Several states already have minimum wages that meet or exceed the $7.25. In such cases where there is a state minimum wage established, employers are required to pay employees the highest minimum wage, whether that be the federal or state minimum wage.
Who is Eligible to Receive the Minimum Wage?
Generally, all covered, nonexempt employees as determined by the provisions of the Fair Labor Standards Act (FLSA) are eligible to be paid at least the federal minimum wage. Just about every employee in the United States is covered by the FLSA with the exception of employees working for small construction companies and employees working for small independently owned retail or service businesses. Although many employees are covered by the FLSA, certain employees are exempt from the federal minimum wage and overtime provisions.
What is the Difference Between Exempt and Nonexempt Employees?
The basic distinction between exempt and nonexempt employees is that nonexempt employees must be paid at least the federal minimum wage for each hour worked and provided with overtime pay of no less than one-and-a-half times their hourly wage for time worked beyond 40 hours each week. Exempt employee status is determined by many factors including salary level, salary basis, and job duties. Examples of exempt employees include:
- Executive Employees
- Professional Employees
- Outside Sales Employees
- Computer Employees
For more detail on employee classifications, visit the United States Department of Labor website.
How is Overtime Pay Determined?
Overtime pay is due at the rate of at least one-and-a-half times the regular hourly wage for each hour worked over 40 per workweek. A workweek is defined as seven (7) consecutive 24-hour periods, or 168 hours. Each workweek must stand alone; the averaging of hours over two or more weeks is not permitted.
What is the Minimum Wage for Tipped Employees?
Effective July 24, 2009, employers are required to pay tipped employees the minimum wage of $2.13 per hour if certain criteria are met. An employer must pay this amount in direct wages if this amount plus tips received by the employee is at least the federal minimum wage (i.e., $7.25), the employees retains all tips, and the employee regularly receives more than $30 per month in tips. If an employee's tips combined with the employer's direct wages of at least $2.13 an hour do not equal the federal minimum hourly wage, the employer must make up the difference.
References: United States Department of Labor Website
The information contained within this article is for general guidance only. As such, it should not be used as a substitute for consulting with professional accounting, tax, legal or other competent advisers.
Lauren Massie - “There is no knowledge that is not power” ~ Ralph Waldo Emerson
