Minimum wage refers to the absolute lowest rate of income, generally an hourly rate, that an employer may pay their employees for their labor. The federal government has established a federal minimum wage rate law, with each state maintaining its own minimum wage rate laws as well. The purpose of these federal and state laws are to protect workers from unfairly low payment.

In 2009, the Fair Labor Standards Act (“FLSA”) established the federal minimum wage to be $7.25 per hour. Federal wage law applies to all employers across the nation. Importantly, if a state or city has their own laws, the employer should pay whichever wage rate is the most generous to their employees. 

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, but the city’s minimum wage is $9.25 an hour. In such a situation, an employer must pay their employees at least $9.25 per hour as it is the most generous of the three.

A state’s minimum wage cannot fall below the federal minimum wage. However, state minimum wages may exceed the federal minimum wage. Some local cities and counties also have living wage laws which set a higher minimum wage in order to reflect that city’s specific cost of living. 

These laws generally apply to companies that are contracted to do business in the local area or government, and the employer must pay the highest minimum wage whether that wage is federal, state, or local. 

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.

Are There Specific Exceptions to Minimum Wage Rates?

Not all employees are protected by state or federal minimum wage laws, such as independent contractors. This is because independent contractors are not considered to be actual employees. Other employees that are exempt from receiving federal minimum wage include:

  • Outside salespersons;
  • Workers on small farms;
  • Seasonal amusement or recreational business employees;
  • Newspaper deliveries; and
  • Students and learners as defined by law.

Additionally, not all employers are required to pay the minimum wage. Under the FLSA, a business must receive $50,000 or more in annual sales in order to be required to pay their employees minimum wage. 

Also, if employees work in interstate commerce, which generally means conducting business between the states, their employer does not need to pay them minimum wage. Other circumstances in which an employer need not pay a minimum wage include when full time students are employed by higher education institutions (like teacher’s assistants). 

Employees whose earning capacity is affected by physical or mental impairments related to the job they perform may also be subjected to sub minimum wage policies, for example employees hired through programs that find jobs for individuals with down syndrome.

Family members, employees in training, and volunteers may also be exceptions to minimum wage rates. Employees not covered by the federal law may still be covered under state or local laws. Additionally, employees who earn tips may have varying minimum wage guidelines. Federal law allows employers to pay a different hourly rate to employees who regularly receive tips. However, these tips must amount to enough to meet minimum wage requirements.

What Else Should I Know About Wages?

Under the FLSA, employers are not required to pay for time not worked. This includes holidays, whether religious or federally mandated, and personal vacations. Holiday and vacation pay are generally agreed to by an employee and their employer as a condition of employment. However, there are laws in place which dictate holiday pay for employees who do work during those days.

Hazard pay refers to additional pay for engaging in work that is physically demanding, or potentially especially dangerous. Examples of such work could include work in mines or nuclear power plants. There is no requirement under the FLSA that requires any specific rate of payment for hazard pay, except for a provision which states that hazard pay should be included as part of an employee’s regular pay.

Should an employer fail to pay minimum wage to an employee when obligated by law to do so, they may face the following punishments:

  • Fines ranging from $100 to $10,000;
  • A civil penalty of $1,100 per occurrence, for willful or repeat offenders;
  • If the employee is a minor, an $11,000 civil penalty per worker assessed per each violation of child labor laws;
  • Jail time, usually no more than one year;
  • Department of Labor injunctions;
  • Back wages paid to the affected employee;
  • Liability for legal fees associated with their failure to pay minimum wage; and/or
  • Liquidated damages.

Do I Need an Attorney for Wage Discrimination?

You should consult with a skilled and knowledgeable employment attorney in order to stay in compliance with applicable state and federal regulations, if you are an employer. The attorney can help you understand which wage laws apply to your business, and represent you in a wage dispute lawsuit brought by current or former employees. 

If you are an employee facing a wage dispute, then an employment attorney can help you understand your rights. Finally, an attorney can  represent you in a lawsuit to recover any lost wages that you are owed.