When the federal minimum wage and a state minimum wage set different rates, the worker gets paid the higher of the two. That is the entire rule. The federal floor of $7.25 per hour has held since 2009, but more than 30 states, the District of Columbia, and dozens of cities now require more, and in every one of those places the higher local number controls. The federal vs. state minimum wage question almost always resolves in favor of state law today, because most states have moved above $7.25.1U.S. Department of Labor. Minimum Wage
Why the Higher Rate Wins
The Fair Labor Standards Act contains a savings clause, 29 U.S.C. § 218(a), stating that nothing in the FLSA excuses noncompliance with any state or local law setting a higher minimum wage.2Office of the Law Revision Counsel. 29 U.S. Code 218 – Relation to Other Laws Federal law functions as a floor, not a ceiling. An employer in a state with a $16 minimum wage cannot pay $7.25 and point to the FLSA as cover.
The consequence for getting this wrong is not small. Underpayment exposes the business to the unpaid wages plus an equal amount in liquidated damages, which effectively doubles the bill.3U.S. Department of Labor. Back Pay
State Minimum Wages Above the Federal Rate
As of January 1, 2026, 30 states plus the District of Columbia require more than $7.25 per hour.4U.S. Department of Labor. State Minimum Wage Laws A snapshot of the top of the range:
- District of Columbia: $17.95
- Washington: $17.13
- Connecticut: $16.94
- California: $16.90
- New York: $16.00 to $17.00 depending on location
Roughly 20 states and D.C. index their minimum wage to inflation, so the rate adjusts every January without new legislation. Arizona, Colorado, Florida, Maine, and Oregon all work this way. Other states raise the rate on a schedule set by statute. Either way, if you work in one of these states, the state number is your wage floor and it is worth checking each year in case it has moved.
States at or Below the Federal Rate
Two states — Georgia and Wyoming — still have state minimum wage laws set at $5.15 per hour. Five others — Alabama, Louisiana, Mississippi, South Carolina, and Tennessee — have no state minimum wage at all.4U.S. Department of Labor. State Minimum Wage Laws
In these seven states, the federal $7.25 rate controls for almost everyone. The Georgia and Wyoming figures are largely symbolic because most employers meet the FLSA’s coverage thresholds, and once federal law applies the higher rate wins. If you work for a reasonably sized employer in one of these states, you are owed at least $7.25 per hour regardless of what state law says.
Cities That Set a Higher Rate Still
The higher-rate-wins rule keeps going at the city and county level. Seattle requires $21.30 per hour in 2026. New York City sits at $17.00. San Francisco is scheduled to reach roughly $19.18 by mid-2026. An employer operating in one of these cities has to satisfy all three layers — federal, state, and local — and the highest one governs.
Local authority is not universal. About 25 states have preemption laws that block cities and counties from setting minimum wages above the state figure. In those states, no matter what your city council thinks, the state rate is as high as the local floor can go.
Whether the FLSA Reaches Your Job
The “which rate applies” question assumes federal law reaches your employer in the first place. It usually does, through one of two paths.
Enterprise coverage applies to any business with at least two employees and $500,000 or more in annual gross sales. Hospitals, schools, nursing homes, and government agencies are covered regardless of revenue.5Office of the Law Revision Counsel. 29 USC 203 – Definitions
Individual coverage picks up workers whose own duties touch interstate commerce — handling goods that crossed state lines, making calls or sending emails to other states, or processing credit card transactions.6U.S. Department of Labor. Interstate Commerce – FLSA Advisor In practice that description fits nearly anyone with a phone or an internet connection. The people most likely to fall outside are those working for very small, purely local businesses.
Common Exemptions
Some employees are exempt from the minimum wage and overtime rules even when their employer is covered. The largest category covers executive, administrative, professional, computer, and outside sales employees earning at least $684 per week on a salary basis — about $35,568 per year. The Department of Labor tried to raise that threshold in 2024, but a federal court vacated the new rule, and $684 remains in effect for 2026.7U.S. Department of Labor. Earnings Thresholds for Executive, Administrative, and Professional Exemptions
A job title alone does not create exempt status. Someone called a “manager” who spends most of the day doing the same work as hourly staff may still be entitled to the minimum wage and overtime. The real test looks at actual duties along with the salary threshold.8U.S. Department of Labor. Fact Sheet 17A – Exemption for Executive, Administrative, Professional, Computer and Outside Sales Employees Under the FLSA
Tipped Workers: The Biggest Federal-State Gap
For workers who regularly earn more than $30 per month in tips, federal law lets employers pay a direct cash wage of just $2.13 per hour and count a “tip credit” of $5.12 to reach the $7.25 minimum.9U.S. Department of Labor. Minimum Wages for Tipped Employees If tips fall short in a given workweek and total hourly earnings dip below $7.25, the employer has to cover the difference.10U.S. Department of Labor. Tip Regulations Under the Fair Labor Standards Act
States handle tipped pay very differently. Some require the full state minimum wage before tips, eliminating the tip credit entirely. Others set a tipped cash wage somewhere between $2.13 and the full minimum. A tipped server in a no-tip-credit state is guaranteed $16 or $17 per hour before any customer leaves a dollar. A server in a state that follows the federal structure is guaranteed only $2.13 in direct wages, with tips expected to make up the rest.
One boundary worth noting: automatic gratuities on large-party checks, banquet fees, and room service charges are service charges under IRS rules, not tips. They count as regular wages and cannot be used to satisfy the tip credit.11Internal Revenue Service. Tips Versus Service Charges – How to Report
If You Were Paid Less Than the Correct Rate
Two enforcement paths exist. The Department of Labor’s Wage and Hour Division can investigate and sue on your behalf, or you can file a private lawsuit. Recovery includes the unpaid wages plus an equal amount in liquidated damages, so a $5,000 shortfall typically becomes a $10,000 claim.3U.S. Department of Labor. Back Pay Private plaintiffs can also recover attorney’s fees and costs.
The federal deadline is two years from the violation, stretched to three years if the underpayment was willful, meaning the employer knew or should have known it was breaking the law.12Office of the Law Revision Counsel. 29 USC 255 – Statute of Limitations State deadlines vary and may be shorter or longer, so check both. Miss the window and the claim is gone no matter how clear the violation.
Raising the issue is legally protected. The FLSA bars any employer from firing, demoting, cutting hours, or otherwise retaliating against a worker who complains about pay, whether the complaint goes to the government or is raised internally with a supervisor. The protection continues after employment ends — a former employer who blacklists someone for filing a wage claim faces the same liability. Remedies include reinstatement, lost wages, and liquidated damages.13U.S. Department of Labor. Fact Sheet 77A – Prohibiting Retaliation Under the FLSA