Once again the minimum wage is in the news. President Biden campaigned on a set of policies to support struggling communities and businesses in the midst of the COVID-19 pandemic that included raising the federal minimum wage. The Senate recently declined to move forward on legislation to address the minimum wage, but many members of Congress have not given up on fighting for much needed and long overdue reforms.

Whatever happens, we are sure to continue to hear about the minimum wage as Congress as well as numerous states debate this issue. Here are some of the latest proposals for reforming the minimum wage:

  • Increasing the federal minimum wage to $15 per hour

What does this mean?

The federal minimum wage is currently $7.25. This rate was set in 2009 and has not been increased in over a decade. This is the longest period since an increase since the federal law implementing the minimum wage was first passed in 1938.

Twenty-one states follow the federal minimum wage, while twenty-nine states have higher minimum wage rates. Many states have already begun raising the minimum wage with the goal of achieving a $15 per hour minimum wage in the next few years. Individuals living in these states might not feel the impact of a federal increase as much as people living in states that follow the federal rate.

See our discussion of minimum wage law here.

  • Eliminating the tipped minimum wage

What does this mean?

The federal tipped minimum wage is an astonishingly low $2.13 per hour. This means that tipped employees, such as restaurant servers and delivery employees, can be paid a mere $2.13 per hour.

Seven states require payment of the full minimum wage to most or all employees, while fifteen states follow the federal tipped wage. The remaining states have a tipped minimum wage that is higher than the federal wage but lower than the regular minimum.

The law requires that employers paying the tipped minimum wage follow certain rules, including ensuring that employees receive the full minimum wage with tips, providing certain notifications to employees and paying overtime based on the full minimum wage. But in our experience, employers often skirt these rules and pay the lower wage rate without following the rules.

Eliminating the tipped minimum wage would be huge. Tipped employees would finally be guaranteed a reasonable hourly rate and would not be dependent upon tips to survive. Employers would no longer have any legal justification for paying extremely low wages to tipped employees.

See our in-depth examination of the unique wage issues faced by tipped workers here.

  • Eliminating the sub-minimum wage for people with disabilities

What does this mean?

Federal law allows businesses that receive a certain certification to pay wages below the federal minimum wage to certain people with disabilities. Federal law does not set a specific rate but states that the rate should be based on an individual’s capacity compared with the capacity of workers who perform similar work and do not have disabilities. Often people with disabilities are segregated into “sheltered workshops” where they perform rote tasks for extremely low pay and with little real chance of transitioning to integrated and well-paying workplaces. Since there is no floor, some disabled workers are paid a dollar or less per hour.

Some have made progress on raising wages for people with disabilities by setting a minimum wage rate for these individuals or banning subminimum wages altogether. Several members of Congress and the United States Commission on Civil Rights have called on Congress to gradually increase the minimum wage for people with disabilities as well as expanding employment support and opportunities that encourage fair and fulfilling work for people with disabilities.

For more help

Minimum wage requirements are complicated and vary by state and by industry. If you have any questions about whether you should be paid the minimum wage, whether you are getting the correct minimum wage, or what it means to be “exempt” from the minimum wage, please call Pelton Graham at (212) 385-9700 for a free consultation or email us through our website form.

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