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Calculating the Minimum Wage

Employees covered by the FLSA must be paid the minimum wage for all hours worked. To determine whether the requirements are met the earnings in any given workweek are divided by the total hours worked in the workweek. Earnings cannot be averaged over a period longer than a workweek. Further, the average hourly earnings above the minimum wage in one workweek cannot offset below minimum wages in another workweek.

Monthly Salaries

To determine whether the minimum wage requirements are met, the monthly salary is multiplied by 12 and then divided by 52 to obtain the weekly rate of pay. The weekly rate of pay is then divided by the hours worked each week to determine the hourly rate for each week. The hourly rate must exceed the minimum wage. For example, if an employee earns $2,000 per month, then your salary is $24,000.00 per year, which means that your weekly rate is approximately $461.53. If you work 70 hours per week, then your hourly rate is $6.59, which is a violation of the FLSA if you are a non-exempt employee.

Commission Payments

Commissions are payments for hours worked, regardless of whether it is the sole source of the employee's compensation or a part. Commission earnings may be computed daily, weekly, bi-weekly, semimonthly, or some other interval. The employer must record the hours worked on a workweek basis and ensure the employee receives at least the minimum wage each workweek. If an employee fails to receive the minimum wage in one workweek and exceeds it in another workweek, the employer cannot average them out.

If an employee is paid $250 in commissions in one week and works 50 hours in that one workweek, then the hourly rate is $5.00 per hour. If the employee receives no other payment, that would be a violation of the FLSA.

For monthly commissions, the computation still has to be on a workweek basis. For example, if an employee earns $1,000 a month, you multiply $1,000 by 12, then divide that number by 52, which means the employee makes $230 per week. If the employee works 50 hours a week, then this comes to $4.60 per hour, which is below minimum wage.

Piece Rates

Employee earnings can be calculated on a piece-rate basis, but an employee has to still receive the minimum wage. The employer has to divide the straight-time earnings, including the piece-rate earnings, and divide it by the total hours each week to determine the hourly rate. The fact that some workers are slower than others will not excuse an employer from paying the minimum wage.

Tipped Employees

Under the FLSA, the federal minimum wage for tipped workers is $2.13 an hour. However, the wages plus tips must equal at least $7.25 per hour. If the wages and tips does not equal at least $7.25 per hour the employer must pay the employee the difference.

In Ohio, the minimum wage for tipped workers is $4.05 per hour. However, the wages plus tips must equal at least $8.10 per hour. If the wages and tips does not equal at least $8.10 per hour the employer must pay the employee the difference.

More Minimum Wage Law Topics

Employees Eligible for the Minimum Wage

Current Federal Minimum Wage

Current Ohio Minimum Wage

Current Minimum Wage in Other States

Employees Not Entitled to the Minimum Wage

Tipped Employees

Calculating the Minimum Wage

Remedies

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