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. Nineteen states 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, ten states have indexed their minimum wage rates to the rate of inflation. Lawmakers have introduced legislation that would do the same in other states, and at the federal level. No bills have passed yet, but if the economy improves, it's a fair bet that some will start to be enacted.
Author: Michael Cardman, Legal Editor
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