The federal minimum wage provisions are contained in the Fair Labor Standards Act (FLSA). As of July 2009, the federal minimum wage is $7.25 per hour. States are allowed to pass their own minimum wage laws; these wages can be lower or higher, or some states have no minimum wage laws at all. If the state does not have minimum wage laws or the minimum wage is lower than the federal law, employees are eligible to the federal minimum wage.
Stay current – check your state’s minimum wage here.
What if the state minimum wage is higher than federal minimum wage?
In cases where an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher of the two minimum wages.
How does this apply to tips?
Different minimum wage laws may apply if an employee is entitled to tips. Employers are allowed to take employees “tip credit”, as long as the tips, plus the hourly tip credit are equal to the relevant (state or federal) minimum hourly wage. The federal tip wage is currently $2.13 per hour. Currently Alaska, Minnesota, California, Guam, Minnesota, Montana, Nevada, Oregon and Washington require employers to pay tipped employees the full state minimum wage before tips. Other states either follow the Federal minimum tip credit, or have higher tip wages. In the event the wages do not meet the minimum wage, the employer must make up the difference.
What if my employee is willing to work for less than minimum wage?
Per the FLSA, voluntary or even mutually agreed upon labor arrangements that are less than the applicable minimum wage (state or federal) are illegal. Employers are entirely responsible for violations of the minimum wage and would be susceptible to major penalties if caught violating the laws. See the U.S. Department of Labor’s Employment Law Guide, section Penalties/Sanctions, for more details on fine amounts and negligence.
Can I pay minors or disabled employees less than minimum wage?
In some scenarios you may be allowed to pay minors or disabled employees less than minimum wage, also known as subminimum wage.
The ‘Youth Minimum Wage’ applies to vocational education students and full time students, under age 20, who may be paid below the minimum wage if they are employed by retail or service establishments, agriculture, or institutions of higher education, but only for the first 90 calendar days of employment. Per the FLSA, “Any wage rate above $4.25 an hour may be paid to eligible workers during this 90-day period.”
Another scenario in which you may be able to pay less than minimum wage is when employing a worker with a disability. Subminimum wages for disabled employees must be commensurate and the employer is required to receive certification by the DOL to pay the lower rate. The purpose of this subminimum wage was designed to provide employment for individuals who may otherwise not have an employment opportunity.
It is vital to follow your state’s applicable minimum wage requirements. Your organization can be penalized due to improper wage payments, plus required to pay back wages. It is a costly error that is easily avoidable. Follow our blogs for more information on the FLSA and other employment law topics. If you need assistance determining your companies minimum wage requirements, contact EAF today!
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