Can Employers Legally Pay Less Than Minimum Wage?

A common question among employees is: can an employer legally pay less than the minimum wage, especially when their employee handbook states otherwise? The answer is often not straightforward, as it depends on various factors, including the specific laws in your state and the classification of the worker.

Understanding Minimum Wage Laws in the US

On a federal level, the Fair Labor Standards Act (FLSA) sets the minimum wage, which is currently $7.25 per hour as of 2023. However, state and local laws may set higher minimum wages, so it's essential to check the applicable laws in your area.

Employers must adhere to the minimum wage in the state where the work is performed. For example, if you work in California, you are subject to California's minimum wage, not the federal minimum wage, as of 2023. Additionally, some cities within states have their own minimum wage laws that may be higher.

Exceptions to the Minimum Wage Requirement

There are exceptions to the minimum wage requirement, as recognized by the FLSA. These exceptions are designed to prevent the loss of employment opportunities for certain groups of workers, such as students and those with certain disabilities.

Student Learners and Vocational Education Students

The FLSA allows employers to pay student-learners and vocational education students less than the minimum wage, provided that the employer obtains a certificate from the Department of Labor's Wage and Hour Division. These students are usually employed in retail, service, agriculture, or institutions of higher education.

Disabled Individuals

The FLSA also allows employers to pay individuals with disabilities, including those with age-related or injury-related disabilities, less than the minimum wage. Employers must apply for certificates from the Department of Labor's Wage and Hour Division to pay these workers at subminimum wages.

Learners

Learners under 20 years old can be paid at a lower rate for the first 90 days of employment. This includes part-time or trainee workers in non-manual or routine jobs. After 90 days, employers must pay these workers the federal minimum wage unless they are covered by a specific exemption for certain types of learners.

State-Specific Rules and Exceptions

While federal laws are crucial, states often have their own specific rules and exceptions. For example, in California, certain groups of employees can be paid less than the federal minimum wage. These include outside salespeople, certain non-profit employees, immediate family members of the employer, and camp employees. In some cases, disabled employees and learners can also be paid less than the minimum wage.

Legal Protections and Compliance

It's important to note that even if an employer has a policy in their employee handbook stating that they can pay less than the minimum wage, it does not automatically make it legal. Employers must ensure they comply with both federal and state laws, as well as any local regulations.

The Role of the Fair Labor Standards Act (FLSA)

The FLSA provides a comprehensive framework for protecting workers. It is essential for employers to familiarize themselves with the law's provisions and ensure they are in compliance. The Wage and Hour Division of the Department of Labor is responsible for enforcing these laws and providing assistance to workers.

Rare Exceptions and the Current Labor Market

While subminimum wages are allowed for certain specific groups, it is rare for employers to pay workers below the minimum wage for extended periods. As the US labor market tightens, and the demand for workers increases, more employers are offering higher wages, including those under 18 and 19 years old.

Conclusion

In most cases, employers cannot legally pay employees less than the minimum wage unless they qualify for a specific exemption under the FLSA. Understanding the nuances of the minimum wage law and the specific rules in your state is crucial for both employers and employees. Seeking legal advice or contacting the Department of Labor's Wage and Hour Division can provide further guidance and help ensure compliance with all relevant laws.