What is Minimum Wage?Minimum wage is the absolute lowest rate of pay by law, usually by the hour, that an employer must pay a worker for their job. The federal government has established, by law, a federal minimum wage rate. Each state has its own minimum wage rate laws as well.
What is the Minimum Wage Rate?FederalThe current federal minimum wage rate was established by the Fair Labor Standards Act (FLSA), and is $5.15 per hour. A recent Congressional decision is likely going to make that amount increase. The federal minimum wage rate is scheduled to increase by 70 cents per year, until it caps out at $7.25 per hour on January 1, 2009.
StateEach state is free to make laws that set its own minimum wage rate, so long as it is not below the federal minimum wage rate. Some states have chosen to have a much higher rate, while others have chosen to peg their state minimum wage rate to the federal minimum wage rate. A few examples are: - New York - $7.15 per hour
- Illinois - $6.50 per hour
- Texas - $5.15 per hour (pegged to the federal minimum wage rate)
- California - $6.75 per hour (unless in San Francisco, where the minimum wage rate is indexed to the price of living at $8.50 per hour)
Are There Any Exceptions to Minimum Wage Rates?The federal minimum wage rate law, and many state minimum wage rate laws, have multiple exceptions. A few examples are: - Family members - Family members do not usually have to receive minimum wage.
- Employees in training - The employment of person while they are being trained to do their job is usually excluded from the need to pay minimum wage.
- Tipped employees - If a person works for tips, a waiter for example, their employer is usually excluded from the need to pay minimum wage. There are other laws in place, however, and most tipped employees must still be paid a base wage of $2.13 or higher per hour.
- Young Employees - If a worker is a young person, usually under 20 years of age, their employer is usually excluded from the need to pay minimum wage, and instead must only pay $4.25 or higher per hour. This exception only lasts for the first 90 days of employment or until the employee turns 20 years old, which ever happens first.
- Full-time students - If a worker is a full-time student, their employer is usually excluded from the need to pay minimum wage. Instead, payment must be 85% or higher of the minimum wage rate with a voucher from the Department of Labor.
- Student-learners - If a worker is a student-learner, their employer is usually excluded from the need to pay minimum wage. Instead, payment must be 75% or higher of the minimum wage rate with a voucher from the Department of Labor.
- Volunteers - Volunteers or interns are giving their services to an employer for free, and do not have to be paid minimum wage.
What are the Consequences of not Paying Minimum Wage?If an employer fails to pay minimum wage to an employee when they are obligated by law to do so, they can face punishment which can include:
- Fines, ranging from $100 to $10,000,
- Jail time, usually not more than 6 months to 1 year,
- Injunctions,
- Liability to the employee for the unpaid wages and/or overtime compensation,
- Liability for legal fees associated with failing to pay minimum wage, or
- Liquidated damages if they are applicable.
Do I Need an Attorney for my Minimum Wage Rate Issue?If you believe you have been working for an employer and not being paid minimum wage, or you are facing liability for not paying an employee minimum wage, it is highly recommended for you to contact a labor or employment attorney. Only they will be able to properly explain the issues and help defend your rights. |
