How To Calculate Minimum Wage Pay
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How To Calculate Minimum Wage Pay

A worker earning the minimum wage can calculate their pay exactly. They just have to know the formula to use.

Employers pay workers the money they earn for their work at a full minimum wage. But, the minimum wages workers earn are made up of different counts.

And, workers in tipped jobs or at an early time in their careers use their own minimum wage.

Every American has a simple calculation to use to find out how much they get paid.

The Standard Minimum Wage

Workers in most occupations get paid at least $7.25 an hour. Since July 24, 2009, this has been the federal minimum wage. Their formula is simple.

Hourly pay = $7.25.

Pay for a fraction of an hour = the fraction x $7.25

Pay = (full hours + hour fraction) x $7.25

Overtime Pay

Work done during overtime hours past 8 hours in a day or 40 hours in a week earns one and a half times the minimum wage.

Overtime pay = overtime hours x (1 1/2 x $7.25).

The Youth Minimum Wage

New workers under 20 years old in their first 90 days on the job can earn $4.25 an hour. This is the youth minimum wage.

Youth pay = (full hours + hour fraction) x $4.25.

Tipped Employees

Workers in tipped jobs, such as waiters and waitresses that make $30 a month in tips or more, get paid the minimum wage, at least. Its calculated a little different. Employers can choose to pay $7.25 an hour. Then, the worker keeps all their tips.

Pay = (full hours + hour fraction) x $7.25

But, employers can choose to pay a lower minimum for tipped workers, $2.13 an hour, and count their worker's tips in the total pay used to equal the minimum wage, or more. They can claim up to $5.12 an hour as the tip credit.

Pay = (full hours + hour fraction) x flat cash wage + tips claimed as a credit.

The pay must equal (full hours + hour fraction) x $7.25. Any tips not claimed as a credit are added to the pay. (The flat cash wage is at least the minimum $2.13 an hour, and can be more).

When the flat cash wage and the tips do not add up to the minimum wage, the employer pays the worker the difference. Pay = (full hours + hour fraction) x flat cash wage + tips claimed as a credit + employer makeup pay. This must equal (full hours + hour fraction) x $7.25. Tips not claimed as credit are still added to the pay.

Workers that work two jobs, and only earn tips regularly in one job, can use the tipped worker minimum wage calculation only for the hours worked at the tipped job, not the job that does not earn them tips. Use the standard calculation for the other job.

When a tipped worker spends more than 20 percent of their time doing tasks that do not earn them tips, they can not use the tipped worker calculation for those hours. For example, a waiter that spends more than 20 percent of their time setting tables, making coffee, and washing dishes. The standard calculation for the $7.25 minimum wage is used for those hours.

Compulsory service charges are not part of the worker's tips. For example, a 15 percent charge on a restaurant bill. When an employer pays out a service charge to a worker, the pay still does not count as a tip, but it does count towards the minimum wage.

Pay = (full hours + hour fraction) x flat cash wage + tips claimed as a credit + service charge pay outs.

Pay/(full hours + hour fraction) = $7.25.

An employer can subtract the percentage the credit card company charges for a credit card bill payment from a worker's tips. For example, a 3 percent charge reduces the tips paid on the bill by 3 percent. But, the pay can not drop to less than the minimum $7.25 an hour.

Pay = (full hours + hour fraction) x flat cash wage + tips claimed as a credit + (0.97 x tips charged on a credit card and claimed as a credit). .

Special Rates

Not all workers have to earn a pay equal to $7.25 an hour. The Department of Labor can give out a special certificate for full time students, student learners, apprentices, and persons with disabilities. These workers use the calculation for a wage lower than $7.25 an hour the labor department tells them.

Sources:

The Fair Labor Standards Act (1938).

U. S. Department of Labor, Wage and Hour Division, Employee Rights Under the Fair Labor Standards Act: Federal Minimum Wage (July 2009).

Wage and Hour Division, U. S. Department of Labor, Tipped employees Under the Fair Labor Standards Act (March 2011).

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