The federal minimum wage is a nationally determined hourly wage that has increased over time in response to rising costs of living. States can set higher minimum wages but cannot go below the national minimum. The law was introduced to protect workers, and not all employees are covered. Those who regularly receive tips have a different wage rate calculation.
A federal minimum wage law is a nationally determined wage that all eligible employees must be paid by the hour. In the United States, the federal minimum wage has increased over the years as the cost of living has risen. Individual states can set a higher minimum wage, but they cannot go below the national minimum wage.
The concept of the federal minimum wage was first introduced as a response to concerns about people – many of whom were immigrants, women and children – working long hours for low wages in many of the country’s factories. A number of US states enacted minimum wage laws before the federal government set a national standard. Initial attempts to establish a minimum wage law were rejected by the US Supreme Court as unconstitutional. Eventually, the current minimum wage law was passed and supported as part of the Fair Labor Standards Act of 1938.
Not all employees are covered by the federal minimum wage law. There are two basic ways an employee can be covered: company coverage and individual coverage. A person is covered by company coverage if he or she works in an industry that is required to pay minimum wage. Corporations with a fixed annual income, government agencies, schools and hospitals are examples of industries that are required by law to pay employees at least the federal minimum wage.
Individual coverage under the federal minimum wage law is a little more complicated. Basically, the individual’s job is to involve him or her in interstate commerce on a regular basis. While this sounds daunting, in reality nearly every business has been involved in interstate commerce in one form or another since the advent of the digital age. The janitor who works in a factory where goods are produced that will eventually be shipped out of state also qualify. Additionally, domestic workers such as cooks, housekeepers and nannies are usually covered.
Workers who regularly receive a substantial portion of their wages from tips are also subject to minimum wage laws; however, the wage rate is calculated differently. A worker who receives a significant amount of income from tips, such as a waitress, must receive a significantly lower minimum hourly rate than other hourly employees. In theory, the employee’s hourly rate plus tips should equal the basic federally set minimum hourly rate for other workers who do not receive tips as part of their income.
Protect your devices with Threat Protection by NordVPN
