April 28, 2003
EXCEPTIONS TO THE FEDERAL MINIMUM WAGE LAW
By: John Moran, Associate Analyst
You asked for a description of the exceptions to the federal law governing the minimum wage.
Federal law provides minimum wage exceptions under specific circumstances for (1) workers with disabilities, (2) full-time students, (3) employees under 20 years old in their first 90 consecutive days of employment, (4) tipped employees, (5) student learners, (6) apprentices, and (7) messengers. These are exceptions for workers who would otherwise fall under the minimum wage law. There are also groups of workers who are exempted entirely from the law.
Over time a number of these exceptions, particularly the apprentice and messenger provisions, have become obsolete because people working in those jobs are easily able to earn more than the federal minimum wage. (Federal labor officials say no employer has applied for either of those exceptions in more than 25 years. ) But these exceptions are still in federal law.
FAIR LABOR STANDARD ACT (FLSA)
The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, and child labor standards affecting full-time and part-time workers in the private sector and in federal, state, and local governments. Covered workers are entitled to a minimum wage of at least $ 5. 15 an hour. (For more information please see U. S. Department of Labor’s (DOL) web page on minimum wage: www. dol. gov/esa/minwage/q-a. htm. )
In states where state law sets a higher minimum wage, such as Connecticut, the employee is entitled to the higher of the two wages. The Connecticut minimum wage is $ 6. 90 an hour as of January 1, 2003.
Federal law exempts entirely from minimum wage requirements groups of workers such as white collar employees (those employed in executive, administrative, professional, or outside sales positions), farm workers employed on small farms, seasonal recreational employees, and companions for the elderly. This report does not address these groups.
Employers seeking permission for any of the following exceptions must apply to the DOL’s Wage and Hour Division for a certificate authorizing the exception.
WORKERS WITH DISABILITIES
The FLSA allows employers, upon obtaining a certificate, to pay wages below the federal minimum wage to workers with disabilities. This special minimum wage must be commensurate, based on the worker’s individual productivity, no matter how limited, to the wage and productivity of experienced workers who do not have disabilities performing essentially the same type, quality, and quantity of work. The standard for workers without disabilities becomes the gauge for measuring a worker with a disability. Federal labor officials say the disabilities exception is the most frequently used minimum wage exception.
The full-time student exception applies to students employed in retail or service stores, agriculture, or colleges and universities. With an authorizing certificate, the employer is allowed to pay 85% of the minimum wage.
The certificate limits the hours a student may work to no more than (1) eight hours a day and (2) 20 hours a week when school is in session and 40 hours a week when school is out. Once the student graduates or leaves school for good he must be paid the full minimum wage.
EMPLOYEES UNDER 20 YEARS OLD
A federal minimum wage of $ 4. 25 an hour applies to workers under age 20 during their first 90 consecutive days of employment with the same employer as long as their work does not displace other workers. After 90 consecutive calendar days of employment or the employee reaches age 20, whichever is first, the employee must receive the regular minimum wage.
An employer of a tipped employee is required to pay only $ 2. 13 an hour in direct wages if (1) that amount plus tips equals at least the minimum wage, (2) the employee keeps all tips, and (3) the employee regularly receives at least $ 30 a month in tips. If the employee’s tips do not bring his pay up to the minimum wage, the employer must make up the difference. When an employee is subject to both state and federal tipped employee wage laws, the employee is entitled to the benefits provided by the more generous law. (Connecticut tip wage law creates a $ 4. 88 minimum wage for waiters and other service employees, and $ 6. 33 for bartenders. )
The student-learner exception applies to high school students who are at least 16 years old and are enrolled in vocational education courses. An employer can obtain a DOL certificate allowing it to pay the student as little as 75% of the minimum wage. The lower wage rate applies as long as the student remains enrolled in vocational education. The use of this category has also greatly diminished in recent decades. In 1997 when the U. S. DOL revised its regulations on the exceptions, it reported that only 800 student-learner certificates were issued nationwide in 1996.