What Is Iowa’s Minimum Wage and Who Is Exempt?

The minimum wage in Iowa is $7.25 per hour, the same as the federal floor. Iowa reached that rate on January 1, 2008, and it hasn’t moved since.¹ Iowa Code Chapter 91D.1 requires every employer to pay at least the state hourly wage or the current federal minimum wage, whichever is higher. Because both sit at $7.25, there’s nothing to calculate. If Congress ever raised the federal rate, Iowa employers would automatically owe the higher amount; if Iowa raised its own rate first, the state figure would control.

A few categories of workers can legally be paid less, and some can be paid nothing at all under the law’s exemptions. The rules below cover who gets the full $7.25, who doesn’t, and what to do if your employer is paying you less than you’re owed.

Tipped Workers

If you earn $30 or more per month in tips, your employer can pay a base rate of $4.35 per hour instead of the full $7.25.² The $2.90 gap is called the tip credit — the amount your employer offsets through the tips you collect from customers.³

Here’s the protection that matters most: if your base pay plus tips don’t average at least $7.25 per hour in any given workweek, your employer must make up the difference.² That calculation has to happen every pay period. A slow Tuesday can’t be averaged against a busy Saturday from a different workweek, and employers who skip the math are where most tipped-wage violations show up.

Tip Pooling

Federal law lets employers require tip pooling, where tips are collected and redistributed. When the employer takes the tip credit and pays only $4.35, the pool can include only employees who customarily receive tips — servers, bartenders, bussers, and similar front-of-house workers. If the employer pays the full $7.25 without taking any tip credit, the pool can also include back-of-house staff like cooks and dishwashers.⁴

Managers, supervisors, and owners with at least a 20% equity stake are always barred from taking a share of pooled tips, regardless of which pay structure the employer uses. A manager may keep only tips a customer hands them directly for service they personally provided.⁴

New Hires: The 90-Day Rate

Iowa allows employers to pay new hires $6.35 per hour during the first 90 calendar days of employment.⁵ The clock starts on your first day of work and runs on calendar days, not days actually worked. Once those 90 days pass, pay has to rise to at least $7.25.

If you leave before the 90 days end and get rehired by the same employer within three years, the employer can keep paying $6.35 until the original 90-day total is reached. But if you already completed the 90 days and get rehired within three years, the employer cannot restart the lower rate. You go straight to the full minimum wage.⁶

Separately, federal rules allow subminimum wages for student-learners enrolled in vocational education programs, at no less than 75% of the applicable minimum wage. Employers need a certificate from the U.S. Department of Labor before paying those rates.⁷

Overtime

Iowa has no overtime statute of its own, so the federal Fair Labor Standards Act controls. Any covered employee who works more than 40 hours in a single workweek must receive at least one-and-a-half times their regular pay rate for every extra hour.⁸ For a minimum-wage worker, that’s at least $10.88 per hour past 40.

A workweek is any fixed, recurring block of 168 hours (seven consecutive 24-hour periods). It doesn’t have to match the calendar week, and your employer can’t average your hours across two workweeks. Work 50 hours one week and 30 the next, and you’re owed 10 hours of overtime for the first week even though you averaged 40.⁸ There’s no federal requirement to pay overtime just because you worked on a weekend or holiday. Only the 40-hour threshold triggers it.

Who Is Exempt From Iowa’s Minimum Wage

Iowa Code 91D.1(2) adopts the federal exemptions found at 29 U.S.C. § 213 and adds one state-specific carveout for small businesses.¹

Small Businesses Under $300,000

An employer whose annual gross sales fall below $300,000 (excluding separately stated retail excise taxes) is exempt from Iowa’s minimum wage requirement entirely.⁹ Federal FLSA enterprise coverage begins at $500,000, so a business sitting between $300,000 and $500,000 in revenue can fall into a gap where neither the state nor federal minimum wage applies to all its employees.

Agricultural Workers

Many farm workers are exempt under the federal provisions Iowa incorporates. The main categories include employees on small farms that used fewer than 500 “man-days” of agricultural labor in any quarter of the prior year, family members of the farm operator, certain hand-harvest laborers paid by the piece, and workers primarily engaged in range livestock production.¹⁰

Executive, Administrative, and Professional Employees

Salaried workers in management, administrative, or professional roles can be exempt from both minimum wage and overtime if they meet specific duties tests and earn at least $684 per week ($35,568 annually). A 2024 Department of Labor rule attempted to raise that threshold, but a federal court in Texas struck it down, reverting the salary level to the 2019 figure.¹¹ Highly compensated employees face a separate threshold of $107,432 per year in total compensation.

