Summary: The impact of the new Federal minimum wage on the Federal Work-Study Program.
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
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.
Elizabeth M. Hicks
Deputy Assistant Secretary
for Student Financial Assistance