There has been a lot of press about the minimum wage of late, especially with the protests in New York by the fast food workers demanding $15 per hour as the minimum wage. In my HR classes this week we are discussing various aspects of the Fair Labor Standards Act. Most of the students did not realize how complicated the FLSA really is with the many exceptions to the rules. To that end I am repeating a post I originally wrote in May of 2012 only this time I am calling it Four Facts about Minimum Wage.
There was an article in the paper the other day talking about workers having to be more accepting of minimum wage positions. The reporter quoted a teen worker who was surprised that she was not being paid minimum wage and the reporter expressed a sentiment that this was an outrageous act on the part of the employer. Reading that article made me as the question when is the minimum wage not really the minimum wage?
There are actually several situations where the current minimum wage of $7.25 per hour does not have to, or cannot be, paid. Let’s start with the case of the teen worker mentioned above. She was being paid $4.25 per hour rather than $7.25. The Fair Labor Standard Act (FLSA) allows for a Youth Minimum Wage, which allows employers to pay workers under the age of 20 $4.25 per hour for the first 90 calendar days of their employment. However, once they reach the age of 20 they must be moved to $7.25 per hour even if they have not yet worked that 90th day. Not all states however, allow the Youth Minimum Wage. The rule is that whenever there is a conflict between the Federal law and a State law, whichever is most beneficial to the employee takes precedence.
There are some situations where an employer can apply for a subminimum wage certificate, and the USDOL will issue them, if the employees would lose their jobs without the reduction to a subminimum wage. The categories for which an employer may apply for such a certificate include: messengers; apprentices; full-time students; student learners, learners (those in training and are not yes productive); and disabled employees.
The FLSA also allows employers to pay tipped employees (those that make $30 per month in tips) a minimum wage below the standard. The FLSA specifies $2.13 as the allowable minimum wage as long as when combined with tips the employee is making at least $7.25 per hour. It not then the employer must make up the difference. Some states do not allow this subminimum wage for tipped employees. Those states can be found in this CHART for minimum wages for tipped employees.
The other situation in which the FLSA minimum wage is not the minimum wage is when a state or local jurisdiction requires employers to pay more. Today there are 17 states that require higher minimum wages that specified in the FLSA. You can check out this CHART OF MINIMUM WAGE LAWS BY STATE if you do not know what your state specifies. By the way, many of these states index the minimum wage to the Consumer Price Index so they change on an annual basis.
Cities do it too
In addition to states some cities also have minimum wage laws, such as San Francisco that specifies that all employees who work more than 2 hours per week must be paid $10.24 per hour. They also index to the CPI. Santa Fe, New Mexico is another with a high minimum wage. Some cities have bi-level minimum wages, with a lower level minimum wage being allowed if the employee is given health benefits.
Know your exemptions
A last statement about minimum wage is that all states have some industries that are exempted from minimum, quite often agricultural positions. So depending on your industry it is important to know the state regulations.