Congress has approved legislation that would raise the federal minimum wage to $7.25 per hour in three steps over a period of 26 months.

President Bush is expected to sign the legislation as early as this weekend. If he does, the federal minimum wage would increase from $5.15 per hour to:

• $5.85 per hour 60 days after enactment,
• $6.55 per hour one year after the first increase, and
• $7.25 per hour two years after the first increase

The federal minimum wage has been $5.15 per hour since 1997. Thirty-three states have approved minimum wages above the current federal level ($5.15 per hour), but many of those state minimum wages are still less than $7.25 per hour.

Because the federal law covers nearly all employees, making most employers subject to both state and federal laws, employers may effectively ensure compliance with both sets of laws simply by following the one that is more beneficial to the employee.

Compensation.BLR.com will be updating both federal and state regulatory analysis on the minimum wage once President Bush signs the legislation.

Both chambers of Congress had approved the increase in January but disagreements over tax cuts for small businesses stopped the legislation from reaching the President's desk. Congress also approved a second try at raising the minimum wage earlier this month, but President Bush vetoed the legislation because it was attached to a spending bill that set a deadline for the withdrawal of American troops from Iraq. While the latest version of the minimum wage increase is attached to the spending bill, there are no deadlines on Iraq in the spending bill.