REFERENCE
Minimum Wage Glossary (2026)
Plain-English definitions of key minimum wage and employment law terms for the US and UK. Each entry includes a link to the page where the term is covered in full context. Verified April 2026.
A
ACAS
Advisory, Conciliation and Arbitration Service. The UK body that provides free, impartial advice on employment rights and helps resolve employment disputes. Workers must contact ACAS for 'early conciliation' before lodging a claim at an employment tribunal.
Enforcement and Back Pay →Accommodation Offset
The maximum daily amount a UK employer can deduct from wages for providing worker accommodation without it counting as an underpayment of minimum wage. From 1 April 2026 this is £11.10 per day. Deductions above this amount reduce the worker's effective hourly rate for NMW purposes.
UK Rates 2026 →Administrative Exemption
One of the FLSA white-collar exemptions from minimum wage and overtime. Requires salary basis, salary level ($684/week), and a primary duty of office/non-manual work directly related to the management or general business operations of the employer or its customers, with the exercise of discretion and independent judgment on significant matters.
Exempt Minimum Wage →Apprentice Rate
The UK National Minimum Wage rate for apprentices under 19 years old, or for apprentices aged 19+ in the first year of their apprenticeship. From 1 April 2026: £8.00 per hour.
UK Rates 2026 →B
Back Pay
Wages owed to a worker that were not paid when due. In minimum wage enforcement, back pay covers the difference between what the worker was paid and the applicable minimum wage for all affected hours within the statute of limitations.
Enforcement and Back Pay →C
Collective Action
An FLSA lawsuit brought by one or more workers on behalf of themselves and similarly situated colleagues who affirmatively opt in. Different from a class action (which is opt-out). Collective actions allow efficient litigation of widespread wage violations.
Enforcement and Back Pay →CPI
Consumer Price Index. A measure of the average change over time in the prices paid by urban consumers for a representative basket of goods and services. The CPI-W (for Urban Wage Earners and Clerical Workers) is typically used for minimum wage indexing in US states.
By State 2026 →D
DOL
US Department of Labor. The federal agency responsible for enforcing the FLSA, including minimum wage and overtime requirements. The Wage and Hour Division (WHD) is the subdivision that handles minimum wage complaints.
Enforcement and Back Pay →Duties Test
The third prong of the FLSA white-collar exemption test. The employee's primary job duty must fit one of the recognised exemption categories (executive, administrative, professional, computer, outside sales, highly compensated employee). Salary alone is not enough to be exempt -- the duties must qualify.
Exempt Minimum Wage →E
Employment Tribunal
The UK judicial body that handles employment law disputes including minimum wage claims. Workers can bring unauthorised-deductions claims within 3 months (less 1 day) of the underpayment, after completing ACAS early conciliation. Separate from (and often faster than) HMRC enforcement.
Enforcement and Back Pay →Enterprise Coverage
The employer-level test for whether the FLSA applies. An enterprise is covered if annual gross sales are $500,000 or more, or if the enterprise is inherently engaged in interstate commerce. In practice, this covers almost all US employers.
Who Is Covered →Exempt Employee
An employee who meets all three requirements of an FLSA white-collar exemption (salary basis, salary level, duties test) and therefore is not entitled to overtime under the FLSA. Exempt employees are still entitled to at least their fixed salary and to minimum wage on an hourly basis if salary is very low.
Exempt Minimum Wage →Executive Exemption
An FLSA white-collar exemption applying to employees whose primary duty is managing the enterprise or a recognised subdivision, who customarily direct the work of at least two full-time employees, and who have genuine authority to hire, fire, or influence employment decisions.
Exempt Minimum Wage →F
FLSA
Fair Labor Standards Act of 1938. The federal US law that establishes minimum wage, overtime pay, recordkeeping, and child labour standards for workers in the private sector and in federal, state, and local governments. Enforced by the DOL Wage and Hour Division.
