Minimum wage is the absolute lowest rate of income, usually by the hour, that an employer can legally 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. The federal and state minimum state laws are meant to protect workers from unfairly low compensation.
The state minimum wage cannot fall below the federal minimum wage threshold. However, state minimum wages may exceed it. Not all employees are protected by the state or federal minimum wage laws. If you are an independent contractor, than you are not considered an actual employee of the employer to be protected under these laws.
- What Is the Minimum Wage Rate?
- Which Minimum Wage Rate Applies to me: Federal, State, or Local?
- State Minimum Wage Rages
- Are There Any Exceptions to Minimum Wage Rates?
- What Are the Consequences of Not Paying Minimum Wage?
- When Can I Pay My Employee Below the Minimum Wage Rate?
- Do I Need an Attorney for My Minimum Wage Rate Issue?
The federal minimum wage rate was established by the Fair Labor Standards Act (FLSA), and on July 24, 2009, it was raised to the current level of $7.25 per hour. This amount has not changed in the year 2017 and remains current.
The minimum wage rates of federal, state, or local law can always be different and employees usually wonder which one applies to them. Federal wage law applies to all employers across the nation. If you work in a state or city that has its own wage laws, your employer should pay whichever law is most generous to their employees. For example, if the federal minimum wage is $7.25 per hour, your state minimum wage is $8 per hour, and your city’s minimum wage is $9.25 per hour, the employer must pay the employee at least $9.25 per hour since it is the most generous of all 3.
Each state is free to make laws that set its own minimum wage rate, as long as it is not below the federal minimum wage for FLSA covered work. 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. As of January 2018, a few examples are:
- New York: The New York state minimum wage is based on location and type of occupation, but it is also set to increase 0.70 cents each year until the end of 2020. The rate will then continue to rise until it reaches $15 an hour. For NYC businesses with 11 or more employees, the minimum wage is set for $13.00 an hour. For NYC business with 10 or fewer employees, the minimum wage is $11.00 an hour. The minimum wage is:
- $11.00 for workers on Long Island and Westchester;
- $10.40 for workers throughout NY;
- $13.50 for fast food workers in NYC; and
- $11.75 for fast food workers in the rest of the state.
- Illinois: $8.25 per hour for all employees 18 years old or older and $7.75 for minors. However, employers may choose to pay $7.75 per hour to any employee who does not receive tips for the first 3 months of their employment.
- Texas: $7.25 per hour. The Texas minimum wage is pegged to the federal minimum wage rate, meaning that it will always match the federal minimum wage.
- California: $11.00 per hour for companies with +26 employees and $10.50 per hour for companies with 25 or less employees, set to reach $15 an hour by 2022.
- Cupertino, CA is $13.50 an hour.
- El Cerrito, CA is $13.60 an hour.
- Los Altos, CA is $13.50 an hour.
- Mountain View, CA is $15.00 an hour.
- Oakland, CA is $13.23 an hour.
- Palo Alto, CA is: $13.50 an hour.
- Richmond, CA is $13.41 an hour.
- San Jose, CA is: $13.50 an hour.
- San Mateo, CA is $13.50 an hour.
- Santa Clara, CA is $13.00 an hour.
- Sunnyvale, CA is $15.00 an hour.
- Alaska: $9.80 an hour.
- Oregon: $9.75 an hour.
- Florida: $8.10 an hour. Annual increase based on cost of living.
Other states that have changed their minimimum wage rates in 2018 are:
- Arkansas: $9.84 an hour.
- Florida: $8.25 an hour.
- Missouri: $7.85 an hour.
- Montana: $8.30 an hour.
- New Jersey: $8.60 an hour.
- Ohio: $8.15 an hour for employers grossing more than $299,000 and $7.25 for employers grossing $299,000 or less.
- South Dakota: $8.85 an hour.
- Arizona: $10.50 an hour.
- Flagstaff, Arizona is $11.00 an hour.
- Arkansas: $8.50 an hour.
- Colorado: $10.20 an hour.
- Maine: $10.00 an hour.
- Washington: $11.50 an hour.
- SeaTac, WA is $15.64 for employees who work in hospitality and/or transportation.
- Tacoma, WA is $12.00 an hour.
- Seattle, WA is :
- $15.45 an hour for businesses with 501 or more employees that do not offer medical benefits.
- $15.00 an hour for businesses with 501 or more employees that offer medical benefits.
- $14.00 an hour for businesses with 500 or fewer employees that do not offer medical benefits.
- $11.50 an hour for businesses with 500 or fewer employees that offer medical benefits.
- Connecticut: $10.10 an hour.
- Hawaii: $10.10 an hour.
- Massachusetts: $11.00 an hour.
- Minnesota: $9.65 for employers with an annual sales volume of $500,000 or more, $7.87 for employers with an annual sales volume of less than $500,000.
- Minneapolis, MN is $10.00 an hour for business with more than 100 employees.
- Vermont: $10.50 an hour.
- Maryland: $8.75 an hour until June 30, 2017. $9.25 an hour on and after July 1, 2017.
- Oregon: $9.75 an hour until June 30, 2017. $10.25 an hour on and after July 1, 2017.
- Albuquerque, New Mexico: $8.95 an hour.
- Bernallio County, New Mexico: $8.85 an hour.
- Michigan: $9.25 an hour.
- Rhode Island: $10.10 an hour.
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. The so called "training wage" of $4.25 per hour may apply to younger workers (below 20 years of age) for the first three months (i.e., 90 days) of their employment.
- 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 effectively still get at least $7.25.
- Young employees – If a worker is a young person, usually under 20 years of age, the 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, which is usually a training period, or until the employee turns 20 years old, whichever happens first.
- Full-time students – If a worker is a full-time student working in retail, agriculture, or in another position at their university, the 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. Such a student is limited to working 8 hours a day and 20 hours a week when school is in session.
- Student-learners – If a worker is a student-learner who is at least 16 years old and is enrolled in a vocational education program, the 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.
If an employer fails to pay minimum wage to an employee when they are obligated by law to do so, they can face punishment, including:
- Fines ranging from $100 to $10,000
- A $1,100 civil penalty per occurrence for willful or repeat violators
- If employees are minors, $11,000 civil penalty per worker assessed per each violation of child labor laws
- Jail time, usually not more than 6 months to 1 year
- Injunctions from the Department of Labor
- Liability to the employee for the unpaid wages (i.e., "back wages") and/or overtime compensation
- Liability for legal fees associated with failing to pay minimum wage
- Liquidated damages, which may be equal to back pay, if they are applicable
The Department of Labor enforces compliance with the Fair Labor Standards Act (FLSA), and its Wage and Hour Division will launch investigation into non-complying employer’s practices.
The FLSA provides certain and limited circumstance when an employer can pay an employee below the minimum wage rate. These circumstances include when full-time students are employed at higher-education institutions, agriculture, and retail businesses. Also when workers get tips through their work, under federal law, if the compensation pay is part of the employee’s tips, then the employer can pay the employee below the minimum wage rate as long as the tips and the hourly pay averages out to be equal or more than the minimum wage rate of the state.
Also if an employee is a youth worker, than the minimum wage laws are different. An employer can pay a youth worker less than the minimum wage for the first 90 days of employment at a rate of $4.25 per hour. After the 90 days, the youth worker would be entitled to the minimum wage regardless of age.
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 an employment attorney. Only they will be able to properly explain the issues and help defend your rights.