Glossary > Employment Law > Wage And Hour Laws > Payroll Practices

Minimum Wage

Minimum wage is the lowest amount an employer can legally pay an hourly worker for their labor. It is set by federal or state law to ensure employees receive a fair and minimum level of compensation for the work they perform.

Example #1

For instance, if the federal minimum wage is $7.25 per hour, an employer cannot pay their employees less than that for each hour worked, regardless of the type of job or industry.

Example #2

In a state where the minimum wage is $15 per hour, employers must pay their employees at least $15 per hour for their work.

Misuse

Misuse of minimum wage laws can occur when employers pay workers below the mandated minimum wage, leading to unfair compensation and exploitation of employees. This practice can harm workers' financial well-being and undermine their economic stability. It is crucial to protect against minimum wage violations to uphold fair pay practices and protect the rights of employees.

Benefits

Setting a minimum wage helps to ensure that workers are compensated fairly for their labor and can meet their basic needs. By establishing a minimum standard, it promotes economic stability for employees and reduces income inequality. For example, a higher minimum wage can lift workers out of poverty and stimulate consumer spending, benefiting both employees and the overall economy.

Conclusion

Minimum wage laws play a crucial role in safeguarding the rights and livelihoods of employees by establishing a baseline for fair compensation. Upholding minimum wage standards is essential to protect workers from exploitation, promote income equality, and support a more equitable economy.

Related Terms

Fair Labor Standards Act (FLSA)