• Tipped employees' hourly rate must combine to meet the federal minimum wage.kellnerin image by Yvonne Bogdanski from Fotolia.com
  
  The Fair Labor Standards Act (FLSA) is the legislation covering minimum wage laws in the United States. As of 2010, the federal minimum wage is $7.25 an hour, up to 40 hours a week. Employers pay time-and-a-half for hours exceeding 40. States may have different wage rates, though when the federal rate is applicable, the higher of the two prevails. Some workers and occupations are exempt. There is a variety of penalties for noncompliance with federal minimum wage laws.
  
  

History of Federal Minimum Wage

• After a long political battle, the FLSA took effect on Oct. 24, 1938. This set the federal minimum wage at 25 cents an hour. As shown in a U.S. Department of Labor chart, incremental increases brought the minimum wage to $1.60 by 1968 and $5.85 by 2007. According to an Oregon State University website, 1968 ranks as the year with the highest minimum wage in "real" dollars, as $1.60 is equivalent to $10.10 in 2010 dollars. The years 1997 to 2007 brought no change in minimum wage, the longest such period.
  
  

Exceptions To Minimum Wage

• Employers who gross less than $500,000 annually or have less than two employees do not have to pay federal minimum wage. Many professional employees paid on a salary basis are exempt from minimum overtime pay. As explained on a U.S. Department of Labor online fact sheet, commissioned sales employees are exempt from overtime pay if "the employee averages at least one-and-a-half times the minimum wage for each hour worked." Tipped employees must make the minimum wage when combining their hourly wage and tips. If the hourly rate does not amount to the minimum wage, the employer must make up the difference. Some workers are exempt from both minimum wage and overtime legislation. These include farm employees working on small farms, domestic service workers living with their employer, employees in certain aspects of the fishing industry and babysitters. An employer, bound by the minimum wage legislation, can pay a worker under the age of 20 $4.25 for an initial 90-day period if this employee did not displace another worker.
  
  

Penalties For Violations

• Enforcing the legislation is the job of investigators for the U.S. Department of Labor's Wage and Hour Division. Penalties range from payment of wages due to employees to criminal prosecution and a $10,000 fine. Multiple, purposeful violations may result in imprisonment and fines of $1,100 per violation, according to the DOL.