Dear Dan: We pay our seasonal help minimum wage. That’s already been raised each of the last two years by the Federal government. Now I hear it’s going up again, which seems like bad timing. Is this right? - Worried Employer
Dear Worried:
Back in 2007, the Federal government passed a minimum wage increase to be implemented in three steps, ending with an increase to $7.25 per hour (from $6.55) effective July 24, 2009. Many small businesses employ workers at minimum wage – especially during the summer when they use seasonal and student help. If your business employs workers at minimum wage it’s critical to know the rules.
Between July 2007 and July 2009, the three-step series of Federal minimum wage increases boosted the hourly rate nearly 40 percent, placing even more pricing pressure on small firms already dealing with recession and pricing pressures of all kinds. A few states have ever higher minimum wage levels, so the impact of changes to federal minimums depends on what state you do business in. What’s more, states often raise their minimums to reflect federal changes, so state levels may shift as well. If employees are subject to both state and federal minimum wage laws, they are entitled to the higher amount.
But minimum wage mandates don’t affect only those paid the minimum wage. If you have other workers who earn wages somewhat above the minimum, you might have to raise their pay accordingly if they have more experience and skills.
The minimum wage, as well as overtime pay, recordkeeping requirements and youth employment standards are set by the Fair Labor Standards Act (FLSA). The U.S. Department of Labor FLSA compliance web page has detailed guidance on which workers are covered under minimum wage and overtime pay standards, along with a helpful Q&A.
Check state minimum wage laws: State laws are seldom simple, but generally, businesses in 19 states faced minimum wage increases when the first round of federal changes started in 2007. The U.S. Dept. of Labor (DOL) website has a handy color-coded online map showing states with higher, lower and the same as the federal standard, as well as those with no minimum.
Download the new minimum wage poster: Every employer subject to the Fair Labor Standards Act (FLSA) minimum wage provisions must post and keep posted a notice explaining the Act in a conspicuous place where employees can easily read it. Free posters are available from the U.S. Dept. of Labor, or for purchase from numerous private legal compliance firms you can find online. You can view and download a free poster at the DOL website. Posters are in PDF format, in large or small size, and your choice of color or black-and-white.
Answer all your minimum wage questions: How does the federal minimum apply to workers who receive tips? What about young or full-time student workers? What are the requirements on overtime?
The Wage and Hour Division of the U.S. Department of Labor has an excellent minimum wage FAQ section that will answer these and other common questions about minimum wage laws. You can also find a selection of helpful and free compliance assistance materials and information at the DOL site.
More Minimum Wage Tips & Tactics: Here are some other things you should know about the minimum wage:
- Federal rules do not require extra pay for weekend or night work. However, covered, nonexempt workers must be paid at least time-and-a-half for time worked over 40 hours in a workweek.
- The Full-time Student Program is for full-time students employed in retail or service stores, agriculture, or colleges and universities. Employers can obtain special certificates from the DOL allowing payment at 85% of the minimum wage.
- Pay raises to amounts above the federal minimum wage are not required by the Fair Labor Standards Act (FLSA).
- The Fair Labor Standards Act (FLSA) has no requirement for double time pay. This is a matter of agreement between an employer and employee.
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Worried Employer is probably going to end up doing what most other sm. businesses are doing — hiring fewer employees and making them work harder for the extra money.