True or false: As an employer, you possibly can pay staff any quantity you need. False. It’s 100% false. Why? Due to minimal wage legal guidelines.
However, what’s minimal wage? Relying on your online business’s location, you’ll have differing federal, state, and native minimal wage charges. To make sure your online business is compliant with labor legal guidelines, get to know minimal wage.
What’s minimal wage?
The minimal wage is the lowest quantity you possibly can legally pay an worker per hour of labor. You possibly can pay greater than the minimal wage in case you’d like, however you can not pay lower than the minimal wage.
Minimal wage legal guidelines don’t apply to impartial contractors, so it’s essential to just be sure you classify your staff appropriately.
Who units the minimal wage?
The federal authorities units a regular minimal wage that applies to all staff in america. Nevertheless, states and localities can set their very own minimal wage charges, too.
So, which price do it’s essential observe? Federal, state, or native?
Federal minimal wage vs. state vs. native
What occurs if a state’s minimal wage is decrease than the federal minimal wage? What about if the native minimal wage is decrease than the federal?
If the state or native minimal wage is decrease than the federal minimal wage, you will need to pay your staff at the least the federal minimal wage price.
What about if the state or native minimal wage is larger? If the state or native minimal wage is larger than the federal price, pay your staff the state or native price, whichever is larger.
Professional tip: When selecting between federal, state, and native minimal wage legal guidelines, at all times pay your staff the very best price.
What’s the federal minimal wage?
The federal minimal wage is ready by the Honest Labor Requirements Act (FLSA) and enforced by the U.S. Division of Labor (DOL).
Though the federal minimal wage price is topic to vary, it has not elevated since 2009.
So, what’s the nationwide minimal wage? The present federal minimal wage is $7.25 per hour. Nevertheless, the federal minimal wage may doubtlessly improve in upcoming years.
Minimal wage by state
Every state can set its personal minimal wage. If a state’s minimal wage is bigger than the federal minimal, pay staff at the least the state’s minimal wage.
For instance, the minimal price in Ohio is $10.10 per hour for 2023. When you’ve got staff in Ohio, you will need to pay them at the least the state’s minimal since it’s better than the federal minimal wage of $7.25.
Quite a lot of states handed laws to extend the state’s minimal wage to $15.00 by a selected 12 months. For instance, Connecticut’s Public Act No. 19-4 required the state’s minimal wage to extend yearly over a five-year interval. As a result of Connecticut has been following this minimal wage improve schedule, the state’s minimal wage reached $15.00 per hour in 2023.
Use the map beneath to see which states observe the federal minimal wage price and which set their very own minimal.
You may be questioning how a lot minimal wage is in your state. Try our state-by-state minimal wage price chart beneath to seek out out. Understand that the states with $7.25 observe the federal minimal wage base.
[State minimum wages as of July 1, 2023]
*These states should not have a state-mandated minimal wage. As a substitute, most employers should pay the federal minimal wage.
**These states have a minimal wage of $5.15 for any employers who are usually not coated by the Honest Labor Requirements Act. Most employers are coated by the FLSA and should pay the federal minimal wage of $7.25.
Heads up! State minimal wage legal guidelines are ever-changing. Keep up-to-date along with your state’s minimal wage necessities by periodically checking your state’s web site.
Native minimal wage
Some cities and counties create an area minimal wage that differs from state or federal charges. Native wages are most typical in greater cities. Employers should pay the larger of the 2 charges if the native minimal wage is completely different from the state minimal wage.
For instance, the minimal wage in San Francisco is $18.07 per hour. Employers in San Francisco should pay staff at the least the native base wage as a result of it’s better than each the state and federal minimums.
Use the chart beneath to get began. Nevertheless, examine your metropolis’s legal guidelines, as this is probably not an all-inclusive listing.
