The federal minimum wage is $7.25 per hour. That rate has been in place since July 24, 2009, and Congress has not raised it since.1U.S. Department of Labor. Minimum Wage It comes from the Fair Labor Standards Act (FLSA) and applies to most workers in the United States, though many states and cities require higher pay, and several categories of workers can lawfully be paid less.2Office of the Law Revision Counsel. 29 USC 206 – Minimum Wage
Employers must pay the wage in cash or a negotiable instrument such as a check. Scrip, tokens, and store credit do not count.3eCFR. 29 CFR Part 531 – Wage Payments Under the Fair Labor Standards Act The reasonable cost of board, lodging, or similar facilities can be credited toward the wage in limited circumstances, but non-cash perks cannot be used to get around the floor.
Who the Federal Minimum Wage Covers
Coverage runs on two tracks, and either one is enough to protect you.
A business is covered as an enterprise if it has at least two employees and annual sales or business of at least $500,000. Hospitals, medical and nursing care facilities, schools, preschools, and government agencies are covered no matter their revenue.4U.S. Department of Labor. Fact Sheet #14 – Coverage Under the Fair Labor Standards Act (FLSA)
Even if your employer is smaller than that, you are individually covered if your work regularly involves interstate commerce. The Department of Labor reads that term broadly. Making phone calls to people in other states, handling records of interstate transactions, processing credit card payments, traveling out of state for work, or working in a building where goods are produced for shipment across state lines all qualify.4U.S. Department of Labor. Fact Sheet #14 – Coverage Under the Fair Labor Standards Act (FLSA) Between the two tracks, the vast majority of American workers are covered.
Independent contractors are not. If you are genuinely in business for yourself rather than economically dependent on a company, the FLSA’s minimum wage and overtime rules do not apply to you. The DOL uses a multi-factor “economic reality” test to sort employees from contractors, weighing things like how much control the business has over your work, whether you can profit or lose money based on your own decisions, the permanence of the relationship, your investment in equipment, and how integral your work is to the company’s business. No single factor decides it.5U.S. Department of Labor. Field Assistance Bulletin No. 2025-1 Misclassification is common, and being labeled a contractor on paper is not the end of the analysis.
When State or Local Pay Is Higher
The $7.25 rate is a floor. Federal law says nothing in the FLSA excuses an employer from complying with a state or local law that sets a higher wage.6Office of the Law Revision Counsel. 29 U.S. Code 218 – Relation to Other Laws Where two rates apply, you get the higher one.
As of 2026, state minimum wages run from $7.25 in states that follow the federal figure to $17.50 in the District of Columbia. More than 30 states, plus many cities, have set rates above the federal minimum, and many of those rates adjust each year for inflation. Check your state and city rules, because they change often and they, not the federal number, usually control what you’re owed.
Overtime
If you are non-exempt and covered by the FLSA, your employer must pay at least one and one-half times your regular hourly rate for every hour over 40 in a single workweek.7eCFR. 29 CFR Part 778 – Overtime Compensation A workweek is any fixed, recurring 168-hour period. Overtime is calculated one week at a time; employers cannot average two weeks together to avoid it.
Some salaried employees are exempt from overtime under the executive, administrative, and professional (EAP) exemptions. To qualify, the employee must meet the duties tests for one of those categories and earn at least $684 per week ($35,568 per year). A 2024 rule tried to raise that salary threshold, but a federal court vacated it, and the DOL is enforcing the $684 level.8U.S. Department of Labor. Earnings Thresholds for the Executive, Administrative, and Professional Exemptions Being paid a salary does not by itself make you exempt. Your actual job duties have to fit one of the recognized categories.
When Employers Can Legally Pay Less
The FLSA allows several groups of workers to be paid below $7.25 under specific conditions.