Other Federal Exemptions

Because Iowa adopts 29 U.S.C. § 213 wholesale, other federal exemptions apply too, including seasonal workers at recreational or educational camps, certain newspaper delivery workers, and employees of small newspapers.¹

Deductions That Can’t Drop You Below $7.25

Your employer can take certain deductions from your paycheck, but none can push your effective hourly rate below $7.25. If the employer requires a uniform, special tools, or any equipment that mainly benefits the business, the cost of those items cannot reduce your wages below minimum wage in any workweek.¹²

This protection holds even if you damaged the equipment through negligence. The employer can spread the deduction across multiple paychecks, but each paycheck still has to clear the $7.25 floor, and the same rule applies to overtime hours. Having an employee reimburse the employer in cash instead of taking the deduction from the paycheck doesn’t get around the rule.¹²

No City or County Can Set a Higher Rate

Before 2017, a handful of Iowa counties passed their own minimum wage ordinances above $7.25. That ended when Governor Branstad signed House File 295, which bars any county or city from setting wage rates, leave policies, or other employment terms that exceed state or federal requirements.¹³ The law was retroactive and voided local ordinances already on the books, including the higher rate workers in Johnson County had seen approved. The result: $7.25 applies uniformly in every jurisdiction in Iowa.

Filing a Wage Claim If You’re Underpaid

If your employer isn’t paying at least minimum wage, you can file a claim directly with the Iowa Department of Inspections, Appeals, and Licensing (DIAL). The limits are strict:¹⁴

File within 365 days of when the wages were due.
The claim must be for less than $6,500.
The work must have been performed in Iowa.

You start by completing a wage claim form (available in English or Spanish), and DIAL assigns an investigator. If the employer refuses to cooperate, DIAL can file suit on your behalf. For claims above $6,500, or past the one-year window, you’d generally need to pursue the matter in court. The federal FLSA statute of limitations for minimum wage claims is two years, or three years if the violation was willful.¹⁵

When an employer intentionally fails to pay wages, Iowa Code Chapter 91A makes them liable for the unpaid amount plus liquidated damages. The formula isn’t a simple doubling: it’s 5% of the unpaid wages for each day they remain unpaid, excluding Sundays, holidays, and the first seven days past the regular payday. Those penalties accumulate but are capped at the total amount of unpaid wages.¹⁶ A worker could recover up to double what they were shorted, plus court costs and attorney’s fees.

Keep your own copies of pay stubs, time records, and schedules. Federal law requires employers to retain payroll records for at least three years and supporting documents like time cards for at least two,¹⁷ but if you’re building a wage claim, you don’t want to depend on your employer to produce the evidence against them.

1
Iowa Legislature. Iowa Code Chapter 91D – Minimum Wage
2
Department of Inspections, Appeals, & Licensing. Wage
3
U.S. Department of Labor. Minimum Wages for Tipped Employees
4
U.S. Department of Labor. Fact Sheet 15 – Tipped Employees Under the Fair Labor Standards Act
5
Department of Inspections, Appeals, & Licensing. Wage Claims FAQ
6
Legal Information Institute. Iowa Admin Code r 875-215.1 – Initial Employment Wage Rate
7
U.S. Department of Labor. Subminimum Wage
8
U.S. Department of Labor. Overtime Pay
9
Iowa Legislature. Iowa Code 91D.1 – Minimum Wage Requirements
10
Office of the Law Revision Counsel. 29 USC 213 – Exemptions
11
U.S. Department of Labor. Earnings Thresholds for the Executive, Administrative, and Professional Exemptions
12
U.S. Department of Labor. Fact Sheet 16 – Deductions From Wages for Uniforms and Other Facilities Under the FLSA
13
Iowa General Assembly. Iowa HF 295 – Prohibiting Local Employment and Merchandise Regulations
14
Department of Inspections, Appeals, & Licensing. How Do I File a Wage Claim
15
eCFR. 5 CFR 551.702 – Time Limits
16
Iowa Legislature. Iowa Code Chapter 91A – Wage Payment Collection
17
U.S. Department of Labor. Fact Sheet 21 – Recordkeeping Requirements Under the Fair Labor Standards Act