The federal minimum wage is $7.25 an hour, and it has sat at that number since July 24, 2009, according to the U.S. Department of Labor. That is the longest stretch without an increase since the wage floor was created in 1938.
But here is the part that trips people up: most American workers are covered by more than one minimum wage law at the same time. There is the federal rate, often a state rate, and sometimes a city or county rate on top of that. When those numbers conflict, the rule is simple and worth memorizing: you are entitled to the highest rate that applies to you. An employer cannot pick the cheapest law on the menu.
The federal floor, and who it covers
The federal minimum wage comes from the Fair Labor Standards Act, the same law that governs overtime. It covers employees of businesses with at least $500,000 in annual sales, plus workers at smaller outfits who are engaged in interstate commerce, which courts have read broadly enough to sweep in most jobs. Hospitals, schools, and government agencies are covered regardless of size.
If you are covered by the FLSA and no state or local law says otherwise, $7.25 is your floor. In the handful of states that have no minimum wage law of their own, or that set one below $7.25, the federal number is what covered workers actually get.
When your state sets a higher number
Most states have decided $7.25 is not enough and set their own higher minimums. Many of those states also adjust the rate automatically each year for inflation, so the number can change every January (and in a few states, in July). The Labor Department keeps a state-by-state table of current minimum wage rates that is updated as laws change, and it is the cleanest place to check your own state rather than relying on a sign in the break room.
The mechanics matter here. A state minimum wage law covers workers in that state even if their employer is also covered by the FLSA. Since you are owed the higher applicable rate, a covered worker in a state with a $15 minimum is owed $15, not $7.25. The federal rate never drags a higher state rate down.
Cities and counties can go higher still
A growing number of cities and counties set local minimum wages above their state’s rate, particularly in higher-cost metro areas. Where local rates exist, the same higher-rate rule applies: the local number wins if it is the largest. A few states have passed preemption laws that block cities from setting their own wage floors, which is why local minimums exist in some states and not others. If you work in a large city, it is worth a quick search of your city or county government’s website, because local rates often update on July 1 rather than January 1.
Tipped workers: the $2.13 rule
Federal law lets employers pay tipped workers a cash wage as low as $2.13 an hour and count tips toward the rest, a setup called the tip credit. The catch, spelled out in the Labor Department’s fact sheet on tipped employees, is that cash wage plus tips must reach the full minimum wage for every workweek. If tips fall short, the employer must make up the difference. Tips also belong to the worker: an employer cannot keep any portion of them, and managers cannot take a cut of a tip pool.
States split three ways on this. Some follow the federal $2.13 cash wage, some require a higher tipped cash wage, and several states require tipped workers to receive the full state minimum before tips. Again, the arrangement most favorable to you is the one you are owed.
Teens, students, and other exceptions
There are a few narrow, legal carve-outs. Employers may pay workers under age 20 a youth minimum wage of $4.25 an hour, but only for their first 90 consecutive calendar days on the job, after which the full minimum kicks in. Certain full-time students, student learners, and apprentices can be paid subminimum rates, but only under certificates issued by the Labor Department, not on an employer’s say-so. If someone is paying a subminimum rate without paperwork behind it, that is a red flag.
What to do if you are being shortchanged
Start by checking your pay stubs against the highest rate that applies to you, remembering that the minimum is measured against all hours worked, including time spent on required tasks before and after a shift. If the math comes up short, you can raise it with your employer, but you do not have to. You can file a confidential complaint with the Labor Department’s Wage and Hour Division at no cost through its complaint process, or call 1-866-487-9243. The agency can recover back wages on your behalf, and the law prohibits retaliation against workers who file.
State labor departments handle violations of state minimum wage laws and are often faster for smaller claims. Either way, keep your own records: pay stubs, schedules, and a simple log of hours worked. Wage claims are won and lost on documentation, and the worker who wrote things down usually has the stronger hand.
