We've had inquiries recently about whether the federal Fair Labor Standards Act allows employers to pay less than its $7.25-per-hour minimum wage to certain younger workers. While there is such an exception, it is limited in important ways.
The FLSA's so-called "Opportunity Wage" provision allows an employer to pay a worker who is under 20 years old at a rate of at least $4.25 per hour for the first 90 consecutive calendar days after the worker's initial employment by that employer. An employer may not displace other workers (including that it can neither terminate them nor reduce their hours, wages, or benefits) in order to hire employees at the Opportunity Wage.
The 90-day period begins to run when the employee starts work – not when the employee was made an offer or accepted the job – and it includes the first day of work. The period is counted in calendar days – not working days – so it continues to run:
• Regardless of the number of days the employee actually works during that time, and
• Even if the employee has a break-in-service during the 90 days.
The U.S. Labor Department says that an employer may not (i) employ a worker at this lower rate until the 90 days runs out, and (ii) then discharge that person in order to hire another one at the Opportunity Wage.
The employer is no longer permitted to pay a worker at the lower rate once he or she turns 20. This is so even if the 90-day period has not yet expired.
The Opportunity Wage does not excuse an employer from complying with the FLSA's child-labor restrictions. Neither does it override a state's or other jurisdiction's requirement to pay a higher minimum wage than $4.25 (although an employer should find out whether that jurisdiction has its own exception similar to the Opportunity Wage).
Be careful not to confuse the Opportunity Wage with another FLSA exception involving special certificates the U.S. Labor Secretary may issue. These certificates permit certain workers (such as full-time students and student-learners, for instance) to be employed at rates less than the FLSA's minimum wage. However, there are extensive, detailed, and differing requirements for who can qualify, how employers must go about applying for certificates, the conditions under which certificates will be issued, what records must be kept, and how and why the Labor Department might withdraw a certificate. Employers may not pay the lower minimum wage to such workers without the certificate in hand, and the authorized hourly rate will be substantially higher than $4.25.
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FLSA Opportunity Wage Provision, 29 U.S.C. 206(g).pdf (21.90 kb)