Overview: The federal Fair Labor Standards Act (FLSA) requires that all nonexempt employees be paid at least $7.25 for every hour they work. Many states and municipalities 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.
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 subminimum wages below the normal rate.
Trends: To help employees keep pace with the rising cost of living, many states and municipalities adjust their minimum wage rates once a year based on the rate of inflation.
Author: Michael Cardman, Legal Editor
Updated to reflect passage of the minimum wage ordinance in San Carlos.
Updated to reflect passage of the minimum wage ordinance in San Carlos, California.
Updated to reflect the Colorado Overtime and Minimum Pay Standards (COMPS) Order, effective March 16, 2020.
Updated to reflect a forthcoming increase in the minimum wage.