Pay and Benefits

Generally, you must pay your employees the federal minimum wage ($7.25) for all hours worked regardless of whether they are paid by the hour, the day, or at a piece rate. For work performed on or in connection with federal contracts, your workers must be paid a higher minimum wage. Some states have set higher minimum wages. In those states, you must pay your workers at least the state minimum wage. The Wage and Hour Division (WHD)’s video on the minimum wage provides additional examples and details.

There are some exceptions:

• You may pay tipped employees a cash wage of not less than $2.13 per hour and claim a tip credit to satisfy the rest of the minimum wage obligation. However, if tips combined with cash wages do not equal the minimum wage, you must make up the difference.
• You may pay less than the minimum wage if an employee is under age 20 and in the first 90 calendar days of employment.
• You may pay less than the minimum wage, provided you obtain a certain certificate, to student learners enrolled in vocational education, full-time students in certain workplaces, or people whose earning or productive capacity is impaired by a disability.