Most employees have the right to be paid at least the federal minimum wage ($7.25) for all hours worked regardless of whether they are paid by the hour, the day, or at a piece rate. Some state laws and local laws provide greater employee protections; employees are entitled to the highest of the local, state, or federal minimum wage that applies to them.

Employers may pay tipped employees a cash wage of no less than $2.13 per hour under federal law provided the employer meets certain requirements before claiming a credit against its minimum wage obligations. If an employee’s tips combined with cash wages do not equal at least the federal minimum wage ($7.25), the employer must make up the difference. Note that many states require higher direct cash wage amounts for tipped employees.

Employers may pay new hires the youth minimum wage (not less than $4.25 per hour) during the first 90 days of employment if employees are under age 20; but after 90 days of employment, or upon reaching age 20 (whichever comes first), they must receive at least the federal minimum wage. Employers who obtain a special certificate from the U.S. Department of Labor may also pay employees below the federal minimum wage if they are a student-learner enrolled in vocational education, a full-time student in certain workplaces, or a person whose earning or productive capacity is impaired by a disability for the work being performed. Some state laws do not allow the payment of lower wages to youth, students, or workers with disabilities.

Employers must pay employees for all hours employees work in a workweek. In general, “hours worked” includes all time an employee must be on duty, or at the place of work. Normally, time spent in training, traveling from site to site during the day, and doing repair work must be paid. Unless exempt, employees must be paid at least the minimum wage and any overtime for hours that they have already worked regardless of their immigration status.

A different, higher minimum wage may apply for work performed on or in connection with certain federal construction and service contracts. If employers perform work on or in connection with certain federal contracts entered into before January 30, 2022, employers must pay those working under the contract at least a minimum wage of $12.15 per hour, and for tipped employees who perform work on or in connection with such a federal contract, they must be paid a minimum of $7.90 per hour. If you perform work on or in connection with certain federal contracts that are entered into, renewed, or extended on or after January 30, 2022, employers must pay those working under the contract at least a $16.20 minimum wage, and for tipped employees who perform work on or in connection with such a federal contract, they must be paid a minimum of $13.75 per hour.

A service worker performing work under a service contract subject to the Service Contract Act must be paid at least the prevailing wage in the local area for the classification in which the employee is working. The prevailing wage is the minimum hourly wage to be paid based on what is prevailing in the locality where the work is performed, plus fringe benefits. If a worker performed work under such a contract, the worker must be paid at least the prevailing wage for the work performed, as reflected on the applicable wage determination issued by the Department of Labor.

A construction worker performing work on a federal or federally funded construction project subject to Davis-Bacon requirements must be paid at least the prevailing wage in the local area for the labor classification in which the employee is working. The prevailing wage is the minimum hourly wage and fringe benefits to be paid based on what is prevailing in the locality where the work is performed, as reflected on the applicable wage determination issued by the Department.

Questions? We’re here to help.

We are committed to helping you understand your responsibilities as an employer. Many questions about pay may be answered by using the following elaws (Employment Laws Assistance for Workers and Small Businesses) Advisors:

For additional assistance, please contact:

All discussions with us are free and confidential.

Learn about WHD