Sponsors
Raises the federal minimum wage in phases to $17.00, then indexes future annual increases to median wage growth; phases out long-standing subminimum wages and limits the use of special certificates; raises minimums and ends employer tip retention for tipped workers; strengthens enforcement and penalties; authorizes grants to states/tribes to improve wage-law enforcement; creates a National Advisory Committee on the Hospitality Industry; and makes several COVID-era Earned Income Tax Credit (EITC) expansions permanent and effective for tax years after 2025.
Referred to the Committee on Education and Workforce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Last progress May 29, 2025 (8 months ago)
Introduced on May 29, 2025 by Alice Costandina Titus
Defines the term "State" by referring to the meaning given in section 3(c) of the Fair Labor Standards Act of 1938 (29 U.S.C. 3(c)).
Defines the term "Tribal government" to mean the government of an Indian Tribe, as that term is defined in section 4(e) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 5304(e)).
Amend Section 6(a)(1) of the Fair Labor Standards Act of 1938 to require not less than $10.25 per hour beginning on the effective date described in section 2(c) of this Act.
Amend Section 6(a)(1) to require not less than $13.75 per hour beginning 12 months after the effective date described in section 2(c).
Amend Section 6(a)(1) to require not less than $17.00 per hour beginning 24 months after the effective date described in section 2(c).
Expand sections to see detailed analysis
Replaces the existing text of 29 U.S.C. 203(m)(2) with a new phased schedule for the employer-paid cash wage for tipped employees and explicit prohibitions on employers keeping employee tips, including by managers/supervisors or to cover tip-processing costs.
Who is affected and how:
Workers (employees): Directly benefits many low- and moderate-wage workers by increasing the federal minimum wage in scheduled steps to $17 and by eliminating many subminimum categories. Tipped workers will receive stronger legal protections: employers may no longer retain tips, supervisors are barred from taking tips, and tipped-employee minimums are set on a schedule. Student-learners and youth paid under special certificates will see phased increases and eventual elimination of subminimum rates.
Employers and businesses: Face higher direct labor costs as federal minimums rise and special certificates are phased out. Businesses that rely on tipped labor must change pay and tip-handling practices and may incur higher payroll costs. Employers may also face updated civil penalties and potential increased enforcement activity.
Low-income individuals and families: Many will benefit from higher wages and from the permanent EITC expansions (lower age threshold, removal of the upper age limit, updated credit amounts), increasing take-home income for eligible taxpayers starting in 2026 tax years.
State, local, and Tribal governments: As employers, they will be subject to the new wage rules and may incur higher personnel costs. They are also eligible for grants to improve wage-law enforcement and compliance; however, implementation costs for their own payroll may not be federally funded and could create budgetary pressure (an unfunded mandate risk).
Department of Labor and Wage and Hour Division (WHD): Increased administrative duties to implement wage indexing, oversee tip-rule changes, administer grants, staff and support the advisory committee, and enforce the law. The bill also protects WHD investigators from removal in RIFs, which could affect agency personnel management.
Tax administration and recipients: IRS and tax filers will need to implement EITC rule changes for tax years beginning after 2025; eligible taxpayers under the new rules will see changes in eligibility and credit amounts.
Overall effect: The bill raises wages and expands tax credits for low-income workers while increasing compliance and enforcement duties. Employers face higher ongoing wage costs and administrative changes; government employers are similarly affected and may need to reallocate budgets. The changes to enforcement and penalties are likely to increase Department of Labor activity and state/tribal engagement through grants and the advisory committee.