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Better Understanding the Minimum Wage

In some instances it is not always so easy to determine whether or not a company is in compliance with the minimum-wage provision of the Fair Labor Standards Act (“FLSA”). Some employers have irregular pay scales in which pay is determined by the amount and type of work being done and this can make things much more ambiguous. For example, a server makes a $3 an hour plus tips. He/she may typically make $15 an hour, which is above the minimum wage. But what happens if it is a slow day and he/she only makes $4 an hour, is the employer now in violation of FLSA?

The provision, 29 U.S.C. § 206(a)(1)(C), of the FLSA states that “[e]very employer shall pay to each of his employees who in any workweek is engaged in commerce ․ not less than ․ $7.25 an hour.” The statute sets the minimum wage that employees must be paid each hour; however, it does not definitively prescribe the computation period or says that the only permissible measure is the hour.

The ruling in Douglas v. Xerox Business Services helps clarify this. Xerox employees were paid differently each time depending on how much and what type of work they were doing and often times this amount would fall below the minimum wage. But then Xerox would subsidize their paycheck so the employees total earnings for the week would be equal to amount they would have earned had they been making the legal minimum wage. The employee’s pay stub may have had pay for an individual hour’s worth of work listed at $4, but at the end of the week all employees average hourly pay was at least the federal minimum, $7.25.

The courts stated that Xerox was in compliance, stating that it is acceptable for one particular individual hour of pay to fall below the hourly minimum wage so long as the average amount made per hour for that given week is equal to or greater than the amount required by minimum wage laws. Although the statute does not explicitly say to use per-workweek as the standard for measuring pay, this is the standard the courts are consistently basing their decisions.

So if your weekly pay stub comes in and it says for one particular hour work you were paid under $7.25 do not be alarmed, your employer may still be in compliance with FLSA. Nonetheless be aware that $7.25 average per hour pay is not the only number you should be concerned about. This is just the Federal minimum wage; your state wage may be much different. The California minimum wage is currently $10.50 per hour and for employers with 25 or fewer employees and $11.00 per hour for employers with 26 employees or more.

If you feel like your employer is not complying with either the state or federal minimum wage laws contact an attorney to find out how you can ensure you are receiving fair pay .

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