[Local minimum wages as of July 1, 2023]
| Metropolis / State | Native Minimal Wage |
|---|---|
| Alameda, California | $16.52 |
| Albuquerque, New Mexico | $12.00 |
| Belmont, California | $16.75 |
| Berkeley, California | $18.07 |
| Bernalillo County, New Mexico | $9.45 (notice the state minimal wage of $12.00 is larger) |
| Burlingame, California | $16.47 |
| Chicago, Illinois | $15.00 (employers with 4 to twenty employees) $15.80 (employers with 21 or extra employees) |
| Prepare dinner County, Illinois | $13.70 (some municipalities choose out of the county minimal wage) |
| Cupertino, California | $17.20 |
| Daly Metropolis, California | $16.07 |
| East Palo Alto | $16.50 |
| El Cerrito, California | $17.35 |
| Emeryville, California | $18.67 |
| Flagstaff, Arizona | $16.80 |
| Foster Metropolis, California | $16.50 |
| Fremont, California | $16.80 |
| Half Moon Bay, California | $16.45 |
| Hayward, California | $15.50 (small employers) $16.34 (giant employers) |
| Las Cruces, New Mexico | $12.00 |
| Los Altos, California | $17.20 |
| Los Angeles, California | $16.78 |
| Los Angeles County (unincorporated) | $16.90 |
| Malibu, California | $16.90 |
| Menlo Park, California | $16.20 |
| Milpitas, California | $17.20 |
| Minneapolis, Minnesota | $14.50 (employers with 100 or fewer staff) $15.19 (employers with greater than 100 staff) |
| Montgomery County, Maryland | $14.50 (employers with 10 or fewer staff) $15.00 (employers with 11 – 50 staff) $16.70 (employers with 51 or extra staff) |
| Mountain View, California | $18.15 |
| Nassau County, New York | $15.73 (if the employer does supply well being advantages) $18.26 (if the employer doesn’t supply well being advantages) (Minimal wage can be adjusted July 31, 2023) |
| New York Metropolis, New York | $15.00 |
| Novato, California | $15.53 (small employers with 1 – 25 staff) $16.07 (giant employers with 26 – 99 staff) $16.32 (employers with 100+ staff) |
| Oakland, California | $15.97 |
| Palo Alto, California | $17.25 |
| Pasadena, California | $16.93 |
| Petaluma, California | $17.06 |
| Portland, Maine | $14.00 |
| Prince George’s County, Maryland | $16.60 |
| Redwood Metropolis, California | $17.00 |
| Richmond, California | $16.17 |
| Rockland, Maine | $14.00 |
| Saint Paul, Minnesota | $15.19 (macro companies) $15.00 (giant companies with 101 – 10,000 staff) $13.00 (small companies 6 – 100 staff) $11.50 (micro companies with 5 or fewer staff) |
| San Carlos, California | $16.32 |
| San Diego, California | $16.30 |
| San Francisco, California | $18.07 |
| San Jose, California | $17.00 |
| San Mateo, California | $16.75 |
| San Mateo County, California (unincorporated | $16.50 |
| Santa Clara, California | $17.20 |
| Santa Fe Metropolis, New Mexico | $14.03 |
| Santa Fe County, New Mexico | $12.95 |
| Santa Monica, California | $16.90 |
| Santa Rosa, California | $17.06 |
| SeaTac, Washington | $19.06 (for workers in hospitality and transportation industries) |
| Seattle, Washington | $16.50 (employers with 500 or fewer staff who pay $2.19 per hour towards medical advantages and/or staff earn $2.19 per hour in ideas) $18.69 (employers with 500 or fewer staff who don’t pay $2.19 per hour towards medical advantages and/or staff earn $2.19 per hour in ideas) $18.69 (employers with 501 or extra staff) |
| Sonoma, California | $16.00 (employers with 25 or fewer staff) $17.00 (employers with 26 or extra staff) |
| South San Francisco, California | $16.70 |
| Suffolk County (Lengthy Island), New York | $15.00 |
| Sunnyvale, California | $17.95 |
| West Hollywood, California | $19.08 |
| Westchester County, New York | $15.00 |
Like state minimal wage charges, native charges are topic to vary. Examine along with your native authorities for extra info.
Exceptions to minimal wage
There are some exceptions to paying your staff minimal wage. Minimal wage varies for:
Minimal wage for tipped staff
The FLSA at present permits a tip credit score, which reduces the federal minimal wage for tipped staff. Tipped staff can have a decrease base wage as a result of their ideas ought to make up the remainder of their wages.
The federal tipped minimal wage is at present $2.13. This is applicable to staff who earn greater than $30 in ideas monthly.
Particular person states may have minimal wage legal guidelines for tipped staff. Examine your state’s tipped minimal wage legal guidelines to study extra.
Youth minimal wage
The FLSA additionally permits a particular youth minimal wage. You possibly can pay staff beneath age 20 a wage of $4.25 for the primary 90 days of employment. After 90 consecutive days of employment or the worker reaches 20 years of age (whichever comes first), the worker should obtain the minimal wage.
Some states have a youth minimal that’s better than the federal youth minimal wage. For extra info, take a look at the U.S. Division of Labor’s web site.
Dwelling wage vs. minimal wage
When wanting by way of state and native minimal wage legal guidelines, you might even see the time period “residing wage.” For instance, Nassau County, NY makes use of residing wage instead of minimal wage. So, what’s a residing wage?
A residing wage is a state or native minimal wage that’s larger than the federal or state minimal wage. Lawmakers could set these wages to fulfill or exceed federal poverty pointers for a household of 4. Or, they could select the residing wage to accommodate the price of residing in a selected geographic area. The aim of residing wage legal guidelines is to lower poverty by way of elevated earnings.
Some residing wage legal guidelines may additionally mandate paid day off, medical insurance protection, or different advantages for workers.
Minimal wage and residing wage legal guidelines could overlap. Or, residing wage legal guidelines could also be enacted instead of efforts to extend minimal wage charges.
This text has been up to date from its unique publication date of March 22, 2012.
This isn’t supposed as authorized recommendation; for extra info, please click on right here.
