NEWWorklio Insurance: benefits and pay-as-you-go workers' comp, built into payroll.Learn more
HCM
COMPLIANCE

Minimum wage

Minimum wage is the lowest hourly rate you may legally pay a covered employee, set by federal, state, and sometimes local law.

Updated 3 min read4 primary sources

LAW
FLSA §6, 29 U.S.C. §206
RATE
$7.25 an hour since July 24, 2009
RULE
Pay the highest rate that applies
WATCH FOR
Relying on a rate from a prior year

This year's figures for every state, each with its source:

The federal minimum wage is $7.25 an hour, in effect since July 24, 2009, under the Fair Labor Standards ActFLSA. The Fair Labor Standards Act (FLSA) is the federal law setting minimum-wage, overtime, recordkeeping, and youth employment standards for covered employment.Click to open the term. Many states set a higher rate, and some cities and counties set one above both. When rates differ for the same work, you generally pay the highest rate that applies. Rates change periodically, some on a fixed annual schedule and some tied to inflation. Confirm current rates with the U.S. Department of Labor or the state or local agency.

What are the federal rates?

Federal law sets one standard rate and two common lower rates with conditions; others need a DOL certificate. State and local laws can require more for each.

EMPLOYEEFEDERAL MINIMUMCONDITION
Most covered employees$7.25 an hourIn effect since July 24, 2009
Tipped employees$2.13 an hour in cashAfter tip-credit notice, cash wage plus tips must reach $7.25 each workweek
Employees under 20$4.25 an hourFirst 90 consecutive calendar days with you

Which rate applies when rates differ?

Nothing in the FLSA excuses you from a federal, state, or local law that sets a higher minimum wage. With locations in several jurisdictions, you can owe a different rate for the same job in different cities. Track where each hour is actually worked, since the work location generally sets the rate. Where a state has no minimum wage law, or one below $7.25, employees covered by the FLSA get $7.25.

How do you check minimum wage each workweek?

A pay plan that mixes hourly pay with piece rate, commission, or tips still has to clear minimum wage. The test covers every hour worked in the workweekWorkweek (FLSA). A workweek under the Fair Labor Standards Act is a fixed, regularly recurring period of 168 consecutive hours used to compute overtime.Click to open the term. When incentive or piece earnings fall short in a slow week, you owe a true-up payment. Payroll software applies the rate you configure for each location, but it does not decide whether that rate is lawful. Keep each classification and location current as rates change.

Frequently asked

Yes, in many states, through a tip credit. Federal law lets you pay a tipped employee $2.13 an hour in cash when tips make up the rest of $7.25. If cash wage plus tips falls short in a workweek, you pay the difference. Seven states, including California, require the full state minimum wage before tips.

SOURCES
  1. Fair Labor Standards Act, 29 U.S.C. §206 (Minimum wage)
  2. 29 CFR § 531.35 - “Free and clear” payment; “kickbacks.”
  3. U.S. Department of Labor, Minimum Wage
  4. U.S. Department of Labor, State Minimum Wage Laws

General information, not legal or tax advice. Apply current federal and state rules with qualified guidance.

RELATED TERMS

Your next payroll could be your first one on Worklio.