Iowa Minimum Wage Laws
Iowa’s current minimum wage is $7.25. IA Code 91D.1(1)(a)
Iowa’s minimum wage requirements do not apply to employers that have an annual gross volume of sales made or business done that is less than $300,000, not including any excise tax at the retail level that are recorded separately, except the following which are not subject to a minimum sales or business threshold:
- employer that launder, clean, or repair clothing or fabrics;
- employers that engage in construction or reconstruction;
- hospitals or other institutions primarily engaged in the care of the sick, aged, or mentally ill, including institutions that treat individuals with symptoms of mental illness who reside at the premises of the institution;
- schools, including those for individuals with physical disabilities or gifted children, preschools, elementary and secondary schools, and institutions of higher education; and
- public agencies.
Employers subject to the federal Fair Labor Standards Act must pay employees the federal minimum wage rate if it is greater than the Iowa rate. If the federal rate is ever lower than the Iowa rate, employers must pay employees the Iowa rate. IA Code 91D.1(1)(b)
Tip minimum wage
A tip is defined as a sum given by a customer to an employee as a gift or gratuity after the employee performs services for the customer. The customer has the sole discretion to determine if the tip is paid, how much it will be, and generally who will receive it. IA Admin Rules 875-217.52 Tips do not include mandatory service charges; however, if the service charges are distributed to employees, they may be relied on by the employer to satisfy its requirement to pay the employee the standard minimum wage (see below). IA Admin Rules 875-217.52 Tips may be paid in cash, check, or credit card. Special gifts in a form other than money, such as tickets or merchandise, may not be counted as tips. IA Admin Rules 875-217.53
An employer must ensure employees paid the tipped minimum wage rate also earn the standard minimum wage rate when the wages earned from tipped wages are combined with tips received. The amount of tips an employer relies on to ensure its compliance with the standard minimum wage rate is referred to as a tip credit. An employer may only count tips as a tip credit if the employees receive the tips freely and absent any control by their employer. IA Admin Rules 875-217.52; IA Admin Rules 875-217.59
Employers may pay the tipped minimum wage to employees who are working in occupations where they customarily and regularly earn more than $30 per month. An employer does not need to rely on calendar months to determine whether an employee customarily and regularly receives $30 per month, instead they may use any appropriate recurring monthly period. If employees work more than one job for their employer, the employer may only pay the employees tipped wages for time worked in the jobs where they customarily and regularly receive $30 per month in tips. Work that is related to tipped work, e.g. making coffee, setting tables, etc., can be compensated at the tipped wage rate. IA Admin Rules 875-217.56
Employees are considered to receive tips customarily and regularly if they receive tips more frequently than occasionally, although they do not need to receive them constantly. Employees still qualify to be paid tipped wages if they occasionally do not meet the $30 per month threshold due to sickness, vacation, seasonal fluctuations, or other similar occurrences. IA Admin Rules 875-217.57
Tip pooling and sharing
Iowa minimum wage laws allow employees to participate in a tip pooling or sharing agreement. It is not clear whether an employer may require employees to participate in tip pooling or sharing. When employees participate in tip pooling or sharing, only those amounts of tips received by each employee after the tips have been split may be counted as tips for that employee for purposes of the employer meeting its tip credit obligations. IA Admin Rules 875-217.54
Employees with disabilities
Iowa minimum wage laws do not allow employers to pay employees with disabilities a subminimum wage rate lower than the standard minimum wage.
Iowa minimum wage laws allow employers to pay trainees $6.35 for the first 90 calendar days the trainees are employed. IA Code 91D.1(1)(d) This is referred to as the initial employment wage rate. IA Admin Rules 875-215.2 If an employee end their employment before the 90 calendar day limit expires and is rehired within three years, the employer may only pay the rehired the initial employment wage for the number of calendar days remaining from the initial employment period. If the employee completes the 90 day initial employment period and then has their employment end, the employer may not pay the employee the initial employment wage rate upon rehire if the employee is hired within three years. IA Admin Rules 875-215.2(3)
Iowa minimum wage law does not allow employers to pay apprentices a subminimum wage rate lower than the standard minimum wage.
Iowa minimum wage law does not allow employers to pay learners a subminimum wage rate lower than the standard minimum wage.
Iowa minimum wage law does not allow employers to pay student learners a subminimum wage rate lower than the standard minimum wage.
Iowa minimum wage law does not allow employers to pay student workers a subminimum wage rate lower than the standard minimum wage.