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Understanding minimum wage requirements

On Behalf of | May 25, 2021 | Employment Law

Employees in the state of Indiana have the right to earn a minimum wage. The federal minimum wage is defined underneath the Fair Labor Standards Act, or FLSA for short. However, things can get more complicated when a state or local law specifies a different minimum wage amount.

What is minimum wage?

Employment law statutes define the federal minimum wage as $7.25 per hour. This minimum wage is specifically designed for non-exempt employees. Employees whose income is dispersed as a salary are not covered under the federal minimum wage law.

One specific area that is addressed for minimum wage is tipped employees. These are employees who work at restaurants or bars and rely on tips as their main source of income. The Fair Labor Standards Act specifies that tipped employees must earn at least $2.13 per hour in direct wages. However, this law also specifies that each tipped employee must make an amount equal to the federal minimum wage for non-exempt employees. This means if the employee only makes a $4.00 tip within an hour period, they would have only made $6.13 for that hour worked. The employer is responsible for making up the gap between the federal minimum wage and the hourly amount the employee earned. In this case, the employer would have to make up the $1.12 difference.

A look at state and local laws

When it comes to minimum wage, an employer must follow the law that states the highest amount for the employee. It’s not uncommon for state or even local municipalities to set a higher minimum wage amount than the federal government. For example, if a local municipality makes it a law that employees must be paid at least $10 an hour, this would override the federal minimum wage of $7.25 per hour. This means that the employee must receive $10 per hour for their work.

Minimum wage is an area of employment law that has many people confused. Employers may make mistakes because they don’t understand what the laws are, or they might deliberately attempt to underpay workers. If you believe that you haven’t been paid the correct amount of money for the time that you worked, it’s advisable to seek legal help to get the back wages that are owed to you.