Employer Alert: Pennsylvania Adopts New Minimum Wage Effective January 1, 2007

August 2006

BY: JOHN K. BAKER AND RICK GRIMALDI

Attention All Employers

On July 9, 2006, Pennsylvania Governor Ed Rendell signed new legislation increasing the state’s minimum wage above the federally mandated $5.15 an hour. This marks the first change in the minimum wage in almost ten years. Pennsylvania joins the 19 other states who have increased their minimum wage, including New Jersey, New York, Delaware and Maryland. The new law, SB 1090, increases the state minimum wage in two steps: from $5.15 to $6.25 an hour on January 1, 2007, and from $6.25 to $7.15 an hour on July 1, 2007.

Small Employer Schedule

Most employers must abide by the new minimum wage law. Employers with 10 or fewer full-time employees, however, are subject to a different increase schedule. These employers must increase their minimum wage to $5.65 on January 1, 2007; $6.65 on July 1, 2007 and $7.15 on July 1, 2008.

60-Day Training Wage

The new law also provides for a 60-day training wage, based on the federal $5.15-per-hour training wage, for employees under 20 years of age. Upon hiring, employers must notify workers of both the training wage and the workers’ right to receive the Pennsylvania minimum wage after 60 calendar days of employment. The law makes it clear that other workers may not be displaced to allow hiring of training-wage workers.

Impact on Employers

Whether it simply causes an increase in payroll, affects collective bargaining, or forces companies to reassess overtime or alter hiring projections, the new minimum wage will impact all Pennsylvania employers. Companies, in order to minimize the impact, should take time to review their raise and benefit schedules as well as their hiring needs. Also, unionized employers should review collective bargaining agreements, which often contain wage or benefit clauses based on the minimum wage, to determine whether the minimum wage hike will impact future negotiations with workers.

Important Deadlines

Employers With 10 or Fewer Full-Time Employees

White and Williams LLP is ready to assist employers as they prepare for the higher minimum wage. To discuss this or other labor and employment issues, please contact a member of the Labor and Employment Practice Group. In Philadelphia: Rick Grimaldi may be reached at 215.864.6350 or grimaldir@whiteandwilliams.com. In Allentown: John Baker may be reached at 610.782.4913 or bakerj@whiteandwilliams.com.