Minimum wage
Minimum wage is the lowest hourly rate you may legally pay a covered employee, set by federal, state, and sometimes local law.
- 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
Rates by state
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.
| EMPLOYEE | FEDERAL MINIMUM | CONDITION |
|---|---|---|
| Most covered employees | $7.25 an hour | In effect since July 24, 2009 |
| Tipped employees | $2.13 an hour in cash | After tip-credit notice, cash wage plus tips must reach $7.25 each workweek |
| Employees under 20 | $4.25 an hour | First 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
- Fair Labor Standards Act, 29 U.S.C. §206 (Minimum wage)
- 29 CFR § 531.35 - “Free and clear” payment; “kickbacks.”
- U.S. Department of Labor, Minimum Wage
- 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.