Under federal law, employers must pay all employees a minimum hourly wage. The federal minimum wage is currently $7.25 per hour, but individual states and territories can implement their own minimum wages that are higher than the federal threshold. In the U.S. Virgin Islands, the minimum wage is $9.50 per hour as of June 1, 2017 although it is anticipated that it will increase it to $10.50 by the end of 2018.
Some jurisdictions have also passed living wage laws, which have higher minimums than even the state levels. Employers must pay the highest minimum wage affecting them, whether it’s federal, territorial or local.
While the minimum wage is an hourly rate, this does not mean employers must pay employees hourly wages. So long as the total amount paid divided by the number of hours worked at least equals the minimum wage, employers can also pay via salary, commission or wages plus tips.
Which employers are required to pay the federal minimum wage?
The Fair Labor Standards Act (FLSA) is the law that outlines minimum wage requirements on a federal level. While it covers most employers, there are a few that are exempt.
Typically, any business that has $500,000 or more in annual sales or has employees that do business between states and territories must abide by FLSA rules. This “interstate commerce” could include making phone calls or sending mail to another state or receiving it from another state, and not just actually physically visiting another state or territory.
Are any workers not covered by federal minimum wage laws?
Just because a business is covered by federal minimum wage laws does not mean all its workers are covered. The following are a few examples of workers who are not entitled to the federal minimum wage:
- Independent contractors (only employees are guaranteed a minimum wage)
- Outside sales staff, such as salespeople who work a specific route
- Switchboard operators for phone companies with fewer than 750 stations
- Workers on small farms
- Employees of local newspapers with a circulation of less than 4,000
- Newspaper deliverers
- Employees of recreational or seasonal amusement businesses
- Students, apprentices and trainees as defined by federal labor laws
Even if a business or employee is exempt from federal minimum wage rules, they might still be covered by territorial law. Thus, it’s important to be familiar with all of the wage and labor laws that could affect your business.
What about workers who receive tips?
If you have tipped employees, you are allowed to pay them less than the minimum wage that applies to your business, as long as the amount they receive including the tips adds up to at least the minimum wage. The law requires you to explain this policy to all employees.
For more information on your responsibilities as an employer when it comes to wages, consult a skilled U.S. Virgin Islands labor and employment attorney.
Ravinder S. Nagi is a shareholder and the Assistant Managing Attorney for BoltNagi. He is the chair of BoltNagi’s Litigation Department and the Labor and Employment Practice Group. He has represented numerous private and public companies in complex labor and employment cases of all types.