Minimum Wage Glossary

Our minimum wage glossary offers general descriptions of terms that may vary by jurisdiction. For a definition specific to a jurisdiction, refer to the term within that jurisdiction’s statutes and regulations.

You can also check out our

• Paid Leave Glossary
• Labor Law Poster Glossary

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Applicable Wage When Health Benefits Offered

The rate an employee earns when the employer offers qualifying health benefits. A small number of jurisdictions have lower minimum wage rates when the employer provides health benefits, including but not limited to Nevada and Seattle.

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Business Size

The size of an employer — based on its number of employees or gross receipts — as defined by a minimum wage statute. In instances under which the law defines employer size, employers must pay different rates based on their classification. Business size is often designated as a large or small employer under a minimum wage law. St. Paul is unique in that it categorizes employers into four business sizes, macro, large, small, and micro, basing the category on gross receipts.

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Consumer Price Index (CPI)

A measure of the average change over time in the prices paid by consumers for goods and services. These indexes are often tied to minimum wage increases, with new rates increasing proportionate to the figure as determined by the jurisdiction. Indexes are available for the U.S. and most smaller jurisdictions.

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Deductions

Money withheld from an employee’s wages for items such as taxes, health care premiums, uniforms, meals, etc.

Departments of Labor

Governmental agencies that manage the enforcement of employer compliance with labor standards, including wage and hour requirements. Customarily, departments of labor publish new minimum wage rates as they become available.

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Exclusions from Regular Rate of Pay

Certain payments made by employers to their employees that are excluded from their regular rate of pay, including but not limited to gifts, bonuses and expense reimbursements.

Exempt Employee

A worker who is exempt from minimum wage and/or overtime pay requirements. To qualify as an exempt an employee, he or she must meet certain job duty tests under one of the exempt classifications (executive, administrative, professional, etc.), be paid a salary and have that salary be at least the minimum salary threshold for that jurisdiction.

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Fast Food Employee

A specific rate paid to fast food workers in New York and California. In New York, such employees mean any person employed or permitted to work at or for a fast-food establishment by any employer where such person’s job duties include at least one of the following: customer service, cooking, food or drink preparation, delivery, security, stocking supplies or equipment, cleaning, or routine maintenance. In California, it includes workers employed by a covered fast food restaurant, or a “limited-service restaurant” in California that is part of a restaurant chain of at least 60 establishments nationwide and primarily sells food and beverages for immediate consumption.

Federal Minimum Wage

The lowest minimum hourly rate most employees can earn across the U.S. The federal minimum wage has been $7.25 since 2009, but many states and local jurisdictions have set their own higher rates in recent years.

Fight for $15

A nationwide movement pushing for an increase in the federal minimum wage to $15 an hour, which started when fast food workers in New York City went on strike in 2012.

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Gratuities

Tips an employee receives for work. Note that many jurisdictions have separate wage rates for employees who customarily receive tips, and there are also laws regarding tip-pooling and employers taking tips from workers.

Gross Wages

An employee’s pay before taxes and other deductions are removed. Generally, gross wages include salary, hourly pay and/or tips.

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Hospitality Rate

A specific minimum wage rate for workers in the hospitality industry (hotel employees, for example). A small number of jurisdictions have separate rates for employees in hospitality industries. Recently, West Hollywood passed an ordinance creating a hotel worker minimum wage starting at $17.64 an hour, which went into effective on Jan. 1, 2022.

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Indexing

When a jurisdiction increases its minimum wage rate based on the consumer price index. (See Consumer Price Index above.) Many jurisdictions schedule regular minimum wage rate increases, followed by increases based on the consumer price index.

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Jurisdiction

A defined boundary for which a governmental entity has the authority to enact minimum wage laws. Jurisdictions are at the city, county, state and federal levels.

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Labor Law Posting

A physical or digital poster that employers are generally required to conspicuously display in an area frequented by its employees. A minimum wage labor law posting often includes information pertaining to wage rate increases, overtime pay, child labor, and various employee rights.

Living Wage

A calculation determining the lowest wage that a wage earner and their family can comfortably live in an area based on the area’s cost of living and other factors. Note: This is not a minimum wage.

Learner/Trainee Minimum Wage

A type of subminimum wage rate than an employee earns during the first several weeks of employment when the employee has no previous similar or related experience. The timeframe can vary based on the jurisdiction. (See also: Subminimum Wage.)

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Minimum Wage

The lowest hourly wage an employer can pay an employee for work. However, this can vary based on several factors:

• Jurisdiction
• Industry/sub-industry
• Tipped wages
• Employer size
• Company revenue
• Subminimum wage
• Overtime
• Whether the employer provides health benefits

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Non-Exempt Employee

A worker entitled to the applicable minimum wage who does not fall under any of the exemptions of the Fair Labor Standards Act. Qualifications often also include performing work for a certain amount of time in the week and performing the work within the geographic boundaries of that jurisdiction.

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Overtime

The rate of pay an employee must receive after working more than 40 hours in a workweek. Employees covered by the Fair Labor Standards Act must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay.

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Preemption

Laws that prevent jurisdictions from enacting certain types of legislation, including minimum wage, for smaller levels of government. Several jurisdictions have enacted such laws. But it can work both ways — Colorado in recent years removed a preemption law and now allows smaller jurisdictions to set their own rates. New York State has also considered a similar measure regarding minimum wage.

Prevailing Wage

Typically, the rate of pay government contractors, subcontractors, and vendors must offer employees when doing business with any level of government, i.e., city, county, state, federal.