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 amendments to the tip-pooling rules, effective June 29, 2018.
The legal arm of the National Restaurant Association has filed a lawsuit seeking to overturn a US Department of Labor policy that prohibits employers from claiming a minimum wage tip credit for employees who spend more than 20% of their time performing duties that do not directly produce tips, such as washing dishes or making coffee.
Updated to reflect a change in the effective date of a minimum wage increase.
Updated to reflect a change in the effective date of a minimum wage increase in Delaware.
Delaware joins Massachusetts as the second state to enact a minimum wage increase this year.