What Is Minimum Wage?

Employees are subject to both state and federal minimum wage laws. If state and federal law differ, the higher wage prevails.

Federal Minimum Wage

Since 2009, the federal minimum wage has been set at $7.25, though overtime exemptions may apply. Increases occur when Congress passes a bill and the President signs it into law, not automatically.

Who the Federal Law covers

Enterprise coverage consists of FLSA covered employees and businesses or organization that have a least two employees; have a minimum, annual dollar volume of $500,000 in sales or business; whose work consistently involves interstate commerce or the production of goods for commerce; government agencies; hospitals; schools and preschools; and businesses that provide nursing or medical care for residents. Individual workers "engaged in commerce or in the production of goods for commerce" as well as domestic service workers are protected.

Exemptions

Most exemptions depend on weekly wages and are judged on a case by case basis, but some standard exemptions apply for those who work for tips, farm and seasonal employees, and students.

Federal law demands that workers who receive tips must be paid at least $2.13 an hour. If the amount of tips earned exceeds or equals $7.25 an hour, the employee keeps the tips as well as the $2.13. If the amount of tips that day does not equal $7.25 an hour, the employer must make up the difference.

In specific and case by case circumstances, some employees on small farms and seasonal and recreational employees are not entitled to minimum wage.

During the first 90 calendar days of work for employees under 20, the minimum wage is $4.25 per hour. After 90 days, the regular $7.25 is required. Full-time students in the retail, service stores, or agricultural can be paid no less than 85% of minimum wage, if the employer obtains a certificate from the Department of Labor. Additionally, the student may not work over eight hours a day and no more than 20 hours a week during the school year and 40 hours a week when school is not in session.

Employers must follow child labor laws, and must pay a student minimum wage upon graduation. For students at least 16 years old engaged in a vocational education, an employer may gain a certificate from the Department of Labor to pay the student no less than 75% of minimum wage while the student remains in the program. For more information regarding certificates, call (312) 596-7195.

A sub-minimum wage may apply for workers with disabilities. The Secretary of Labor has the right to issues a certificate on case by case bases. For more information, you can call (312) 353-3809.

Visit the U.S. Department of Labor's Minimum Wage site for answers to many frequently asked questions about federal minimum wage requirements.

State Minimum Wage

Some states offer a higher minimum wage than the national standard, while others are the same, lower, or have no state law regarding minimum wage.

The follow states have a minimum wage that is great than the federal requirement: Alaska ($8.75), Arkansas ($7.50), Arizona ($8.05), California ($9.00), Colorado ($8.23), Connecticut ($9.15), Delaware ($7.75), Florida ($8.05), Hawaii ($7.75), Illinois ($8.25), Massachusetts ($9.00), Maryland ($8.00), Maine ($7.50), Michigan ($8.15), Minnesota ($8.00), Missouri ($7.65), Montana ($8.05), Nebraska ($8.00), New Jersey ($8.38), New Mexico ($7.50), New York ($8.75), Nevada ($8.25), Ohio ($8.10), Oregon ($9.25), Rhode Island ($9.00), South Dakota ($8.50), Vermont ($9.15), Washington ($9.47), and West Virginia ($8.00).

The following state issues the same minimum wage as the federal law, $7.25: Iowa, Idaho, Indiana, Kansas, Kentucky, North Carolina, North Dakota, New Hampshire, Oklahoma, Pennsylvania, Texas, Utah, Virginia, and Wisconsin.

The following states have a lower minimum wage: Georgia ($5.15) and Wyoming ($5.15).

The following states have no minimum wage laws: Alabama, Louisiana, Mississippi, South Carolina, and Tennessee.

Visit the Minimum Wage Laws in the States pages for up-to-date information about your state's minimum wage.

Pay Raises

Although many employees feel entitled to a pay raise after working in a position for a certain amount of time, no federal or legal support for this practice exists. No U.S. law, including the Fair Labor Standards Act (FLSA), dictates pay raises, which remain as agreements between employers and employees.