Employees in the United States are either “exempt” or “non-exempt” from minimum wage. For employees who are “non-exempt” from minimum wage, this means that the employer must pay the employee no less than the federal minimum wage (or state minimum wage, if higher than the federal minimum wage) for each hour worked by the employee in a traditional work-week.
Employees subject to the minimum wage cannot earn less than the minimum wage, even if the employee agrees to some alternate amount of pay. For example, if an employer and employee agree that the employee will work 20 hours per week for a flat rate of $100 per week, then the employer will be in violation of the Fair Labor Standard Act’s minimum wage provisions because the effective hourly rate of $5 per hour agreed upon by the parties is less than the federal minimum wage, and the fact that both the employer and employee agreed to this arrangement is irrelevant. Employees cannot waive their rights under the Fair Labor Standards Act.
What’s the consequence to the employer? An employer who fails to pay the required minimum wage is subject, under the federal Fair Labor Standards Act, to having to pay the unpaid wages, plus liquidated damages (usually double damages) and attorney fees, where applicable. Criminal penalties are also possible.
The best time to discover a problem with your pay practices is before you are sued or fined.
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