Minimum Wage Law
Definition
Federal and state regulations that set the lowest legal hourly rate employers must pay employees.
What is Minimum Wage Law?
Minimum wage laws establish the lowest hourly rate employers can legally pay their employees. The Fair Labor Standards Act (FLSA) sets the federal minimum wage, but many states and cities have higher minimums. Employers are required to follow the rate that is most favorable to the employee. These laws are designed to protect workers from unfairly low pay and promote consistent labor standards.
Why is Minimum Wage Law Important for Employers?
Staying compliant with minimum wage laws is essential for both legal and operational reasons:
- Helps avoid costly back pay, fines, and legal disputes
- Accounts for regional differences, including city-specific and industry-based requirements
- Influences overall compensation planning and budgeting
FAQs
What determines the applicable minimum wage rate?
Employers must follow the highest rate between federal, state, or local minimum wage laws—whichever benefits the employee most.
Are tipped employees subject to the same minimum wage?
Not always. Some states allow a lower cash wage for tipped workers, but employers must ensure tips bring total pay up to the full minimum wage.
How often does minimum wage change?
Rates can change annually or even more frequently depending on cost-of-living adjustments or ballot initiatives at the state or city level.
How ExtensisHR Can Help
We simplify minimum wage compliance by:
- Tracking federal, state, and local wage law changes
- Updating payroll and employee classifications as needed
- Providing training to managers to support ongoing compliance