Minimum Wage

Minimum Wage Definition

Minimum wage is the least dollar amount that employers must pay to nonexempt (eligible) employees per hour, as mandated by local, state or Federal law.

Employers may pay employees by some other method than hourly, such as by piecework or commission. But, in any case, the dollar amount that eligible employees earn, divided by the hours that they worked, must equal at least the current minimum wage.

Generally, the current minimum wage for eligible employees under Federal law is $6.55 per hour, effective July 24, 2008. Special rules regarding age, tips and commissions are briefly explained below.

Age: Minimum wage for the first 90 consecutive days of employment for eligible employees who are under 20 years of age is $4.25 per hour. It increases to $6.55 per hour after the first 90 days or when eligible employees turn 20 years old, whichever occurs first.

Tips: Minimum wage is $2.13 per hour for eligible employees who routinely earn at least $30 per month in tips, get to keep all of their tips, and also earn at least $6.55 per hour at the $2.13 minimum wage plus tips. If tipped employees do not earn at least $6.55 per hour, then employers must pay the difference.

Commissions: Minimum wage for eligible commissioned employees is $6.55 per hour, including commissions. If commissions (plus fixed wages, if any) do not add up to at least $6.55 per hour, then employers must pay the difference.

A Federal minimum wage increase of 70 cents per hour is to become effective on July 24, 2009. EmployeeIssues.com will update the information on this page when appropriate. Meanwhile, it still applies.

Employees who work for the types of for-profit or non-profit organizations listed below are generally eligible for minimum wage.

• Any engaged in interstate commerce
• Any that gross $500,000 or more annually
• Federal, state and local government agencies
• Hospitals and other institutions engaged in the care of sick, aged or mentally-ill people
• Educational institutions

Domestic workers (e.g., housekeepers, chauffeurs, cooks and babysitters) are also eligible for minimum wage, if they receive at least $1,300 annually in cash wages from one employer or work more than eight hours a week for one or more employers.

This is only a general overview of eligibility at the Federal level. Other special rules might apply. For example, under specific circumstances and with governmental permission, employers may pay certain students, apprentices and disabled persons less than the current minimum wage.

Additionally, special rules apply to state and local government employment involving fire protection and law enforcement, volunteer services, and compensatory time off ("comp time"). Child labor rules also apply.

The next section includes information about municipal and state minimum wage laws, which might be different or more generous than the Federal equivalent.

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