Sharon Alexander operated The Texas Saloon, an upscale steakhouse restaurant that also served beer and wine. Sharon's average menu item sold for $10. Employees were allowed to eat one meal during their shift. For those who voluntarily elected to eat this meal, Sharon would deduct $0.25 per hour ($2 per eight-hour shift) from the federal minimum wage rate she paid her entry-level dishwashers, which reflected the reasonable cost of the meal. Sharon relied on the Fair Labor Standards Act (FLSA) Section 3(m), which states that employers can consider, as wages, "reasonable costs . . . to the employer of furnishing such employees with board, lodging, or other facilities if such boards, lodging, or other facilities are customarily furnished by such employer to his

[or her] employees."

Sharon interpreted this regulation to mean that she could pay the entry-level dishwashers a rate that, when added to the $0.25 per hour meal deduction, equaled the federal minimum wage. One day, Sharon was contacted by her state department of employment, which charged that she was in violation of the state minimum wage law. The law stated that "total voluntary deductions for meals and uniforms may not decrease an employee's wages below the federal minimum wage on an hourly basis." Sharon maintained that because she was in compliance with the federal law, she was allowed to take the meal credit against the wages paid to her entry-level dishwashers.

1. Is Sharon in compliance with the compensation laws of her state?

2. Do federal laws, in this case, take precedent over state law?