You have seen the term “subminimum wage” thrown about in the news or in small business discussions. But is it a viable option for your company?

It’s complicated.

Subminimum wage is one legal, although somewhat controversial, avenue to pay employees less than the federal minimum wage — which is set at $7.25 nationwide. Many states are now proposing their own, higher standard for minimum wages.

Restaurants are perhaps the most common example of establishments that use subminimum wage. Typically, waiters and waitresses get only $2.13 in direct wages, as it is expected that they will reach $7.25 with tips.


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