Federal History →H
HMRC
His Majesty's Revenue and Customs. The UK government agency responsible for collecting taxes and enforcing the National Minimum Wage. The NMW Compliance team handles worker complaints and employer investigations.
UK Rates 2026 →Home Rule
The authority granted to cities and counties by state law or state constitution to govern their own affairs, including setting local minimum wages above the state floor. Not all states grant Home Rule for wage-setting; pre-emption laws in many states prohibit local minimum wage ordinances.
By City →I
Indexed Minimum Wage
A minimum wage that automatically adjusts each year based on a price index (usually CPI or CPI-W) without requiring new legislation. CPI-indexed rates maintain their real purchasing power against inflation. 17 US states plus DC have CPI-indexed minimum wages.
By State 2026 →Individual Coverage
The worker-level test for whether the FLSA applies, even when the employer as an enterprise is not covered. An individual worker is covered if they personally are 'engaged in commerce' or 'in the production of goods for commerce'.
Who Is Covered →Interstate Commerce
Trade, traffic, or transportation in, through, or affecting commerce between states. Interpreted extremely broadly by courts. Using a phone to take interstate orders, handling goods that crossed state lines, or using services provided from out of state can all constitute interstate commerce.
Who Is Covered →L
Liquidated Damages
Additional money owed to a worker in a successful FLSA minimum wage or overtime claim, equal to the unpaid wages. Liquidated damages effectively double the recovery. An employer can avoid liquidated damages only by proving it acted in good faith and had objectively reasonable grounds for believing it complied with the FLSA.
Enforcement and Back Pay →Living Wage
An independent, research-based estimate of the hourly wage needed for a worker to meet basic living costs. Not a legal minimum. UK: Living Wage Foundation sets the Real Living Wage at £13.45 nationally and £14.80 in London for 2025/26. US: MIT Living Wage Calculator produces county-level estimates.
Living Wage vs Minimum Wage →Living Wage Foundation
The UK organisation that independently calculates and accredits the voluntary Real Living Wage. Over 14,000 UK employers have committed to pay at least the Foundation's rate (£13.45 / £14.80 London for 2025/26), which is above the legal NLW of £12.71.
Living Wage vs Minimum Wage →Local Ordinance
A law passed by a city, county, or other local government body. City minimum wage laws are examples of local ordinances. In states that permit Home Rule for wages, local ordinances can set minimum wages above the state floor.
By City →Low Pay Commission (LPC)
The independent UK advisory body that reviews evidence and recommends National Minimum Wage rates to the government each autumn. Comprises employer representatives, worker representatives, and academic economists. The government has accepted LPC recommendations every year since 1998.
UK History →M
MIT Living Wage Calculator
A tool developed by Professor Amy Glasmeier at MIT that estimates the hourly wage needed for a given family composition in a specific US county. Based on actual costs of food, housing, transport, healthcare, childcare, and taxes. Assumes no government assistance.
Living Wage vs Minimum Wage →N
National Living Wage (NLW)
The UK government's top-band minimum wage rate, branded as the 'National Living Wage'. From 1 April 2026: £12.71 for workers aged 21 and over. This is the government's legal minimum, not the same as the Living Wage Foundation's voluntary Real Living Wage.
UK Rates 2026 →National Minimum Wage (NMW)
The UK framework of statutory minimum wages set by the National Minimum Wage Act 1998. Technically the NLW is the top band of the NMW structure. The bands below the NLW (ages 18-20, 16-17, apprentice) are the National Minimum Wage rates.
UK History →Non-Exempt Employee
An employee not meeting the FLSA white-collar exemption criteria. Non-exempt employees are entitled to minimum wage for all hours worked and overtime pay at 1.5x their regular rate for hours over 40 in a workweek.
Who Is Covered →O
One Fair Wage
A US campaign advocating for the elimination of the federal tip credit, so that tipped workers receive the full minimum wage in cash (plus tips on top). Seven states already have one-fair-wage rules. Active campaigns in New York, Illinois, Michigan, and Massachusetts.
