Minimum Wage
Minimum Wage Definition, Current Rate and Eligibility
Minimum wage is the least dollar amount that employers must pay to nonexempt 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 rate.
Generally, the current minimum wage rate for eligible employees
under Federal law is $7.25 per hour (effective July 24, 2009).
Special eligibility rules for the Federal minimum wage 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 $7.25 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
$7.25 per hour at $2.13 plus tips. (The $5.12 difference is
called a tip credit for employers.) Employers may
require employees to pool their tips, but each employee still
must have earned at least $7.25 per hour after tip pools are
divvied. If eligible tipped employees do not earn at least
$7.25 per hour, then their employers must pay the difference
to them.
Commissions: Minimum wage for eligible commissioned
employees is $7.25 per hour, including commissions. If earned
commissions plus fixed wages, if any, do not add up to at
least $7.25 per hour, then employers must pay the difference.
California
has approved legislation to gradually increase its minimum
wage to $15 per hour by 2022. Small businesses will have until
2023 to pay $15. New York too is gradually raising its minimum
wage to $15 per hour. New York City will raise it to $15 by
December 2018 and the suburbs will do the same by December
2021. Upstate New York will raise its wage to $12.50 by December
2020 and will increase it to $15 during a period to be determined
by the state budget director.
President
Biden has signed an executive
order requiring federal contractors to pay their workers
a minimum wage of at least $15 per hour by January 30, 2022.
Employees who work for the types of for-profit or non-profit
organizations listed below are generally eligible for the
minimum wage.
- Any engaged in interstate commerce
- Any that gross $500,000 or more annually
- Federal, state and local government agencies
- Educational institutions
- Hospitals and other institutions engaged in the care of
sick, aged or mentally-ill people
Domestic workers (e.g., housekeepers, chauffeurs, cooks
and babysitters) are also eligible for the minimum wage, if
they receive at least a certain amount annually in cash wages
from one employer or work more than eight hours a week for
one or more employers. The Social
Security Administration sets the annual cash wage amount.
To generally sum up eligibility requirements, most hourly
nonexempt employees are entitled to earn at least the current
minimum wage rate of $7.25 for each hour worked.
This is only an overview of minimum wage eligibility at the
Federal level. Other special rules as well as exemptions might
apply. For example, under specific circumstances and with
the permission of the U.S.
Department of Labor, employers may pay certain full-time
students, student learners and disabled
persons less than the current minimum wage rate. Child
labor rules also apply.
The next section provides information about municipal and
state minimum wage laws, which might be different or more
generous than the Federal equivalent. It also provides information
about obtaining relief for employer minimum wage violations.
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