Wage Theft Demand Letter
Minimum Wage Violations: How to Identify and Report Them
Minimum wage violations are more complex than just being paid below the posted rate. Learn how tip credits, deductions, and classification issues create violations — and how to fight back.
Minimum wage violations are more complex than employers simply posting $7.25 and paying $6.00. Many workers are paid at the nominal minimum wage but receive less in effective pay after illegal deductions, improper tip credits, or unreimbursed work expenses. Understanding the mechanics of minimum wage law reveals many violations that workers and employers both sometimes miss.
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Federal, State, and Local Minimum Wages
Minimum wage law operates in layers:
Federal: $7.25/hour (FLSA minimum; unchanged since 2009). Applies in all states unless a higher rate applies.
State: Most states have enacted higher minimum wages. As of 2025, many states are at $13–$17/hour. California: $16/hour statewide; New York: $16/hour NYC metro, $15/hour rest of state; Washington: $16.28/hour; Colorado: $14.42/hour.
Local: Cities and counties in many states have adopted minimum wages higher than their state floor. Seattle: $17.25–$19.97/hour depending on employer size; San Francisco: $18.67/hour; Chicago: $15.80/hour.
Which rate applies: The highest applicable rate governs. An employer in San Francisco paying $16/hour is violating local law even if they meet the state floor.
Annual increases: Many state and local minimum wages are indexed to inflation or have legislated annual increases. Employers who don't update their rates after annual increases are violating minimum wage law.
How Illegal Deductions Create Minimum Wage Violations
Even when the hourly rate meets minimum wage, deductions can push effective pay below the minimum:
Uniform and equipment costs: Employers can require employees to pay for uniforms and equipment, but not if those costs bring net pay below minimum wage during the pay period.
Cash shortages: Deductions for register shortages are legal in some states only if: the employee agrees in writing, the shortage was directly attributable to the employee, and the deduction doesn't bring wages below minimum wage.
Damaged goods: Charging employees for damaged inventory, products, or property is prohibited if it reduces pay below minimum wage.
Tools of the trade: Employers generally must bear the cost of tools required for work, not employees.
The test: In any workweek, add up all deductions and subtract from gross pay. If the result is below minimum wage × hours worked, there's a violation.
Tip Credits and When They Create Violations
The FLSA allows employers to pay tipped employees less than minimum wage — as low as $2.13/hour federally — if tips make up the difference. This is the 'tip credit.'
The tip credit rules:
- The employer must inform the employee in advance that a tip credit is being taken
- The employee must actually receive enough tips to bring total compensation to at least minimum wage
- If tips are insufficient in any workweek, the employer must pay the difference
Common tip credit violations:
- Employer takes the tip credit but doesn't tell employees
- Employee's tips are insufficient to meet minimum wage in a slow week; employer doesn't make up the difference
- Employer pools tips with non-tipped employees (managers, cooks who don't customarily receive tips)
- Employer requires tipped employees to spend more than 20% of time on non-tipped work while paying tip credit wage
State tip credit variations: Many states have abolished the tip credit entirely (California, Oregon, Washington, Montana, Minnesota, Nevada) and require full minimum wage plus tips.
Travel Time and Other Compensable Time Issues
Some time that workers spend that's required by the job is compensable (must be paid) but often isn't:
Travel between job sites: Travel between customer locations during the workday is compensable time. Commuting to the first job site and from the last one home is not.
Mandatory pre-shift activities: Donning required protective gear, safety equipment checks, security screenings that are mandatory — all compensable if required by the employer.
Training time: Mandatory job-related training is compensable, even if the employer calls it 'orientation' or 'development.'
On-call time: Whether on-call time is compensable depends on how restricted the employee's activities are. If you must stay close to work and respond within minutes, it's likely compensable. If you're free to use the time as you choose, it's generally not.
Sleep time: For employees who work 24-hour shifts, employers and employees may agree in writing to exclude up to 8 hours of bona fide sleep time from compensable hours — if the employer provides adequate sleeping facilities and the employee can actually sleep.
How to Calculate Whether You're Being Paid Below Minimum Wage
Step 1: Add up all time you worked in the workweek, including all compensable time (off-the-clock work, pre-shift activities, training, required travel).
Step 2: Add up all compensation you received for that week (base pay, tips, commissions — before deductions).
Step 3: Subtract all legally permissible deductions.
Step 4: Divide net pay by total hours worked. This is your effective hourly rate.
Step 5: Compare to the applicable minimum wage (federal, state, or local, whichever is highest).
Example:
- You worked 45 hours (including 30 minutes pre-shift daily that wasn't paid)
- Gross pay: $290 (10 hours overtime × $7.25 × 1.5 + 35 hours × $7.25)
- But the 2.5 hours of pre-shift work wasn't paid
- Effective hourly rate: $290 ÷ 45 hours = $6.44/hour — below minimum wage in most states
Keep your own records. Even 15 minutes off the clock daily × 5 days = 1.25 hours/week × 52 weeks = 65 hours/year × your hourly rate = significant money.
Reporting Minimum Wage Violations
Department of Labor Wage and Hour Division: File at dol.gov/agencies/whd/contact/complaints or call 1-866-4-USWAGE. Handles FLSA minimum wage violations.
State labor agency: For violations of state minimum wage laws (often more favorable). Find your state's labor department contact information.
Private lawsuit: You can sue your employer directly under the FLSA. Successful plaintiffs recover back wages, liquidated damages (equal to back wages), and attorney fees. Class actions are common for minimum wage violations that affect multiple workers.
Class and collective actions: Minimum wage violations often affect all employees in similar positions. A class action or FLSA collective action can multiply the recovery and the pressure on employers to comply.
Frequently Asked Questions
Quick answers to the most common questions on this topic.
Can my employer require me to pay for my own uniform?
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Employers can require employees to purchase uniforms, but cannot make deductions that bring net pay below minimum wage in any workweek. If the cost of a required uniform, spread across the pay period, reduces your effective hourly rate below minimum wage, it's a violation.
Do minimum wage laws apply to tipped workers?
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Yes. Tipped workers must receive at least the applicable minimum wage when you combine their cash wage and tips. If tips are insufficient, the employer must pay the difference. In states without a tip credit, tipped workers receive full minimum wage plus tips.
My employer pays me in cash. Does minimum wage law still apply?
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Yes. How you're paid (cash, check, direct deposit) doesn't affect minimum wage protections. Cash payments also create tax issues — employers paying cash 'under the table' may be concealing wage violations.
I'm 16 years old. Is there a different minimum wage for minors?
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Federal law allows employers to pay workers under 20 a 'youth minimum wage' of $4.25/hour for the first 90 consecutive calendar days of employment. After 90 days, the regular minimum wage applies. Some states prohibit youth minimum wages and require full minimum wage for all workers regardless of age.
What's the minimum wage for tipped employees under federal law?
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The federal tipped minimum wage is $2.13/hour. This is the cash wage employers can pay to tipped employees who regularly receive more than $30/month in tips, as long as tips bring total compensation to at least $7.25/hour. Many states have higher tipped minimum wages or no tipped minimum wage.