Federal Minimum Wage Law Is at a Crossroads
Federal Minimum Wage Law Is at a Crossroads
There are calls in Washington to raise the minimum wage to as much as $15 an hour, but it hasn’t budged since
Where the Federal Rate Stands
It’s important for both business managers and employees to have a firm grasp of the minimum wage rules. Currently, the federal minimum wage for covered non-exempt employees is $7.25 an hour, the amount set in 2009. An exception exists for employees under the age of 20. They may be paid a subminimum wage of $4.25 an hour during their first 90 consecutive calendar days on the job.
The federal provisions apply to full- and part-time workers in both the private and public sectors. They’re included in the Fair Labor Standards Act (FLSA), which also includes criteria for overtime pay, recordkeeping and child labor. Employers that must follow the guidelines are:
-Most businesses with an annual dollar volume of business of $500,000 or more,
-Certain entities regardless of annual business volume, such as hospitals, schools, higher education institutions and government agencies,
-Smaller firms engaged in interstate commerce or the production of goods for commerce (including employees in transportation or communications or who regularly use mail or telephones for interstate communications), and
-Companies and individuals employing domestic service workers such as day workers, housekeepers, chauffeurs, cooks or full‑time babysitters, as long as the worker receives at least $2,000 in 2017.
It’s important to bear in mind the following key considerations:
-FLSA doesn’t provide wage payment or collection procedures for an employee’s usual or promised wages or commissions exceeding those required by the federal law.
-The law doesn’t limit the number of hours in a day, or days in a week, an employee may be required or scheduled to work, including overtime hours, if the employee is at least 16 years old (many state minimum wage laws may cover some of these issues, such as meal or rest periods, or discharge notices).
-Employees covered by both the federal and a state minimum wage law are entitled to receive the higher amount.
Special Rules
Certain employees are exempt from FSLA’s minimum wage and overtime pay provisions, while others are exempted only from the overtime pay requirements. Because these exemptions are narrowly defined, you should check the exact terms and conditions with your local Wage and Hour Division (WHD) office.
Employees may be paid on a piece-rate basis, provided they receive at least the equivalent of the required minimum hourly wage rate and overtime pay if they work longer than 40 hours in a workweek. Employers of employees who regularly receive more than $30 a month in tips may consider those tips as part of their wages. Employers of tipped employees are required to pay only $2.13 an hour if that amount combined with the tips at least equals the federal standard.
Finally, under certificates obtained from the WHD, employers may pay less than the minimum to:
-Vocational education students,
-Full‑time students working in retail or service establishments, agriculture or higher education institutions,
-Certain computer workers, including system analysts, programmers and engineers, and
-Individuals whose earnings or productive capabilities are hindered by physical or mental disabilities.
Recent Developments in the States
While members of Congress may have been slow to act, almost half of the states have boosted their minimum wages over the past year. Beginning January 1, 2017, 19 states started providing higher amounts than they did the year before. Of this group:
-7 states automatically raised their rates based on the cost of living (Alaska, Florida, Missouri, Montana, New Jersey, Ohio and South Dakota),
-5 increased rates through ballot initiatives (Arizona, Arkansas, Colorado, Maine and Washington), and
-7 put into effect changes mandated by legislation passed in earlier sessions (California, Connecticut, Hawaii, Massachusetts, Michigan, New York and Vermont).
Maryland, Oregon and the District of Columbia are scheduled to raise their respective minimum wages on July 1 this year. Increases in other states are being debated or have been approved by state legislatures.
On the other hand, a relatively large number of states are still bucking the trend. Notably:
-5 states have no minimum wage laws at all, so workers in those states must continue to rely on the federal minimum wage,
-4 states have minimum wage requirements that are less than the current federal rate, and
-13 states remain in lockstep with Uncle Sam.
Note: Rates may differ among counties and cities within a state. You can find a complete rundown on the minimum wage rates for individual states here.
Consult an Expert
The basic framework for minimum wage rates is relatively simple, but the law is riddled with exceptions and special rules. Don’t make any assumptions about the status of your workers without obtaining an expert opinion.
Sidebar: Minimum Wage Already Boosted for Federal Contractors
Some workers have been benefiting from a federal minimum wage hike for a few years now.
On February 12, 2014, former President Obama signed an executive order setting a new minimum wage for federal contractors, followed by a final rule issued by the Department of Labor. The inflation-adjusted minimum federal wage requirement for federal contractors in 2017 is $10.20 an hour.
(Source: BizActions)
