Who Must be Paid the Federal Minimum Wage?

Many issues can cause wage disputes with an employer. One issue involves the federal minimum wage. Read on to learn who qualifies for the federal minimum wage, exceptions to the rule, and how state laws interact with federal regulations to ensure fair pay.

If you need assistance regarding a federal minimum wage issue, it’s wise to get legal help. An experienced wage law attorney can assess the case, offer legal advice, and determine your best course of action to secure your legal rights.

Understanding the Federal Minimum Wage

President Roosevelt signed the Fair Labor Standards Act (FLSA) in 1938 to protect workers. Among other things, the Act provided a federal minimum wage rate and mandatory pay for overtime work. In 1938, the federal government set the minimum wage at 25 cents. Today, Congress has set the minimum hourly wage at $7.25. However, the law does not apply to all U.S. workers.

The FLSA requires that most employees in the United States be paid at least the federal minimum wage for all hours worked, and receive overtime pay for any hours worked over 40 in a workweek (non-exempt employees). However, the FLSA provides an exemption from both minimum wage and overtime pay for employees employed as bona fide executive, administrative, professional, and outside sales employees.

Employee Eligibility for Minimum Wage

The FLSA protects most employees in the United States. It applies to the following:

• Employees who work for an enterprise that has at least two employees and at least $500,000 in annual sales or revenue
• Employees of the following industries: hospitals, medical or nursing care facilities, schools, preschools, and government agencies. Employees in these industries are protected by the FLSA regardless of the number of employees or the dollar amount of the annual business conducted.
• Employees whose work regularly involves interstate commerce. This can potentially include any employee involved in manufacturing, packaging, or shipping goods out of state. This coverage is interpreted broadly and involves many workers.

Exceptions to the Federal Minimum Wage

The protections of the FLSA are expansive and cover many workers. However, there are several notable exceptions to FLSA coverage. Some workers are exempt from FLSA requirements, including the following:

Workers with Disabilities

If a worker’s disability impacts their job performance, an employer can request an authorization certificate from the Department of Labor Wage and Hour Division (DOL). This allows the employer to pay the employee a special minimum wage, or subminimum wage. The DOL must approve the special minimum wage, which must be based on the individual worker’s actual productivity in proportion to the wages and productivity of similar workers without disabilities. Overtime pay and other FLSA provisions still apply to workers with disabilities receiving special minimum wages.

Student Employees

An employer may obtain a certificate from the Wage and Hour Division (WHD) which allows the employer to pay a full-time student not less than 85% of the regular minimum wage. The workweek is limited to no more than 20 hours a week when school is in session and 40 hours when school is out. The employer must follow all child labor laws. The Student-Learner Program is for high school students at least 16 years old and enrolled in a vocational course. The employer can petition to pay the student not less than 75% of the regular minimum wage for as long as the student is enrolled in the vocational program.

Youth Minimum Wage

An employer may pay an employee under the age of 20 $4.25 an hour for the first 90 days of employment, so long as the employee’s work does not displace other workers. After the first 90 days, the employee must be paid the full minimum wage unless another exception applies to the employee.

Tipped Workers

Special rules apply to tipped employees who generally receive $30 a month or more in tips. An employer may consider the employee’s tips as part of their wages, but it must still be not less than $2.13 an hour in direct wages. If the employee’s tips do not make up the difference between $2.13 an hour and the prevailing minimum wage, then the employer must make up the difference. An employer can credit a portion of the employee’s tips towards the employer’s minimum wage obligation (tip credit).

Federal v. State Minimum Wage Laws

It is important to note that other federal or state wage and hour laws may protect some employees exempt from FLSA provisions.

Federal Minimum Wage for Federal Contractors

Following the rescission of Executive Order 14026 in March 2025, the minimum wage for federal contractors generally reverted to approximately $13.30 per hour under Executive Order 13658. Employers that have contracts with federal agencies must comply with the minimum wage for federal contractors. They must also comply with state minimum wage laws. State minimum wage laws could be lower or higher than the rate for federal contractors.

State Minimum Wages

The minimum wage requirements vary by state. States can determine their own minimum wage. Some states have higher minimum wages than that required by the federal minimum wage laws.

The U.S. Department of Labor Wage and Hour Division provides information on state minimum wage laws. Some states have a higher wage than the federal minimum hourly rate while others have a minimum wage rate lower than the federal rate.

States with a higher minimum hourly rate than the federal minimum wage include New York, California, Oregon, Massachusetts, Illinois, Florida, and Connecticut.

States with a rate lower than the federal minimum wage (or no minimum wage) include Alabama, Georgia, Louisiana, Mississippi, Tennessee, and Wyoming. Employers covered by the FLSA must pay the federal minimum wage of $7.25.

Local Government Minimum Wages

Numerous cities and municipalities have their own minimum wages. These government entities can also institute minimum wage increases. Some local jurisdictions adjust their minimum wages annually for inflation or the cost of living.

Ensuring Fair Pay for All Workers

Congress enacted the FLSA to protect workers’ rights and ensure that employees received at least a living wage for the work performed. If you have questions about the federal minimum wage or any aspect of the FLSA, speak with an experienced wage law attorney. They can answer your questions and explain your legal options.