For some states, each new year brings changes to minimum wage laws. Also, state minimum wage laws may differ from the federal minimum wage. Thus, it is important to be aware of any changes to state minimum wage laws and how they differ from federal requirements. This is especially true because an employer is required to apply the law which grants the greatest benefits to its employees.
A minimum wage is a specific hourly rate established by law, which an employer is required to pay employees for hours worked. Both federal and state laws have exempted and excluded certain employers and employees from their coverage; however, these exemptions and exclusions are typically narrow in their coverage. Thus, most employer and employees are usually covered.
Federal Minimum Wage Laws
The Federal minimum wage is governed by theFair Labor Standard Act (FLSA). The FLSA also governs the rate you are required to pay your employees for overtime, as well as governing the minimum age requirements for youth employment.
The federal minimum wage for 2013 is $7.25 per hour, and overtime, for hours worked over forty in a workweek, is calculated at time and a half, which equates to $10.88 per hour for an employee making minimum wage. For those employers that are covered by the FLSA, there is not a minimum number of employees that must be employed before minimum wage and overtime requirements must be met.
State Minimum Wage Laws
Many states have higher minimum wage rates and tougher overtime requirements than the FLSA standards. For example, California’s current minimum wage for 2013 is $8.00 per hour. Like federal law, California employers are required to pay overtime to their employees. Compared to the federal laws, however, the California’s laws for overtime wages can be a bit complex. For instance, unless otherwise exempt, the overtime wage is calculated at:
- one half (1/2) times the employee’s regular rate of pay for all hours worked in excess of forty (40) hours in a workweek or eight (8) hours up to and including 12 hours in any workday, and for the first eight (8) hours worked on the 7th consecutive day of work in a workweek; and
- two (2) times the employee’s regular rate or pay for all hours worked in excess of twelve (12) hours in any workday and for all hours worked in excess of eight on the 7th consecutive day of work in a workweek.
What this means is most California employers are required to pay their employees overtime in more situations than would be required by the FLSA.
There are states, such as Arkansas and Wyoming that have lower minimum wage rates compared to the federal minimum wage of $7.25. Some states, such as Minnesota have more than one minimum wage rate, which is dependent on the business/enterprises annual receipts. Finally, there some states that do not have a state minimum wage law such as Mississippi. Consequently, employers in these states must only worry about complying with federal minimum wage laws.
When in doubt, get help
Federal and state minimum wage laws have many more differences that we did not discuss. Considering the complexity and constant changes of the minimum wage laws, you should consult with a lawyer who specializes in employment law if you are unsure how federal and state minimum wage laws apply to you.
Contributed by Suzanne Mathews