Enforcement of the federal minimum wage generally falls under the Fair Labor Standards Act, which the Wage and Hour Division administers. The Fair Labor Standards Act was originally passed in 1938 and has been amended several times in the succeeding seven decades.
In general the federal minimum wage applies to workers in all businesses that do more than $500,000 in annual income, however it also applies to any company involved in interstate commerce.
Certain other workers are exempted from the federal minimum wage. Perhaps one of the largest groups of workers exempted from federal minimum wage requirements are servers in the restaurant industry. the restaurant indusry employs more than 11 million people, many of whom are servers. The policy reasoning behind this exemption is that because servers receive tips, paying them the full federal minimum wage rate is unnecessary.
The federal minimum wage for restaurant workers currently stands at $2.13 per hour. Restaurant owners are allowed to count tips earned by employees toward the difference between this rate and the federal minimum wage of $7.25 per hour. Some states may require that a higher minimum wage be paid to restaurant workers, but these wages remain lower than the federal rate.
Restaurant workers have pushed for an increase in the $2.13 minimum their employers are required to pay them under the federal rate. Restaurant owners argue this increase could greatly increase their labor costs and ultimately result in fewer server jobs as some restaurants cut positions to save on labor costs.
Another group of workers who may be paid less than the federal minimum wage are disabled workers. Businesses may pay disabled workers less than the federal minimum wage if granted permission by the U.S. Department of Labor. In general, these exemptions are given to businesses that employ disabled workers whose disabilities impair their productivity or their wage-earning ability. The purpose of this exemption is to promote the hiring of disabled persons, who may not be employable otherwise because of their diminished capacities.
Young workers may also be exempt from the federal minimum wage. For example, students working in a vocational education program through a high school or college can be paid only 85 percent of the U.S. minimum wage if they are at least 16 and work part time. Students enrolled in an apprenticeship program can also be paid under the federal minimum wage, but they can only be paid at this rate for their first 240 hours of work. After that, the apprenticeship exemption expires. Full-time college students working at a job in the service, agricultural or retail sectors or at a college or university can be paid less than the federal minimum wage if the employer gets and exemption from the Labor Department and only if he or she works 20 hours or less while school is in session. Also, workers under the age of 20 can be paid less than the federal minimum wage for the first three months of a job.
Other employees exempt from the federal minimum wage include:
- Seasonal amusement parks or recreational facility employees
- Newspaper carriers
- Babysitters or companions for elderly or infirm persons
- Some workers in the fishing industry
- Seamen working on foreign registered vessels
- Some farm workers
Exemptions from the minimum wage have been criticized by many workers’ advocates, who argue that employers seek to fill jobs with workers from the exempt group to skimp on labor costs. They also argue that the practice is exploitative of workers, especially those with physical or mental disabilities. Proponents argue that the wage exemptions allow companies to be able to afford to employ people who might otherwise be unemployable.
Businesses who may be eligible for exemptions to the federal minimum wage should consult with the U.S. Department of Labor, which handles issuing exemptions. Paying employees that are not exempt from the minimum wage less than the minimum wage can result in exposure to labor lawsuits by employees and punitive action by the Department of Labor.