What is the minimum wage?
A minimum wage is the lowest hourly pay an employer may legally give a covered worker. In the United States, the federal floor comes from the Fair Labor Standards Act (FLSA) of 1938, which also sets overtime, recordkeeping and child labor rules. The federal minimum has been $7.25 an hour since July 2009, the longest stretch without an increase since the law began.
States, counties and cities can require more, and most workers live where they do. When rates differ, the employee is entitled to the highest applicable one. About 30 states and the District of Columbia set rates above $7.25, many indexed to inflation, and some cities such as Seattle and Denver set even higher local rates. This layered system reflects American federalism: Congress sets a national floor, and states remain free to build on top of it, which is why a worker in Washington state earns more than double the federal rate while a worker in a state with no minimum wage law of its own falls back on $7.25.
- Federal minimum
- $7.25 an hour
- Tipped workers
- $2.13 cash wage if tips make up the rest
- Overtime
- 1.5x regular rate over 40 hours
- Korean term
- 최저임금 (minimum wage)
Two cashiers doing the same job can earn very different legal minimums. The state line, sometimes the city line, decides the number.
Who is covered?
The FLSA covers employees of businesses with at least $500,000 in annual sales and of hospitals, schools and government agencies, plus individual workers engaged in interstate commerce, which in practice includes most jobs. Independent contractors aren't covered, which is one reason misclassification fights matter, as explained in independent contractor vs. employee.
Tipped employees can be paid a cash wage as low as $2.13 an hour if tips bring them to at least $7.25; the employer must make up any shortfall. Several states, including California and Washington, don't allow a tip credit at all. Some young workers, full-time students and workers with disabilities can be paid special lower rates under specific rules.
Overtime rules
Non-exempt employees must receive overtime at one and a half times their regular rate for hours worked over 40 in a workweek. The regular rate includes most bonuses and commissions, not just base pay. Federal law has no daily overtime and no cap on total hours for adults, but some states do: California requires overtime after 8 hours in a day and double time after 12.
Employers can't avoid overtime by averaging two weeks together or by giving private-sector employees comp time instead of pay. Time spent on required pre-shift security checks, mandatory training or work done off the clock that the employer knows about generally counts as hours worked, though the Supreme Court held in Integrity Staffing Solutions v. Busk (2014) that post-shift security screening wasn't compensable.
Exempt vs. non-exempt employees
Certain executive, administrative and professional employees are exempt from both minimum wage and overtime if they meet a salary test and a duties test. The federal salary threshold is $684 a week ($35,568 a year). A 2024 rule to raise it was struck down by a federal court in Texas in November 2024, so the earlier threshold applies. Outside salespeople, certain computer professionals and some seasonal workers have their own exemptions, and several states, including California, New York and Washington, set higher salary thresholds.
- United States v. Darby (1941)
- Upheld the FLSA under the Commerce Clause
- Integrity Staffing Solutions v. Busk (2014)
- Post-shift security screening not compensable
- Encino Motorcars v. Navarro (2018)
- Exemptions read fairly, not narrowly
Recovering unpaid wages
Workers can file a complaint with the Department of Labor's Wage and Hour Division or sue. Under the FLSA, they can recover up to two years of back pay, or three years if the violation was willful, plus an equal amount as liquidated damages and attorney's fees. Employees can join collective actions, and retaliation for complaining is illegal. Because most jobs are at-will, the anti-retaliation rule is often the main protection for workers who speak up.
How Korea compares
Korea sets a single national minimum wage each year through a tripartite Minimum Wage Commission of worker, employer and public members. The rate is 10,320 won an hour in 2026, up 2.9 percent from 10,030 won in 2025. Workers who work 15 or more hours a week also earn a paid weekly rest day, which raises effective pay. Overtime, night work and holiday work get at least a 50 percent premium, and total weekly hours are capped at 52, though workplaces with fewer than five employees are exempt from the premium and cap.
A Korean paper on Minimum Wage, the 52-Hour Workweek and Paid Annual Leave in Korea: Labor Law Reforms and Their Problems discusses the minimum wage jumps of 2018 and 2019 and the 52-hour week, and Independent Contractor Workers and Workers' Compensation in Korea: Special Rules for Delivery Drivers, Tutors and Insurance Agents looks at workers outside these protections.
| United States | Korea | |
|---|---|---|
| Who sets it | Congress, plus states and cities | Minimum Wage Commission, yearly |
| Rate | $7.25 federal; most states higher | 10,320 won (2026), nationwide |
| Overtime | 1.5x over 40 hours, no cap | 50% premium, 52-hour weekly cap |
| Paid leave | No federal requirement | 15+ days annual leave by law |
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Criticism and debate
Supporters of higher minimums point to research finding small or no job losses from moderate increases and to the fall in the real value of $7.25 since 2009. Opponents argue that high minimums push small businesses to cut hours, automate or close, especially in low-cost regions. The same debate played out in Korea after the double-digit raises of 2018 and 2019. Many economists favor indexing the minimum to inflation or to local median wages so it doesn't swing with politics.
Keep your own record of hours worked. In a wage dispute, a simple log made at the time can matter more than anything else.
- What is the federal minimum wage?
- $7.25 an hour, unchanged since July 2009, though most states and many cities require a higher rate.
- Who is exempt from overtime?
- Mainly executive, administrative and professional employees paid at least $684 a week on a salary basis whose duties meet the legal tests, plus some other specific categories.
- How far back can you claim unpaid overtime?
- Two years under the FLSA, or three for willful violations, plus an equal amount in liquidated damages; some state laws allow longer.
References and official sources
- Minimum wage. U.S. Department of Labor
- Overtime pay. U.S. Department of Labor
- 29 U.S.C. § 207 (overtime). Cornell LII
- Fair Labor Standards Act, Wex. Cornell LII
- 최저임금법. 국가법령정보센터