When it comes to starting your business and hiring new employees, you might have a set budget you want to stick to for compensation. However, if your budget isn’t as high as the law dictates it should be, you could find yourself in violation of wage and hour laws and put yourself at risk of a long court process.
1. Question: How much do I have to pay my employees?
Federal law states that you must pay your employees at least $7.25 per hour worked. However, it is important to note that states and even cities can create their own minimum wage laws. For example, if your business is in Alabama, you only need to pay $7.25, but if your business is in Washington, you must pay at least $9.67 per hour. Some cities, including Los Angeles, require you to pay at least $15 per hour. Remember to keep up with changes in wage trends, too. They change often, sometimes annually.
2. Question: What if I want my employees to earn tips?
Some types of businesses, namely restaurants and bars, pay their employees using tips they earn from customers. Federal law requires employees to make $7.25 per hour, but in the case of tipped employees, the employer is only required to pay $2.13 per hour to start and can factor in the employee’s tips to make up the rest of the minimum wage. This is known as a “tip credit.” This means, however, that employees must average $5.12 or more in tips each hour they work. If they don’t, the employer is responsible for covering the difference. For example, if a tipped employee works 40 hours per week, he or she must gross $290 in that time. If $2.13 per hour plus tips only equals $200 for the week, the employer must pay the additional $90.
3. Question: How many hours can my employees work per week?
As long as your employees are of a working age not governed by youth labor laws, they can work as long as you want them to. However, the Fair Labor Standards Act (FLSA) names 40 hours as a typical workweek. Any hours accumulated after 40 must be paid overtime of at least time and a half. For example, if your employees earn $10 per hour and work 45 hours in one week, you must pay them $15 per hour for five of those hours. In addition, you cannot average hours if you pay less often than weekly. If your employee works 45 hours in one week and 25 in another, you must still pay time and a half for five hours in the first week. You cannot average the time worked out to 35 hours per week to avoid paying overtime. Some professions, such as computer specialists or administrative employees, are not governed under overtime laws and do not need to be paid overtime.
4. Question: Do I have to let my employees take breaks?
There is no federal law requiring meal breaks or rest breaks for employees, but many states do have laws to cover breaks. Some states require an employer to provide an employee with a meal break of about 30 minutes after he or she has worked a certain number of hours. Eight states require employers to provide rest breaks of about 10 minutes per four hours of work. In some states, meal breaks can be waived if both parties agree and if the time worked falls within a certain number of hours. Of notable importance is the exception for nursing mothers. FLSA requires most employers to provide nursing mothers a reasonable break time to express breast milk. They must receive these breaks for the first year after the child is born. The employer is responsible for providing a safe, clean space for pumping. It must be private and cannot be a bathroom.
Keeping these laws in mind ensures your employees are happy and that you are not violating rules.
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