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An Employer's Guide to Minimum Wage Laws

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By Christopher Coble, Esq. | Last updated on

Labor Day is coming up. And while you may be considering whether to give your employees the day off, you may also want to consider some of the laws that resulted from the Nineteenth Century labor movement.

As the boss, you want to take good care of your employees and pay them what's fair. Generally speaking, you're not going to get into trouble for paying your workers too much. But paying them too little will land you in legal hot water.

There are federal, state, and even some local minimum wage laws. So, what are they, and which ones do you need to you follow?

Federal Minimum Wage Laws

The federal Fair Labor Standards Act sets the minimum wage from coast to coast, as well as the rules for overtime pay, recordkeeping, and child labor. That wage, for covered nonexempt employees, is $7.25 per hour and "time and a half" overtime for work over forty hours per week.

The FLSA applies to any employer that has at least two employees and either "an annual dollar volume of sales or business done of at least $500,000," or "hospitals, businesses providing medical or nursing care for residents, schools and preschools, and government agencies," with a few exceptions and exemptions.

Student-learners, full-time students in retail or service establishments, agriculture, or institutions of higher education, and certain service industry workers are exempt from federal minimum wage laws. Additionally, other workers are exempt from minimum wage and overtime pay statutes, like some executive, administrative, and professional employees; farm workers and seasonal employees; and casual babysitters and some elder care workers.

State Minimum Wage Laws

In addition to the federal minimum wage, states can set their own minimum wage laws, as long as they are higher than the federal minimum. These can range from New Mexico's $7.50 an hour to Washington's $12 an hour. The District of Columbia's minimum wage is $14 per hour. A total of 29 states plus D.C., Guam, and the Virgin Islands have minimum wage rates higher than the federal minimum wage, and many of them have scheduled annual adjustments to raise wages.

Another five states don't have a state-mandated minimum wage, however, as the Labor Department's Wage and Hour Division points out: "Federal minimum wage law supersedes state minimum wage laws where the federal minimum wage is greater than the state minimum wage. In those states where the state minimum wage is greater than the federal minimum wage, the state minimum wage prevails." So, for those of you who are familiar with the rule that federal law always trumps state law if there is a conflict, there is an exception for minimum wage provisions.

Local Minimum Wage Laws

Similarly, some cities and counties (around 45 at last count) have enacted minimum wage ordinances higher than that set by their respective states. Most are in California, like Berkeley ($15.59), Los Angeles ($14.25), and Sunnyvale ($15.65). But Seattle ($16.00), Minneapolis ($12.25), Chicago ($13.00) and even Cook County ($12.00) also have higher minimum wage laws.

However, 25 states have passed minimum wage preemption laws, which prohibit local governments from setting their own minimum wage laws. Therefore, state or federal wage laws prevail.

As you can see, complying with overlapping federal, state, and local minimum wage laws is no easy feat. And that's assuming those laws apply to your small business. To get an answer to that question, and make sure you're not in violation of any labor law, talk to an experienced local employment attorney.

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