Federal Minimum Wage

The federal minimum wage sets the lowest hourly pay rate that covered employers must pay covered employees in the United States. It is established under federal law and enforced by the U.S. Department of Labor.

The federal minimum wage applies nationwide. State and local governments may set higher minimum wages. Employers must follow the highest applicable wage requirement.

Federal minimum wage rate for 2026

As of 2026, the federal minimum wage remains $7.25 per hour. The U.S. Department of Labor confirms the current federal rate on its official federal minimum wage page.

Legal basis for the federal minimum wage

The federal minimum wage is established under the Fair Labor Standards Act. The Department of Labor describes minimum wage requirements and enforcement in its Fair Labor Standards Act overview.

Who must be paid the federal minimum wage

Most employees are covered by the federal minimum wage. Coverage generally applies to employees who are engaged in interstate commerce, produce goods for interstate commerce, or work for an enterprise engaged in interstate commerce. The Department of Labor explains coverage rules on its minimum wage coverage page.

Tipped employees

Special minimum wage rules apply to employees who customarily and regularly receive tips. Employers may pay a direct cash wage of $2.13 per hour if the employee’s tips bring total hourly pay to at least $7.25 per hour. If tips plus the cash wage do not equal the federal minimum wage, the employer must make up the difference. The Department of Labor explains these rules on its tipped employees page.

Youth minimum wage

The Fair Labor Standards Act allows a youth minimum wage of $4.25 per hour for employees under age 20 during their first 90 consecutive calendar days of employment. After the 90-day period, the employer must pay at least the federal minimum wage. The Department of Labor outlines this rule on its youth minimum wage page.

Exemptions from the federal minimum wage

Certain employees are exempt from federal minimum wage requirements. Common exemptions include executive, administrative, and professional employees who meet specific salary and duties tests, outside sales employees, and certain computer employees. Exemptions depend on job duties and compensation structure. The Department of Labor summarizes key exemption concepts in its FLSA exemptions guidance.

Overtime and minimum wage

Covered employees must receive at least the federal minimum wage for all hours worked before overtime is calculated. Under the Fair Labor Standards Act, overtime pay is generally required at one and one-half times the regular rate of pay for hours worked over 40 in a workweek. The Department of Labor explains overtime requirements on its overtime pay page.

State and local minimum wage laws

Many states and local governments have minimum wages higher than the federal minimum wage. When state or local law provides a higher wage rate, employers must pay the higher applicable wage. The Department of Labor provides a state-by-state overview on its state minimum wage laws page.

Recordkeeping requirements

Employers must keep accurate records of employee wages and hours to demonstrate compliance. Required records include hours worked, wages paid, and pay rates. The Department of Labor outlines recordkeeping requirements in its FLSA recordkeeping guidance.

Penalties for noncompliance

Employers who fail to comply with federal minimum wage rules may be required to pay back wages and may be subject to civil money penalties. Employees may file complaints with the Wage and Hour Division. The Department of Labor explains enforcement on its Wage and Hour Division page.

Conclusion

In 2026, the federal minimum wage remains $7.25 per hour under the Fair Labor Standards Act. Many state and local laws require higher wages. Employers must comply with the highest applicable wage rule and follow special requirements for tipped employees, youth workers, and exempt employees.

M. Spik

Editor
25 years of experience managing tax, accounting, payroll, and employment-related information portals. Editor of Accounting Portal since 2011.
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