Tipped Minimum Wage →P
Pre-emption
A legal doctrine where a higher authority's law prevents a lower authority from legislating in the same area. In minimum wage context: state pre-emption laws that prevent cities from enacting local minimum wages above the state floor. Alabama, Texas, Florida, and others have pre-emption laws.
By City →Professional Exemption
An FLSA white-collar exemption for employees in learned professions (requiring advanced knowledge in a field of science or learning) or in creative professions (requiring invention, imagination, originality or talent). Doctors, lawyers, architects, accountants, engineers, teachers often qualify.
Exempt Minimum Wage →R
Raise the Wage Act
A recurring US federal bill to raise the federal minimum wage, most recently from $7.25 to $17 by 2028. Passed the House multiple times but has never achieved 60 votes in the Senate for cloture. As of April 2026, the most recent version (2023) has not been re-introduced in the 119th Congress.
Federal History →Real Wage
A wage adjusted for inflation to reflect purchasing power rather than nominal dollar or pound value. The US federal minimum wage of $7.25 has a real value (in 2026 dollars) significantly lower than its 1968 peak of $1.60 (approximately $14.17 in 2026 dollars).
Federal History →S
Salary Basis Test
The first prong of the FLSA white-collar exemption test. The employee must receive a predetermined fixed salary that is not reduced because of variations in the quality or quantity of work. Improper deductions from salary can cause an employer to lose the exemption.
Exempt Minimum Wage →Statute of Limitations
The time limit for bringing a legal claim. FLSA minimum wage claims: 2 years standard, 3 years for willful violations. California: 3 years. New York: 6 years. UK NMW employment tribunal claims: 3 months from the underpayment.
Enforcement and Back Pay →Subminimum Wage
A wage below the applicable minimum wage, permitted only in specific circumstances: youth training wage ($4.25), 14(b) student learner certificates, 14(c) disabled worker certificates, and tipped worker cash wages. All require compliance with specific FLSA rules.
Youth Minimum Wage →T
Tip Credit
The amount an employer can claim against the minimum wage based on tips received by a tipped worker. Federal tip credit: up to $5.12/hour (allowing a $2.13 cash wage). Seven states ban the tip credit entirely.
Tipped Minimum Wage →Tipped Employee
Under the FLSA, an employee who customarily and regularly receives more than $30 per month in tips. Only tipped employees can be paid the lower tipped minimum wage of $2.13/hour at the federal level (where the tip credit is permitted).
Tipped Minimum Wage →V
Voluntary Living Wage
In the UK context, this refers to the Living Wage Foundation's Real Living Wage -- so called because it is voluntary, not legally required. The government's National Living Wage (NLW) has the word 'living wage' in its name but is a legal minimum, not voluntary.
Living Wage vs Minimum Wage →W
Wage Theft
The failure of an employer to pay workers what they are legally owed. Includes paying below minimum wage, not paying overtime, making illegal deductions, requiring off-the-clock work, or stealing tips. The Economic Policy Institute estimates US wage theft costs workers billions of dollars annually.
Enforcement and Back Pay →WHD
Wage and Hour Division. The subdivision of the US Department of Labor responsible for enforcing the FLSA, including minimum wage, overtime, and child labour standards. File complaints at 1-866-487-9243 or dol.gov/agencies/whd/contact.
Enforcement and Back Pay →Willful Violation
An FLSA violation where the employer knew its conduct violated the FLSA or acted in reckless disregard of whether its conduct was prohibited. Willful violations extend the statute of limitations from 2 to 3 years and may affect the availability of the good faith defence against liquidated damages.
Enforcement and Back Pay →Y
Youth Minimum Wage
The US federal sub-minimum wage of $4.25 per hour for workers under 20 years old in their first 90 consecutive calendar days of employment with a given employer. Employers cannot use the youth wage to displace other workers. Some states do not permit the youth subminimum.
Youth Minimum Wage →