Feb 23 2010

Understanding Minimum Wage

Minimum wage protects employees from being taken advantage of by their employers by instituting a basal wage that must be paid to workers. Currently, federal law dictates that employees must be paid at least $6.55 an hour by employers to pass minimum wage requirements. However, oftentimes the state will institute an increased pay standard, such as in California. In this case, the employee is subject to the higher state-instituted minimum wage.

The History of Minimum Wage

The minimum wage requirement was instituted by Congress as part of its regulation of interstate commerce. It was included in 1938’s Fair Labor Standards Act alongside child labor laws, overtime pay, and record keeping requirements. Issued in the aftermath of the Depression, it was intended to stabilize the economy and protect workers’ health and well-being by founding a minimum standard of living. It is important to note that the minimum wage requirement does not apply to independent contractors but employees, defined by the court as one who is financially dependent on the business he serves.

Limitations of Minimum Wage

Specifically, minimum wage protects those that would not possess enough bargaining power and were likewise more susceptible to overreaching by employers. Executives, outside salespersons, professionals, and administrators are therefore often exempted from the minimum wage requirement by Congress since individuals with these higher-earning positions are considered to have ample bargaining power to prevent being taken advantage of by their employers. Likewise, exceptions may apply to full-time students or disabled persons.

Fair Labor Service Act

In addition to outlining the minimum wage requirement itself, the Fair Labor Service Act also details methods of enforcing this requirement. Specifically, it designates the task of investigation and detection of minimum wage violations to the secretary of the Department of Labor and the administrator of the Wage and Hour Division. This Congress-created office may force an employer to make records to them, or for the presence of witnesses at hearings. In order to contain breaches of the law and attempt recovery of unpaid benefits, the secretary of Labor has the ability to sue on behalf of employees.

Oftentimes, these rulings for damages can prove quite lucrative for the wronged employee, as the FLSA authorizes employees to seek and attain unpaid minimum wages from their employer. Likewise, they are permitted to file a claim not only for themselves but for other similarly aggrieved co-workers denied minimum wage. Willful violations of the minimum wage requirement can cost a company up to $11,000 in fines from the FLSA, and individuals controlling an employer can be held personally responsible for recovering civil damages, including unpaid compensation, reinstatement, attorneys’ fees, etc. Therefore, it is important that employers abide by minimum wage requirements and employees recognize when such rights are denied from them.

It should be noted that the FLSA does not has jurisdiction to regulate special payments such as vacation or sick pay, pay raises, or premium pay for holiday work. Moreover, the FLSA can’t guarantee or regulate payments in excess of the minimum wage amount, nor does it dictate the amount of hours an employee can be made to work in a week, including overtime.

Additional Legal Site: Shavitz Law. Serving clients in the Boca Raton area.