Minimum wage refers to the absolute lowest rate of pay that employers may legally compensate their employees. This wage is established through the federal minimum wage rate law, but each state maintains its own minimum wage rate law as well. What this means is that while no state can legally allow employers to pay their employees less than the federal rate, some states have a higher minimum wage rate which employers must adhere to.
An example of this would be if the federal minimum wage is $7.25 an hour, while a state’s minimum wage is $8.00 an hour. However, the city’s minimum wage is $9.25 an hour. An employer must pay their employees at least $9.25 per hour, as it is the most generous of the three. If a state or city has its own minimum wage laws, the employer must pay whichever wage rate is the most generous to their employees.
In 2009, the Fair Labor Standards Act (“FLSA”) established the federal minimum wage as $7.25 per hour. The purpose of these federal and state laws are to protect workers from unfairly low payment. However, this becomes an issue when employers do not offer wages above the minimum to reflect the cost of living. Additionally, the federal minimum wage has not been raised to meet the needs of the modern employee.
It is important to note that although minimum wage determines the hourly rate at which employees are to be paid, employers do not need to pay their employees by the hour. So long as the total amount paid divided by the total amount of hours worked is equal to at least the minimum wage, it is considered to be legally compatible.
As for the factors involved in calculating minimum wage rate laws, typically the following will be considered:
- The current and past years of inflation and the costs of basic goods such as food, clothing, water, and medications;
- The cost of various other goods in services in for the local area or state; and/or
- Other factors including wage information research, cost of housing, etc.
Which Minimum Wage Rate Applies to me: Federal, State, or Local?
As previously discussed, state minimum wage laws may differ from federal minimum wage laws. Employers cannot pay their employees below the federal minimum wage, but must adhere to state laws when the state has determined their own minimum wage rate above the federal rate.
Federal wage law applies to all employers across the United States. If you are employed in a state or city that maintains its own wage laws, your employer should pay whichever law is most generous to their employees. A local minimum wage ordinance is what dictates a city’s established minimum wage rate, which can differ from both the federal and state rates.
Once again, it may only differ in terms of being higher than the federal and/or state rates; local minimum wage ordinances cannot allow employers to pay their employees less than the federal and/or state minimum wage rate.
State Minimum Wage Rates
According to the Department of Labor website, minimum wage rates are categorized as either being greater than the federal rate, equal to the federal rate, or having no minimum wage required. As of January 2021, the current minimum wage rates by state are as follows.
Greater than the federal rate:
- Alaska: $10.34;
- Arkansas: $11.00;
- Arizona: $12.15;
- California: $13.00;
- Colorado: $12.32;
- Connecticut: $12.00;
- Washington, D.C.: $15.00;
- Delaware: $9.25;
- Florida: $8.65;
- Hawaii: $10.10;
- Illinois: $11.00;
- Massachusetts: $13.50;
- Maryland: $13.50;
- Maine: $12.15;
- Michigan: $9.65;
- Minnesota: $10.08;
- Missouri: $10.30;
- Montana: $8.75;
- Nebraska: $9.00;
- New Jersey: $12.00;
- New Mexico: $10.50;
- Nevada: $9.00;
- New York: $12.50;
- Ohio: $8.80;
- Oregon: $12.00;
- Rhode Island: $11.50;
- South Dakota: $9.45;
- Vermont: $11.75;
- Washington: $13.69;
- West Virginia: $8.75;
- Virginia: $10.50; and
- Guam: $8.75.
Equal to the federal minimum wage rate:
- North Carolina;
- North Dakota;
- New Hampshire;
- Wyoming; and
- Puerto Rico.
No minimum wage required:
- South Carolina; and
Are There Any Exceptions to Minimum Wage Rates? What Are the Consequences of Not Paying Minimum Wage?
There are many exceptions to the federal minimum wage rate law, as well as many state minimum wage rate laws. A few of the most common examples include:
- Family members: Generally speaking, family members do not have to pay minimum wage to their employed family members;
- Employees in Training: When a person is employed, while they are being trained to do their job, they are usually excluded from being paid minimum wage. The “training wage” of $4.25 per hour may apply to younger workers, such as those below 20 years of age, for the first three months or ninety days of their employment;
- Tipped Employees: If an employee works for tips, their employer is generally excluded from the need to pay minimum wage. An example of this would be a server, or a bartender. However, there are other laws in place which state that most tipped employees must effectively still receive at least $7.25/hour;
- Full-Time Students: If an employee is a full-time student working in retail, agriculture, or in another position at their university, the employer typically does not need to pay them minimum wage. Instead, payment must be 85% or higher of the minimum wage rate, with a voucher from the Department of Labor. Such a student is limited to working eight hours per day, and 20 hours per week when school is in session;
- Student Learners: An employee who is a student-learner, who is at least 16 years old and is enrolled in a vocational education program, is excluded from receiving minimum wage. Alternatively, their payment must be 75% or higher of the minimum wage rate, along with a voucher from the Department of Labor; and
- Volunteers: Volunteers or interns are giving their services to an employer for free. As such, they do not have to be paid minimum wage, or any wage at all.
Minimum wage violations can be punishable in many different ways. If an employer fails to pay minimum wage to an employee who is legally entitled to that payment, they may face the following consequences:
- Fines ranging from $100 to $10,000;
- A $1,100 civil penalty per occurrence for willful or repeat violators;
- $11,000 civil penalty per minor worker assessed per each violation of child labor laws;
- Jail time, ranging from six months to one year;
- Injunctions from the Department of Labor;
- Liability to the employee for the unpaid wages and/or overtime compensation;
- Liability for legal fees associated with failing to pay minimum wage; and/or
- Liquidated damages, which may be equal to back pay, when applicable.
Whether you are an employer or an employee, there are many benefits to working with a minimum wage violations lawyer. They can ensure your rights are protected, and help you resolve the issue with legal action when necessary.
Do I Need an Attorney for My Minimum Wage Rate Issue?
Whether you are an employer or an employee, if you are facing a minimum wage rate issue, you should consult with an experienced and local employment lawyer.
Because state laws vary so widely in terms of minimum wage, it is important that you consult with someone local so that they are aware of how your state’s specific laws will affect your legal options. Your attorney will help protect your rights, and can also represent you in court as needed.