Top 7 Questions About Minimum Wage

One topic on the top of everyone’s minds these days is minimum wage. All the buzz in politics lately has everyone wondering- what are the basics of minimum wage? How do I uncomplicate all the information that’s being thrown my way? Check out the questions and answers below to find the clarity on minimum wage that you’ve been searching for.

1. What is the current federal minimum wage?

Currently, the federal minimum wage for covered nonexempt employees is $7.25 per hour. This rate is effective as of July 24, 2009, and is covered under the Fair Labor Standards Act (FLSA).

Many states have their own minimum wage rates as well, which may differ from the federal minimum wage.

2. What if my state’s minimum wage law is greater than the federal minimum wage?

If your state’s minimum wage law is greater than the federal minimum wage, the higher rate applies.

3. What is the federal minimum wage for workers who receive tips?

According to the FLSA, an employer of a tipped employee is only required to pay $2.13 an hour in direct wages if:

• The wage amount plus tips received equals at least the federal minimum wage
• The employee retains all tips
• The employee customarily and regularly receives more than $30 a month in tips

In the case that an employee’s tips combined with their wages of at least $2.13 an hour do not equal the federal minimum hourly wage, the employer must make up the difference.

Also, some states have their own minimum wage laws specific to tipped employees. Like the FLSA non-tipped employee minimum wage law, the employee is entitled to the rate which provides the greater benefits.

4. Who does the minimum wage apply to?

Minimum wage applies to employees of enterprises that have at least $500,000 in annual gross sales or business done.

For smaller enterprises, minimum wage applies to those who engage in interstate commerce or the production of goods for commerce.

5. What’s the difference between minimum wage, prevailing wage and living wage?

Minimum wage is the lowest hourly wage an employer can pay an employee for work.

Prevailing wage is the rate of pay contractors and vendors must offer their employees when doing business with a government agency.

Living wage is the lowest wage at which the wage earner and his or her family can afford the most basic costs of living.

Related: Minimum Wage, Prevailing Wage and Living Wage: What’s the Difference?

6. How often does the federal minimum wage increase?

The federal minimum wage does not increase automatically or after a certain period. For the federal minimum wage to increase, Congress must first pass a bill which the president then signs into law.

7. Must young workers be paid the minimum wage?

Employers can pay workers under the age of 20 a wage of $4.25 per hour during their first 90 consecutive days of employment. However, after the 90 days, the FLSA requires employers to pay the full federal minimum wage.