State-by-State Minimum Wage Guide: Every Rate, Effective Date & Exemption

Minimum wage compliance used to be a single number. It is now a matrix: a federal floor that has not moved in over fifteen years, state rates that adjust annually by formula, city and county ordinances that adjust on their own schedules, and separate rates for tipped employees, small employers, and specific industries.

For a multi-state employer, the practical risk is not ignorance of the law — it is a payroll configuration that was right last January and drifted out of compliance this one.

Rates in this guide require verification. Every figure below is marked [VERIFY] because state minimum wages are reset annually — most indexed states announce the coming year's rate in the fall of the prior year. Confirm each rate against the administering state agency before relying on it. The structural information in this guide — how each state sets its rate, whether a tip credit is permitted, whether local ordinances are preempted — is far more stable and is where most compliance errors actually originate.

The Federal Baseline

The federal minimum wage under the FLSA is $7.25 per hour, unchanged since July 24, 2009 — the longest period without an increase since the statute was enacted.

Two additional federal figures matter:

• Tipped cash wage: $2.13 per hour, with a maximum tip credit of $5.12. The cash wage plus tips must reach at least the full minimum wage; if it does not, the employer makes up the difference.
• Youth minimum wage: $4.25 per hour for employees under 20, limited to the first 90 consecutive calendar days of employment. It ends at day 91 or on the employee's 20th birthday, whichever is first, and it cannot be used to displace other workers.

Who is covered. The FLSA applies through two routes. Enterprise coverage reaches businesses with at least $500,000 in annual gross volume of sales or business done, plus hospitals, schools, and government agencies regardless of revenue. Individual coverage reaches employees personally engaged in interstate commerce or the production of goods for commerce — a standard read broadly enough that most employees are covered even at businesses below the enterprise threshold.

Where federal, state, and local rates differ, the employee receives the highest applicable rate. This is the only rule in the entire subject that never changes.

How States Set Their Rates

Understanding the mechanism tells you when to expect a change and where to look for it. Every state falls into one of five categories.

Roughly twenty states now index annually. That is the single most important operational fact in this guide: for those states, your payroll configuration expires every year, whether or not anyone tells you.

States without their own minimum wage law

Alabama, Louisiana, Mississippi, South Carolina, and Tennessee have no state minimum wage statute. Covered employers follow the federal $7.25.

States with a rate below the federal minimum

Georgia and Wyoming each maintain a statutory rate below the federal minimum. For FLSA-covered employers the federal rate controls, so the state figure applies only to the small set of employers not covered by the FLSA at all. Do not configure payroll to the state figure.

The State Table

Tip Credits: Where They Are and Aren't Allowed

Seven states prohibit the tip credit entirely — Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington. In these states, tipped employees must receive the full state minimum wage in direct cash wages before tips. Tips are on top.

Where a tip credit is permitted, four federal conditions apply regardless of the state amount:

1. The employee must customarily and regularly receive more than $30 per month in tips
2. The employer must inform the employee of the tip credit provisions in advance
3. The employee must retain all tips, except through a valid tip pool
4. Cash wage plus tips must equal at least the full minimum wage for every workweek — the employer makes up any shortfall

Tip pooling. Employers that take a tip credit may only pool among employees who customarily and regularly receive tips. Employers that pay the full minimum wage without a tip credit may operate a broader pool that includes back-of-house staff. Managers and supervisors may never keep tips from any pool, in either arrangement — this is one of the most frequently litigated points in the entire subject.

Overtime for tipped employees is calculated on the full minimum wage, not the reduced cash wage. Our overtime calculation guide  covers the mechanics.

Local Minimum Wage Ordinances

A growing number of cities and counties set rates above their state's — Seattle, New York City, San Francisco, Denver, Chicago, Los Angeles, and dozens of others. Several use different rates by employer size, and many adjust on July 1 rather than January 1.

Two questions decide whether you need to track them:

1. Does the state preempt local wage ordinances? Many states — particularly in the South and Midwest — expressly prohibit localities from setting their own minimum wage. In those states there is nothing local to track.
2. Which jurisdiction applies to a given employee? Generally where the work is performed, not where the employer is based. For mobile or remote employees this requires a rule: many ordinances apply once an employee works a threshold number of hours within the jurisdiction in a week.

That second question is the live issue for employers with delivery drivers, field technicians, and remote staff. Establish the rule before the audit, not during it.

Exemptions That Still Apply

The federal minimum wage does not reach every employee. Common exemptions include:

• Executive, administrative, professional, outside sales, and computer employees meeting the salary and duties tests
• Youth minimum wage — under 20, first 90 consecutive calendar days
• Full-time students under certificate programs in retail, service, agriculture, or at their own institution
• Student-learners in bona fide vocational training programs
• Workers with disabilities under Section 14(c) certificates [VERIFY: this program has been the subject of active DOL rulemaking to phase it out — confirm current status]
• Certain agricultural workers, seasonal amusement and recreational establishments, and specified small newspapers

State exemptions differ from federal ones and are often narrower. Never assume a federal exemption carries over.

Building an Annual Update Process

1. Inventory every jurisdiction where you have an employee performing work — state, county, and city
2. Record the mechanism for each (indexed, step schedule, fixed) and its adjustment date
3. Calendar a review each October, when most indexed states publish the coming year's rate
4. Audit the compression effect. Raising the floor without adjusting the rates just above it creates compression that drives turnover among your tenured staff. Budget for the band, not just the minimum.
5. Check exempt salary thresholds at the same time — in several states the exempt threshold is a multiple of the minimum wage, so it moves automatically when the minimum wage does
6. Update posters. Minimum wage postings are required and rate-specific; an outdated poster is an easy citation
7. Confirm tipped configurations, including cash wage, credit amount, and the make-up-the-difference calculation

Step 5 is the one most employers miss. In California and Washington, the exempt salary threshold is derived from the minimum wage — so a minimum wage increase silently reclassifies employees whose salaries no longer clear the bar.

Frequently Asked Questions

What is the federal minimum wage?

$7.25 per hour, unchanged since July 2009. Where a state or local rate is higher, the higher rate applies.

Which states have no minimum wage law?

Alabama, Louisiana, Mississippi, South Carolina, and Tennessee. Covered employers in those states follow the federal rate. Georgia and Wyoming have rates below the federal minimum, so the federal rate controls for covered employers.

Which states don't allow a tip credit?

Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington require the full state minimum wage in direct cash wages, with tips paid on top.

If a city rate is higher than the state rate, which applies?

The highest applicable rate — federal, state, or local — always governs, unless the state preempts local wage ordinances entirely.

Which rate applies to a remote employee?

Generally the rate for the jurisdiction where the work is physically performed. Many local ordinances apply once an employee works a threshold number of hours in the jurisdiction during a week.

Can I pay a training wage to new hires?

Only under the youth minimum wage, for employees under 20, and only for the first 90 consecutive calendar days. It cannot be used to displace existing workers, and several states do not permit it at all.

The Bottom Line

Treat minimum wage as an annual payroll maintenance task with a named owner and an October calendar entry, not as a legal question you answer once. Track the mechanism for each jurisdiction, not just the current number, and remember that in indexed states a minimum wage change can also move your exempt salary threshold.

For structured instruction, explore our FLSA Training Courses and Payroll Training Courses , or find jurisdiction-specific resources through HR Training by State