Minimum Wage Law Requirements

The federal Fair Labor Standards Act requires, among other things, that a minimum wage be established, and that all nonexempt employees be paid that minimum wage. As of October 1, 1997, the minimum wage is $5.15 per hour (previously the minimum was $4.75 per hour). This rate must be paid to all nonexempt employees for each hour worked up to and including 40 hours in a calendar workweek. Any time beyond 40 hours must be paid as time-and-a half overtime, which works out to a current minimum of $7.725 per hour.

The minimum doesn't just apply to hourly workers. The law doesn't require you to pay an employee on an hourly basis just because the law is stated that way; it merely requires you to pay a covered employee for a workweek an amount that's at least equal to the minimum wage, multiplied by the hours worked. The employee may be paid on an hourly, a salary, a monthly, a piecework, or any other basis as long as the statutory minimum requirement of $5.15 per hour is satisfied. For example, an employee who works 40 hours a week must be paid a weekly salary of at least $206.00.

Also, the minimum wage doesn't have to be paid in cash. For example, you can pay some or all of it in room and board. But there are two exceptions to that rule: (1) you cannot make a profit on the noncash payments and (2) you cannot use the cost of facilities to pay your employees, if the employee's use of the facility is primarily for your benefit.

In considering your obligations to pay minimum wage: