The lowest hourly wage an employer can pay employees by law — federal, state, or local, whichever is highest.
Federal minimum wage is $7.25/hour (unchanged since 2009). Most states have higher minimum wages — ranging up to $17.50+/hour in some jurisdictions. Many cities and counties have local minimum wage ordinances above their state's rate (Seattle, NYC, San Francisco, etc.).
For multi-state or multi-city employers, minimum wage compliance is non-trivial: the applicable rate is the highest of federal, state, and local rates where each employee works. Tipped employees have a separate (lower) cash wage floor in most states, with a "tip credit" making up the difference — but the credit is capped and varies by state.
PEOs track minimum wage rates across all states + localities where the client operates and adjust pay automatically as employees cross jurisdictional thresholds.
The lowest hourly wage an employer can pay employees by law — federal, state, or local, whichever is highest.
Federal minimum wage is $7.25/hour (unchanged since 2009).
Most PEO buying decisions touch several related concepts at once. Minimum wage typically comes up alongside the other terms in this category. Closely related terms include Fair Labor Standards Act (FLSA), Overtime pay, Tip credit.
This is one entry from our PEO glossary covering payroll, benefits, workers comp, HR compliance, and PEO mechanics. Browse all terms.
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