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Depending on where your business is located, minimum wage laws can be governed by federal law, state law, or even local law. In the absence of local laws, state law will control. If there is no state law, then federal law controls. If there is a difference between the local, state, and federal requirements, the highest wage requirement controls.
Notably, there are only 5 states that do not have their own minimum wage laws, and therefore rely on the federal mandate. Those states are Alabama, Louisiana, Mississippi, South Carolina, and Tennessee. Additionally, Arkansas, Georgia, Minnesota, and Wyoming's state minimum wages are below the federal mandated rate, which means that federal law controls in those states.
Can States Block Local Minimum Wages?
In reaction to the increase in cities and municipalities adopting local minimum wage laws, some state lawmakers have essentially prohibited the local regulations. Most recently, in Ohio, as a rider on a bill originally intended to help pet stores and ban bestiality, the state has prohibited cities and municipalities from raising their minimum wages above the state minimum. The city of Cleveland was set to vote on a an increase of the local minimum wage to $15 this coming May.
Opponents of local minimum wage laws assert that raising minimum wages is bad for businesses. The proponents of the recently passed Ohio bill assert that the local minimum wage prohibition was done in order to keep Ohio business friendly. Ohio joins 19 other states with similar laws on their books.
Who Enforces Minimum Wage Laws?
Generally, either a state's labor department or the Federal Department of Labor will be tasked with enforcing minimum wage laws. It will depend on whether your state has minimum wage laws. Typically, a violation of a minimum wage law will be enforced via an administrative hearing. In California, for example, state minimum wage violations must be brought before the state's labor commissioner.
If violations are sustained, then employers generally will be looking at substantial fines and penalties, on top of having to pay the underpaid employee the difference in wages.