Iowa's minimum wage mirrors the federal $7.25/hour floor, but its coverage is broader.
While Iowa does not set a higher state minimum wage, its application extends to businesses with gross sales of $300,000 or more, a lower threshold than the federal FLSA's $500,000. Additionally, state law explicitly preempts local jurisdictions from enacting their own minimum wage ordinances, maintaining a uniform standard across Iowa.
Iowa Minimum Wage at Federal Floor
Iowa Code § 91D.1 aligns with the federal minimum wage, but expands coverage and includes specific rules for tipped employees, with state preemption preventing local ordinances.
What those rules do as an Iowa shift is created.
Teambridge evaluates each shift against Iowa's minimum wage statutes, ensuring compliance not just with the hourly rate but also considering the broader applicability of state law to your business operations.
Minimum Wage Check
For every hour worked in Iowa, Teambridge verifies that the employee's effective hourly rate meets or exceeds the state's $7.25 minimum wage, taking into account any applicable tip credits.
Tipped Wage Calculation
When an employee earns tips, Teambridge applies the Iowa tipped wage rate of $4.35/hour. It automatically flags if the combined tips and direct wage do not meet the full $7.25 minimum wage, ensuring a tip credit make-up is applied.
Coverage Determination
Teambridge helps determine if your business falls under Iowa's minimum wage law based on its $300,000 gross sales threshold, which is broader than the federal FLSA's $500,000, ensuring state-specific applicability.
Deploy Iowa wage & hour compliance for your business.
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Iowa adopts the federal minimum wage, but with expanded state-specific coverage and preemption.
Iowa Code § 91D.1 sets the state's minimum wage at the federal level of $7.25 per hour. However, the state law applies to employers with annual gross sales of $300,000 or more, encompassing a wider range of businesses than the federal Fair Labor Standards Act (FLSA), which typically applies to enterprises with $500,000 or more in annual gross volume of sales.
Iowa Code § 91D.1: Minimum Wage
"Except as otherwise provided in this chapter, every employer shall pay to each of the employer's employees wages at a rate of not less than seven dollars twenty-five cents per hour."
Tipped Employees and Wage Calculation
For employees who customarily and regularly receive more than thirty dollars a month in tips, Iowa law permits employers to pay a reduced cash wage, provided the sum of direct wages and tips equals at least the state minimum wage. The current tipped wage in Iowa is $4.35 per hour, which is 60% of the state minimum wage, a more generous direct wage requirement than the federal FLSA's $2.13 per hour.
State Preemption of Local Ordinances
Iowa Code § 364.3 explicitly prohibits local governments from establishing their own minimum wage rates or other wage regulations. This state preemption ensures uniformity across Iowa, preventing a patchwork of differing local wage ordinances that could complicate compliance for businesses operating in multiple jurisdictions within the state.
Teambridge ensures Iowa's minimum wage compliance, even with its nuanced coverage.
Teambridge handles the complexities of Iowa's minimum wage law, from applying the correct hourly rate and tip credit calculations to understanding the state's broader coverage threshold, so your business remains compliant without manual oversight.
Automatic $7.25/hour floor
Teambridge automatically applies the Iowa state minimum wage of $7.25 per hour to all non-exempt employees, ensuring no hourly rate falls below this threshold.
Accurate tipped wage processing
For tipped employees, Teambridge calculates the direct wage at $4.35 per hour and verifies that the total compensation (direct wage plus reported tips) meets or exceeds the $7.25 minimum wage, flagging any required make-up payments.
State-specific applicability
Teambridge's system incorporates Iowa's $300,000 gross sales threshold for minimum wage applicability, helping you understand if your business is covered by state law, even if it might not meet federal FLSA thresholds.
No local ordinance conflicts
By understanding Iowa's state preemption laws, Teambridge ensures your compliance strategy focuses solely on state and federal regulations, eliminating concerns about potential conflicting local minimum wage ordinances.