What is minimum wage?

Minimum wage is the lowest hourly rate an employer can legally pay employees. The federal minimum wage is $7.25 per hour, but many states and cities set higher rates. When federal, state, and local rates differ, employers must pay the highest applicable rate. Professional service firms rarely pay minimum wage for professional roles but may have support staff subject to these requirements.

State and local variations

California, New York, Washington, and other states have minimums exceeding $15 per hour. Cities like Seattle, San Francisco, and New York City set even higher local rates. Some jurisdictions tie minimum wage to inflation with annual increases. If you have remote workers, the rate depends on where the employee works, not where your business is located.

Compliance considerations

Post required minimum wage notices in the workplace. Track hours carefully for hourly employees to ensure total compensation divided by hours worked never falls below minimum wage. Include all hours worked, even brief check-ins or off-the-clock tasks. Violations result in back pay, penalties, and potential lawsuits. When in doubt, pay more than the minimum.