Overview: Federal minimum wage law requires that all nonexempt employees be paid at least $7.25 for every hour they work; this is the federal minimum wage. Twenty-six states have (or will soon have) even higher minimum wages.
Since about 97 percent of the American workforce earns more than the minimum wage, very few employers need to concern themselves with this baseline requirement. Nevertheless, an employer that makes agreed-upon deductions from an employee's pay – for example, deductions for cleaning uniforms – must be careful that the deductions do not bring the employee's wage below the applicable minimum rate.
To comply with minimum wage laws, an employer can apply certain payments – most notably, tips that wait staff, bartenders and other tipped employees receive for service, and the cost of board and lodging – toward its minimum wage obligations.
Also, minimum wage laws allow certain employees – including students, workers with disabilities, messengers, apprentices and student-learners – to be paid at subminimum wages below the normal rate.
Trends: To help employees keep pace with the rising cost of living, 14 states adjust (or will adjust) their minimum wage rates based on the rate of inflation. Lawmakers have introduced legislation that would do the same in other states, and at the federal level.
Author: Michael Cardman, Legal Editor
Updated to reflect IRS final regulations defining 'spouse' for federal tax and benefits purposes.
Updated to reflect the passage of amendments to Berkeley's minimum wage ordinance, effective August 31, 2016.
In Schaefer v. Walker Bros. Enters., the 7th Circuit Court of Appeals followed federal guidance that allows employers to claim the minimum wage tip credit even when their employees spend as much as 20 percent of their time performing duties that are related to their occupations but do not explicitly produce tips.
Updated to reflect a minimum wage increase in Chicago, effective July 1, 2016.
Updated to reflect the establishment of the state's three-region minimum wage, effective July 1, 2016.
HR and legal considerations for employers regarding FLSA minimum wage laws. Support on following rules and regulations regarding this topic.