| DCLPublicationDate: 11/1/96 DCLID: CB-96-23 AwardYear: Summary: The impact of the new Federal minimum wage on the Federal Work-Study Program. November 1996 CB-96-23 SUBJECT: The impact of the new Federal minimum wage on the Federal Work-Study Program. REFERENCE: This letter supplements Chapter 7, Section 3 of the Federal Student Financial Aid Handbook for 1996-97. Dear Colleague: Recently enacted legislation that raised the Federal minimum wage also provided for a subminimum wage called an "Opportunity Wage." This legislation has raised questions concerning what wage should be paid to students under the Federal Work-Study (FWS) Program. The purpose of this letter is to explain the effect of these new provisions on the FWS Program. On August 20, 1996, President Clinton signed into law the Small Business Job Protection Act of 1996 (Public Law 104-188) which enacted provisions that amended the Fair Labor Standards Act of 1938 (29 U.S.C. 201 et seq.). Section 2104 of the Small Business Job Protection Act of 1996 amended section 6(a) of the Fair Labor Standards Act of 1938 by increasing the Federal minimum wage from $4.25 an hour to $4.75 an hour effective October 1, 1996, and to $5.15 an hour, effective September 1, 1997. Section 2105 of the Small Business Job Protection Act of 1996 provides for a subminimum wage known as an "Opportunity Wage" which allows any employer to pay certain employees less than the Federal minimum wage prescribed by section 6(a) of the Fair Labor Standards Act of 1938, as amended. Section 443(b)(1)(D) of the Higher Education Act of 1965, as amended (HEA), and 34 CFR 675.24 specifically state that an institution may not pay any wage to students employed under the FWS Program that is less than the current Federal minimum wage mandated by section 6(a) of the Fair Labor Standards Act of 1938, as amended. Therefore, effective October 1, 1996, an institution must pay students employed under the FWS Program at least the new Federal minimum wage of $4.75 an hour and beginning September 1, 1997, a student employed under the FWS Program must be paid at least $5.15 an hour. Because the HEA, section 443(b), and 34 CFR 675.24 do not permit an institution to pay a student employed under the FWS Program less than the Federal minimum wage established in section 6(a) of the Fair Labor Standards Act of 1938, as amended, an institution MAY NOT pay an FWS student the new subminimum "Opportunity Wage." Institutions should contact the Wage and Hour Division of the Employment Standards Administration, U.S. Department of Labor, to obtain information on the new "Opportunity Wage" for other than FWS students. For additional information or if you have questions, please contact Nancy Adams in our Policy Development Division on (202) 708-4690. We trust that this information will be useful in your administration of the FWS Program. Sincerely, Elizabeth M. Hicks Deputy Assistant Secretary for Student Financial Assistance |