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According to the Fair Labor Standards Act (FLSA), employers must pay all covered employees no less than the federal minimum wage, which is $7.25 per hour as of 2016. Some states set the minimum wage higher than the federal standard, in which case employees are entitled to the minimum wage set by their state. Some employers, however, are exempt from the FLSA.
One note: FLSA does not require an hourly payment system. Employers may pay based on whatever measurement they choose, so long as the employee's pay, when divided by the number of hours worked, meets or exceeds the minimum wage.
Figuring Your Hourly Wage
If you are not sure whether your pay meets or exceeds the minimum wage, do the math. Of course, we realize this isn't always cut and dried. Luckily, federal law provides guidelines.
If you receive an hourly salary, it must be the same salary for all hours you work. In other words, your employer cannot pay you $5 per hour for some hours and $10 per hour for others, with the idea that, over the pay period, it averages out to minimum wage.
For employees paid a fixed salary, by commission, or with piece rates, total pay divided by number of hours worked must equal at least the minimum wage. This is also true for employees who earn tips. In each of these cases, total compensation, including hourly pay, tips, and commissions, must equal the minimum wage. If it does not, the employer must make up the difference.
Who is Exempt from Minimum Wage?
Some workers are exempt from the federal minimum wage, even if their employer's business is covered by the FLSA. For example, independent contractors are not owed the minimum wage as only employees have that entitlement. However, even some employees are exempt. Outside sales people, such as those working a sales route. People who work small farms are exempt, as in many cases small farms themselves are exempt from FLSA. Also, seasonal employees of amusement and recreational businesses. Phone companies with fewer than 750 stations don't have to pay switchboard operators minimum wage.
Some newspaper employees also have exemption. These include employees on papers with circulation under 4,000 as well as people who deliver your daily paper. Finally, anyone the federal government defines as an apprentice, learner, or student is exempt from being paid the minimum wage.
When Can You Sue for Being Underpaid?
If qualify to receive the minimum wage and your employer failed to pay that wage for the hours you worked, you legally have a claim for damages. You have two options to seek redress: filing a claim with your state's labor department or suing your employer to recover these wages.
You may also pursue damages if your employer fails to pay the federal overtime rate for time worked in excess of 40 hours in a one-week period. At the federal level, this rate is 150 percent of your normal hourly rate (also known as time-and-a-half). As an example, if your normal hourly rate is $10, your overtime hourly rate is $15. Overtime rates vary by state, but this is the federal standard. Additionally, some states require overtime pay for any work time in excess of eight hours in a single day.
What are You Entitled To?
Employees who file a successful wage claim or lawsuit are awarded the wages his or her employer did not pay, whether the claim was for pay below minimum wage or overtime hours not paid at the proper overtime rate. Additionally, the employee receives either interest on the unpaid wages or a sum called "liquidated damages." State law determines both interest and liquidated damages. According to federal law, if your employer is deemed to have willfully underpaid you, he or she may have to pay double the amount due as liquidated damages. If the employer proves they acted in good faith, these damages are waived. Employers may not claim ignorance of FLSA rules in this defense.
Schedule a Free Consultation with an Employment Lawyer
Some unpaid wages cases are straightforward and may easily be handled by filing a claim with the state labor department. Others are more complex. An experienced employment lawyer can advise you which option makes the most sense for your particular case.