Legal Definitions - minimum wage

Minimum wage refers to the lowest hourly rate of pay that employers are legally required to provide to their employees.

This fundamental labor protection was established in the United States by the Fair Labor Standards Act (FLSA) in 1938. Its primary purpose is to ensure a basic standard of living for workers, protect them from exploitation, and stabilize the economy by setting a floor for compensation. While there is a federal minimum wage, many states and even some cities have enacted their own minimum wage laws. When both federal and state laws apply, employees are entitled to receive the higher of the two rates.

The minimum wage generally applies to most employees, whether full-time or part-time, in both the private and public sectors. However, certain categories of workers, such as executives, administrative professionals, outside salespersons, and in some specific circumstances, certain students or individuals with disabilities, may be exempt from these requirements. The U.S. Department of Labor's Wage and Hour Division is responsible for enforcing minimum wage laws, and employees who are not paid correctly can pursue legal action to recover unpaid wages, damages, and legal fees.

Here are some examples illustrating how minimum wage laws apply:

• Example 1: The New Restaurant Employee

  Imagine a new restaurant opens in a bustling city. They hire several entry-level staff, including a dishwasher and a server. Even though the server might earn tips, the restaurant is legally obligated to pay both the dishwasher and the server at least the minimum hourly wage set by the city or state, whichever is higher. If the city's minimum wage is $15.00 per hour, and the federal minimum is $7.25 per hour, the restaurant must pay at least $15.00 per hour to these employees, ensuring they receive a baseline income regardless of tips or other factors.

• Example 2: The Summer Intern at a Tech Company

  A college student secures a paid summer internship at a technology company. Even though the student is gaining valuable experience and the position is temporary, the company must pay the intern at least the applicable minimum wage for every hour worked. This demonstrates that minimum wage protections extend to temporary and entry-level positions, ensuring that even interns receive fair compensation for their labor, unless a very specific, narrow exemption applies (e.g., unpaid internships meeting strict legal criteria, which are distinct from paid internships).

• Example 3: The Retail Worker in a Border Town

  Consider a retail store located in a town that borders two states. One state has a minimum wage of $12.00 per hour, while the neighboring state has a minimum wage of $10.00 per hour. If the store is physically located in the state with the $12.00 minimum wage, all its employees must be paid at least $12.00 per hour, even if the federal minimum wage is lower. This illustrates the principle that when state and federal minimum wages differ, the employer must pay the higher of the two rates to ensure employees receive the most beneficial compensation legally mandated.