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The Minimum Wage: Know the Basics

The Minimum Wage: Know the Basics

The federal minimum wage is currently at $7.25 per hour, as established by the Fair Labor Standards Act. This rate has not been raised since 2009. Employers in every state are required to pay all employees this minimum rate. However, states do have the ability to create a higher rate for workers employed within their communities, although they may not set a lower rate.

Here are some other important things you might need to know about minimum wages.

  • Minimum wage for tipped employees. While most employees are guaranteed at least $7.25 per hour, employees who work for tips, such as wait staff or bartenders, have a different wage expectation. The minimum is $2.13 per hour if the amount they earn plus tips equals at least the federal minimum wage.
  • Pay for younger workers. Many people may not realize this, but workers under the age of 20 are not guaranteed minimum wage in all situations. Employers are required to pay $4.25 to workers for the first 90 days of their employment or until they turn 20, whichever comes first.
  • Wages for full-time students. In some cases, employers can hire full-time students and pay them no less than 85 percent of the minimum wage if they obtain a certificate from the U.S. Department of Labor. These include students employed in retail or service, agriculture, or by colleges and universities.
  • Enforcement of minimum wage standards. The Department of Labor's Wage and Hours Division ensures that all U.S. workers are paid the minimum that is required under federal law. In states with higher minimums, they will also have offices that enforce their policies.
  • Living wage certification. Some areas of the country are embracing a new movement referred to as living wage. This taps into the idea that, even with minimum wage, many workers can't afford to live in the cities where they work because the cost of living is simply too high. If you're interested in becoming certified, look to see if there is a living wage organization in your community.

Do you want to know more about minimum wages and how they affect you?


Copy Right 2021

Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.

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