The federal minimum wage and who it actually covers
The federal minimum wage is $7.25 an hour and has been since 24 July 2009, the longest stretch without an increase since the floor was created in 1938. It is set by the Fair Labor Standards Act and enforced by the Wage and Hour Division of the US Department of Labor.
Who the FLSA covers
Two routes bring an employer under the act. Enterprise coverage applies to businesses with annual gross sales or business done of at least $500,000, including hospitals, schools and government bodies. Individual coverage applies to the employee regardless of the employer's size if their own work touches interstate commerce, which covers most office, warehouse, delivery and phone roles.
Miss both tests and there is no federal minimum wage in your case, only the state one. A small purely local retailer with no interstate goods can sit outside the FLSA entirely. In practice state law almost always fills the gap, which is why this rarely changes what you are paid.
Who is exempt from the minimum
- Tipped staff, who may be paid $2.13 an hour with tips making up the difference.
- Workers under 20, at $4.25 an hour for their first 90 consecutive calendar days.
- Full-time students in retail, agriculture and higher education, on certificates from the department.
- Workers with disabilities under a 14(c) certificate.
- Companions, casual babysitters and outside sales staff, who fall outside the hours and wage rules.
What it means in practice
Roughly 1.1 per cent of hourly workers are paid at or below the federal floor. Full-time work at $7.25 grosses $15,080 before tax, below what most states now require and well below the $15 an hour that has become the political reference point.
Two years of back wages, or three if the failure was wilful, are recoverable, plus an equal amount in damages.