The minimum wage is really just the least amount you can pay an employee for the work they do. We have included a link at the bottom to the labor department that gives some specific numbers and a more detailed look. Here we content ourselves with a broader view.
A minimum wage for the United States was first established in 1938, during the Great Depression under the Fair Labor Standards Act. Since then, various ammendments have been added and the dollar amount of the minimum wage has been increased.
Not every employeer has to pay minimum wage. Exceptions are few but they do exist.
For a feel of who is exempt here are a few examples:
- “Executive, administrative, and professional employees
- Workers with disabilities
- Federal criminal investigators
- Farmworkers on small farms
- Homeworkers making wreaths
- Newspaper delivery
- Newspaper employees of limited circulation newspapers
- Seamen on other than American vessels
- Switchboard operators
- Certain seasonal workers”*
Also included, with some fairly strict conditions, are students and young people under the age of 20.*
As you can see, the list is pretty restricted. Chances are, if you employee hourly people, you will have to pay at least minimum wage.
Besides the feds, states and localities can set their own minimum wages. “So what amount do I need to pay?”, you may ask. The answer is the largest amount among the three. Or the largest between state and federal if your local jurisdiction does not have a minimum wage.
So what if I don’t want to pay minimum wage?
As with most anything else, there are various pros and cons for paying less than the required minimum wage.
Wow, this can save me a ton of money!
The labor department has an arsenal ranging from administrative procedures to civil litigation all the way up to criminal prosecution. Most people would agree that back wages, liquidated damages, and civil penalties don’t sound good. To say nothing about fines and imprisonment. On balance, most would agree that paying at least the minimum wage is probably the way to go. Your payroll software should help to insure you are paying at least minimum wage.
As promised, here is a link to the labor department that gives specific guidance on minimum wage by state:
* US Department of Labor