What is the minimum wage?

The minimum wage is an hourly rate that employers must pay their non-exempt employees for each hour worked. Non-exempt employees are commonly referred to as “blue collar” workers. Non-exempt employees often perform work that requires physical labor, including, but not limited to, construction, landscaping, security guards, janitors, retail workers, cashiers, office clerks and food service workers, among other positions. Employees are presumed to be non-exempt unless the employer can establish an exemption from the minimum wage and overtime applies.

Under the federal law establishing the minimum wage (the Fair Labor Standards Act or FLSA, which, as of January 1, 2025, remains in effect), non-exempt employees are entitled to at least $7.25 per hour. However, Maine’s minimum wage is higher than the federal minimum wage. Under Maine law, the minimum wage for non-exempt employees is $14.65 per hour effective January 1, 2025. In addition, by local ordinance, the minimum wage for non-exempt employees working in Portland, Maine is $15.50 per hour effective January 1, 2025.

What is a tip credit?

Employers in the restaurant industry and other hospitality industries are afforded a credit against the hourly wage payable to certain direct customer service positions, such as waiters, servers, bartenders and bar backs. Under Maine law, employers in these industries are allowed to take a credit against hourly wages up to 50% of the minimum hourly wage, so long as the tips received by the employee during the work week equal or exceed the tip credit amount. If the tips received by the employee when divided by the number of hours worked in the employee’s work week do not equal or exceed the tip credit amount, then the employer must make up the difference.

As an example, assume that a server at a restaurant in Westbrook works 10 hours in a work week and receives $100.00 in tips. In this scenario, the server received $10.00 per hour in tips. The employer may take the full tip credit of $7.33 per hour against the minimum wage and must pay the server $73.20 in gross hourly wages, and the employee keeps all tips the employee received.

On the other hand, assume a server at restaurant in Westbrook works 10 hours in a work week and receives $50.00 in tips. In this scenario, the server received $5.00 per hour in tips. The employer may take a tip credit of $5.00 per hour against the minimum wages, but must make up the difference and pay the minimum wage for a total of $96.50 in gross hourly wages, and the employee keeps all tips the employee received.

What is overtime?

Generally, all employees are entitled to be paid overtime wages at one-and-a-half (1.5x) their regular hourly rate for all hours worked during a work week over 40 hours, unless the employer can establish an exemption applies.

What is an exempt employee?

There are multiple exemptions to overtime, including, most commonly, the professional exemption, executive exemption and administrative exemption. Exempt employees are often referred to as “white collar” workers. To make use of these exemptions, the employer must be able to satisfy what is known as the salary and duties test. The salary test requires the employer to prove that the employee is being paid on a salary basis and that the employee is being paid at least the minimum salary set by law. The duties test requires the employer to prove that the primary duty of the employee is the type of work that the law has identified as exempt from overtime. If the employer cannot satisfy the salary and duties test, then the employee is entitled to overtime wages for overtime hours worked.

What is the minimum weekly salary for exempt employees?

Under the FLSA and its regulations (which, as of January 1, 2025, remain in effect), the minimum salary for employees classified under the executive, professional or administrative exemptions is $684 per week, or $35,568 per year. However, Maine requires a higher minimum salary to make use of these exemptions. Under Maine law effective January 1, 2025, the minimum salary for employees classified under the executive, professional, or administrative exemptions is $845.21 per week (or $43,951.00 per year).

For more information about Murray, Plumb & Murray and its employment law practice group, please visit mpmlaw.com/practice-areas/employment.