As a small business owner, it’s important to pay your employees at or above the legal minimum wage. As you probably know, the minimum wage is the lowest hourly rate that you as an employer can pay your employees. However, figuring out which minimum wage applies to your employees may not be that simple, because state minimum wage laws can differ from federal minimum wage laws. As an employer, you’re required to pay employees whichever one grants the most benefits.
The Fair Labor Standard Act (FLSA) determines the federal minimum wage, currently held at $7.25 per hour. For overtime, the law requires employers to pay their employees time and a half, which comes out to be at least $10.88 per hour.
Related Article: Overtime Pay Legal Considerations
On top of that, each individual state has its own minimum wage laws. Some states have a higher minimum wage than the federal one, such as Connecticut, which currently has a minimum wage of $9.15 per hour. Other states have a lower minimum wage, such as Georgia, which is all the way down to $5.15 an hour. States may also have different requirements for paying employees overtime.
To make matters even more confusing, certain cities and regions have their own minimum wage laws as well. For instance, California’s minimum wage is $9.00 an hour. Yet, the city of Oakland has a minimum wage of $12.25 and San Diego has a minimum wage of $9.75. Plus, many of these numbers will be on the rise starting July 2015 or in January 2016.
Furthermore, some states and cities have separate minimum wage standards for small businesses. Using California as an example again, effective on July 1, 2015, Emeryville has a minimum wage of $12.25 for businesses with 55 or fewer employees and a separate minimum wage of $14.44 for businesses with more than 55 employees.
Although most do, some states, such as Alabama and Mississippi, do not have any minimum wage laws. If this is the case, your business only needs to worry about following federal minimum wage laws.
Finally, some businesses and employees are considered exempt from minimum wage laws. For example, Section 13(a)(1) of the FLSA provides minimum wage and overtime exemptions for employees who work in bona fide executive, administrative, professional and outside sales positions. In order to be granted an exemption, the FLSA requires employees to meet certain criteria regarding their daily job requirements and responsibilities. However, qualifying for an exemption is the exception to the rule and most employers and their employees are covered by the federal minimum wage law.
For more information on how to receive a minimum wage law exemption for yourself, your employee or your small business, go to the US Department of Labor’s Fact Sheet at their website (http://www.dol.gov/whd/fact-sheets-index.htm).
All in all, it’s extremely important to keep up with minimum wage laws as they change from year to year, especially for those of you that own a small business in a city or a state with multiple minimum wage laws. If you’re unsure or confused about your area’s wage requirements, talk to a local human resources consultant or a lawyer who specializes in employment law.
Author: Drew Lunt formed The Lunt Group LLC to administer EmploymentLawHandbook.com, in order to provide free information about employment law to the public.
Published: June 24, 2015