Key Terms: Minimum Wage Edition

With so many regulation changes occurring regarding wage rules, it's easy to get overwhelmed and stop watching every detail, let alone know every term associated with minimum wage. That's why we created this guide! If you see something we missed, please let us know on PayrollTalk.

Fair Labor Standards Act (FLSA): The FLSA declares the Federal Minimum Wage, currently $7.25 per hour for non-exempt employees (effective July 24, 2009).

Federal Minimum Wage Rate: The minimum wage applied by the federal government. Currently set at $7.25 per hour for non-exempt employees.

State Minimum Wage Rate:
 States and localities can also implement minimum wage rates. When a state's minimum wage is higher than the federal minimum wage, the higher rate applies. If the federal rate is higher than the state rate, the federal rate applies.

Youth Under Age 20:
 Minimum wage for young workers - those under 20 - is only $4.25/hour, at least for their first 90 consecutive calendar days of employment. After the 90 day period, or if an employee turns 20 during the 90 days, minimum wage is $7.25/hour.

Full-time students employed in retail stores, agriculture, or colleges and universities can be paid 'not less than 85% of the minimum wage' according to the Department of Labor. If employers wish to pay full-time students less, they must obtain a certificate from the Department of Labor.

Tipped Workers:
 The minimum wage for tipped employees is $2.13/hour in direct wages, if that amount plus tips equals at least the federal minimum wage. In this case, the employee must retain all tips and earn more than $30/month in tips.

Student Learners:  This applies to high school students over the age of 16 who are enrolled in vocational education. If an employer obtains the correct certificate from the Department of Labor, the employer is allowed to pay the employee 'not less than 75% of the minimum wage'.

Exempt Employees: The minimum wage does not apply to exempt employees as a whole. However, different wage minimums are required based on profession.

Non-Exempt Employees: The federal minimum wage applies, unless the state or jurisdiction's rate is higher than the federal minimum wage. The rate that is most beneficial to the employee always applies.

For more information about minimum wage, please visit the Department of Labor Q&A page on the topic.