Tipped Employees
An employer can pay a direct cash wage as low as $2.13 per hour to an employee who customarily receives more than $30 a month in tips, as long as the employer claims a “tip credit” for the difference. The maximum tip credit is $5.12 per hour. If your tips plus the $2.13 cash wage do not add up to at least $7.25 an hour in any workweek, the employer has to make up the shortfall.9Federal Register. Tip Regulations Under the Fair Labor Standards Act (FLSA) – Restoration of Regulatory Language
Managers and supervisors may not keep tips their employees receive and may not take from a mandatory tip pool. A manager can keep only tips a customer gives directly and solely for a service the manager personally provided.10U.S. Department of Labor. Tip Regulations Under the Fair Labor Standards Act (FLSA) Many states require a higher cash wage for tipped workers than $2.13, and some do not permit a tip credit at all.
Workers Under 20
Workers under age 20 can be paid a minimum of $4.25 per hour during their first 90 consecutive calendar days on the job.11U.S. Department of Labor. Fact Sheet #32 – Youth Minimum Wage – Fair Labor Standards Act The clock runs on calendar days, not days actually worked. Once 90 days pass or the worker turns 20, whichever happens first, the employer must move them to the full $7.25 rate. Employers are not allowed to displace existing workers to bring in youth employees at the lower wage.
Student-Learners and Full-Time Students
Student-learners enrolled in vocational education programs can be paid as low as 75% of the minimum wage ($5.44 per hour) under a certificate from the DOL.12eCFR. 29 CFR 520.506 – Subminimum Wage for Student-Learners Full-time students working in retail, service, agriculture, or at a college or university can be paid at least 85% of the minimum wage ($6.16 per hour) under a separate DOL certificate.13U.S. Department of Labor. Fair Labor Standards Act Advisor
Workers With Disabilities
Section 14(c) of the FLSA lets employers with special certificates pay less than the minimum to workers whose disabilities affect productivity for the specific job being performed. The DOL proposed phasing out the program in December 2024, then withdrew that proposal in July 2025, concluding the statute requires the program to continue as long as it remains necessary to prevent job losses for these workers.14Federal Register. Employment of Workers With Disabilities Under Section 14(c) of the Fair Labor Standards Act – Withdrawal The program is still in effect.
Deductions That Cannot Drop You Below the Minimum
Your gross pay can meet $7.25 an hour and your employer can still be in violation if required deductions push your effective rate below the floor. Costs that mainly benefit the employer, including required uniforms, tools, and safety equipment, cannot cut into your minimum wage or your overtime pay. Asking you to pay for those items in cash instead of taking a payroll deduction is the same violation.15U.S. Department of Labor. Fact Sheet #16 – Deductions From Wages for Uniforms and Other Facilities Under the Fair Labor Standards Act (FLSA)
What You Can Recover If You Are Underpaid
If you weren’t paid the required minimum wage or overtime, you can recover the full amount of unpaid wages plus an equal amount in liquidated damages. That effectively doubles the back pay owed, and a court will also award reasonable attorney’s fees.16Office of the Law Revision Counsel. 29 U.S. Code 216 – Penalties An employer can escape the liquidated damages piece only by convincing the court the violation was made in good faith and with a reasonable belief that the pay practices were lawful.17Office of the Law Revision Counsel. 29 U.S. Code 260 – Liquidated Damages
The deadline to file a claim is generally two years from the violation. It stretches to three years if the violation was willful.18eCFR. 5 CFR 551.702 – Time Limits Beyond private lawsuits, the DOL can impose civil penalties of up to $2,515 per violation on employers who repeatedly or willfully fail to pay the required wage or overtime.19U.S. Department of Labor. Wages and the Fair Labor Standards Act The most serious willful violations can be prosecuted criminally, with fines of up to $10,000 and up to six months in prison for a repeat offender; imprisonment applies only after a prior conviction for the same type of violation.16Office of the Law Revision Counsel. 29 U.S. Code 216 – Penalties Employers who retaliate against you for filing a wage complaint face separate legal liability, including reinstatement and lost wages.