage if and when the federal minimum wage goes into effect. The South Dakota minimum wage increases would also follow the same pattern of increases and timing of the federal minimum wage, ending up at $7.25 per hour after three changes over the next two or so years.

So as you can see, the proposed Nebraska minimum wage would put that state sort of in the middle of the pack of its neighbors when it comes to the minimum wage, whereas the moment, the state is kind of at the lower end of the spectrum when it comes to its state minimum wage.

Remember one of the differences between the living wage and the minimum wage? I bring this up because, according to my sources, some of the consideration for if and when Nebraska gets this new state minimum wage is how the state compares with some of its neighbors. What is my point? Well, the living wage—such as the one recently passed in the state of Maryland for state funded contractor projects—is based directly on how much it would take to pay someone to get them above a certain wage income, usually the poverty line.

A minimum wage—such as the new minimum wage law proposed in the state of Nebraska—is instead based on what is currently being paid in the state or the federal level, or in this case, what sort of minimum wage your neighbor is paying. In the case of Nebraska, their neighbors are the likes of Minnesota, Wisconsin, Illinois, Missouri, South Dakota and Iowa. Some of these states recently passed new minimum wage increases, or they did a year or two ago, or they are looking, as Nebraska is doing, of increasing the minimum wage now.

The state of Minnesota’s minimum wage, for instance, which we just recently reviewed, is one that was changed a couple years ago, and from I could gather, there is not much movement to change it. But at current state, it is more than the Nebraska minimum wage for many employers, at the rate of $6.15 per hour for large employers, $5.25 per hour for small employers.

Wisconsin is one state where they have a currently higher minimum wage than the federal minimum wage or Nebraska’s minimum wage, at the rate of $6.50 per hour. But talk on the town, so to speak, is that Wisconsin has possible changes in the works (more to come later when we get to the Ws).

There is a movement in the state of Nebraska, as there has been a movement in many states across this great land lately, to increase the state minimum wage. The movement is taking place in the Nebraska Senate, where some of the senators are trying to get it so that the state has its own minimum wage. Doesn’t the state of Nebraska already have its own minimum wage, you ask? Well, sort of.

The way the Nebraska minimum wage works at the moment is that it is directly tied to what the federal minimum wage is doing. So it is a de facto federal minimum wage, disguised as a state minimum wage that the state has. The proposed law in the Senate at the moment would have the state minimum wage increase from the current level of $5.15 per hour to the ultimate rate of $6.26 per hour over the course of three years.

The first increase to the Nebraska minimum wage would occur this coming October 1, increasing the Nebraska minimum wage by 37 cents to the overall rate of $5.52 per hour. Then the following year, the minimum wage would go up again another 37 cents. The following year after that, the Nebraska minimum wage would see another 37 cent increase, raising it to that final point of $6.26 per hour.

But that would not be the true final point for the state minimum wage after that. The new law would have a mechanism built into it that every year after that, the state minimum wage would go up based on the rate of inflation as determined by the state Department of Labor, compared with what the Consumer Price Index was doing. We have seen that in many other states, and it serves to keep a minimum wage in line with the costs of living.