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 increases in the statewide minimum wage and in local minimum wages in San Diego, San Jose, Sacramento, Oakland, Sunnyvale, Richmond, Mountain View and El Cerrito, effective January 1, 2017; enhanced to improve comprehensiveness with the addition of minimum wage ordinances in San Mateo, Santa Monica, Palo Alto and Cupertino.
Updated to reflect an increase in the local minimum wage in Johnson County, effective January 1, 2017; enhanced to improve comprehensiveness with the addition of minimum wage ordinances in Linn County and Wapello County.
Updated to reflect increases in the minimum wage in multiple states and municipalities, effective January 1, 2017; enhanced to improve comprehensiveness with the addition of minimum wage ordinances in San Mateo, California; Santa Monica, California; Palo Alto, California; Cupertino, California; Linn County, Iowa; and Wapello County, Iowa.