As a small business owner, it’s extremely important to be aware of minimum wage laws in your state. Although Alabama doesn’t have a minimum wage yet it’s important to make sure you’re not missing out on any regulation and prepared for upcoming changes.

To help you, we’ve prepared a quick guide with details on the Alabama minimum wage rate in 2024 and beyond. 

What is the Minimum Wage in Alabama in 2024?

Alabama is one of five states in the U.S. that hasn’t adopted a state minimum wage law, so it adheres to the federal minimum wage of $7.25, which hasn’t changed since 2009.

There are exceptions to the minimum salaries or wages in Alabama that you must know:

Tipped Employees: Workers who earn tips can be paid a base wage of $2.13 per hour, provided their total earnings (including tips) meet or exceed the federal minimum wage of $7.25. If tips do not bring their earnings up to this level, employers are required to make up the difference.

Workers under the age of 20: According to Fair Labor Standards Act (FLSA) employees under the age of 20 can be paid a reduced wage of $4.25 per hour for their first 90 days of employment. After this period, they must receive at least the federal minimum wage. 

Full-Time Students: Full-time vocational students may be compensated at a sub-minimum wage rate—75% of the applicable minimum wage—while those working in retail or service sectors may earn 85% of the minimum wage.

Disabled Workers: Certain disabled individuals may also be paid less than the federal minimum wage if they possess a certificate from the Alabama Department of Labor.

Overtime Pay:  Hourly employees in Alabama are paid 1.5 times the regular pay rate for any hours worked over a total of 40 in a single work week (defined as any seven consecutive work days by the Fair Labor Standards Act). Alabama follows federal standards for overtime compensation and it amounts to $10.88 per hour based on the current minimum wage.

Will the Minimum Wage in Alabama Change?

Now, minimum wages in Alabama are maintained at a federal level of $7.25 per hour. There is hardly ever an opportunity for the rising rate of minimum wages concerning the employees of Alabama.

But in the past, the minimum wage in Birmingham has always been under the persistent effort of increase.

In February 2016, Birmingham raised the minimum wage to $10.10 an hour; but months later after that, the state legislature established a local law that barred any local government from implementing their own standards on wages and thus overrode the rise by Birmingham.

The issue has been the subject of several legal cases from various bodies, such as the NAACP and fast-food workers who filed a lawsuit against the state law. 

One dismissal did occur, but the 11th U.S. Circuit Court of Appeals made a huge ruling in July 2018 declaring that Alabama’s preemption law violated the 14th Amendment’s equal protection rights.

Still, the court granted in full the appeal dismissed and kept Alabama’s minimum wage at $7.25.

Of course, the decision has nothing to do with today’s situation; however, there’s hope that some such court will allow further increases to come through in another locality that raises its minimum wages.

Preparing for Potential Changes in Minimum Wage 

Even though there are no immediate plans to increase Alabama’s minimum wage, small business owners should proactively prepare for any future changes. Here are some steps to consider:

• Reassess Your Staffing: Look at your monthly sales and then at your expenses to see if the levels of staffing you have to match it. Then readjust your plan for staffing using cash flow analysis.
• Hire Wisely: The process of hiring can sometimes take time and be quite costly. It is now possible to get the best by effective hiring. However, once you have attracted suitable employees, it should then be ensured that those you hire stay motivated to work for your business instead of turning back. Do you feel vetting an employee is an uphill battle, you can hire a recruitment assistant with expertise in vetting the right talent for your business.
• Upgrade Technology: Upgrade Technology: Automate routine tasks, such as payroll processing, to make operations easier and faster. For instance, Square Payroll helps you process payroll efficiently and enables you to focus on strategic business growth. The right tools aside, an accounting and payroll assistant would make managing your finances a breeze. Always be updated on new minimum wage laws and discuss everything with your accountant or legal advisor for ongoing compliance and preparation for any possible eventualities.

Conclusion

This guide will provide Alabama business owners with the information necessary regarding state minimum wage rates so that they remain compliant and make the right investment decisions in the region. More importantly, if you are an employee in Alabama and feel that you are paid below the minimum wage, you should fight for a pay adjustment to meet the state’s minimum wage standards.