Minimum wage?! What does it really mean?

Minimum Wage?

In simple terms, minimum wage is the minimum amount per hour you must pay an employee in the United States based on Federal Employment Law. Currently, the approved Federal amount is $7.25 per hour. Some states like New York, Vermont, Massachusetts, for example, have a higher minimum wage. According to the U.S. Department of Labor, “Where an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher wage rate.”

The map below shows the Federal and state minimum wage amounts.

(Resource: Kiersz, 2019)

Exceptions

There are many exceptions particularly in certain types of industries and specific circumstances:

workers with disabilities
full-time students
youth under age 20
tipped employees (restaurant industry, for example)
student-learners

Tipped Employees

Employers must pay tipped employees not less than $2.13 per hour in wages if that amount added to their tip amount received for the pay period equal at least the federal minimum wage. If the combined wages and tips do not meet the federal hourly minimum wage, the employer must pay the difference.

When an employee is subject to both the federal and state wage laws, the employee is entitled to the provisions of each law which provide the greater benefits.

Young Workers

Young workers under the age of 20 years have a minimum pay of $4.25 per hour. This applies to their first 90-days of employment with an employer. After 90 consecutive days of employment, or if the employee turns 20-years old, minimum wage increases to $7.25 per hour.

Full-time Students

The Full-time Student Program is for full-time students employed in retail or service stores, agriculture, or colleges and universities. Employers may request and obtain a certificate from the Department of Labor that states that the student may be paid no less than 85% of minimum wage. Students may work 8-hours in a day and no more than 20-hours per week. When school is out of session, students may work 40-hours per week. When the student leaves school for good (graduates, for example), they must be paid regular Federal or state minimum wage.

To learn more, go to the Department of Labor Wage and Hour Division website.