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Wages and Payroll Minimum Wages

If you think you have the minimum wage issue figured out as a business owner, think again. I have spoken to many business owners that would like to simply pay their employees any amount they feel they deserve. While this may be tempting, business owners must follow federal, state, and local laws that set minimum wages.

Let’s look at some basic facts:

  1. What is minimum wage and who sets the wage?
    1. Minimum wage is the lowest amount you can pay an employee for an hour of timed (on the clock) work. You can certainly pay more than the minimum wage, but you should never pay less than the minimum wage. The federal government sets a standard minimum wage that applies to all employees in the United States. It is important to understand that individual states and localities can set greater minimum wages. If a state or local municipality where an employee works has a greater minimum wage, you must follow that state or local law.
  2. What is the minimum wage that the Federal Government has set?
    1. The federal minimum wage is regulated by the Fair Labor Standards Act (FLSA) and is enforced by the U.S. Department of Labor. The current federal minimum wage is $7.25 per hour. Some cities create a local minimum wage. So far, local base wages are most common in big cities. It is important to research this because if your city’s minimum pay rate is greater than the state and federal minimum wage, you must pay your employees the prevailing local minimum wage.
  3. Exceptions to Minimum Wage laws.
    1. There are some exceptions to paying your employees minimum wage:
      1. Tipped Employees
        • The FLSA permits an exception for employees such as restaurant waiters (tip credit), which reduces the federal minimum wage burden for these types of (tipped) employees. Such employees may have a lower base wage due to their tips making up the rest of their wages. The FLSA does create a (tipped) employee minimum wage of $2.13. This applies to employees who earn more than $30 in tips per month. Individual states can also have minimum wage laws for tipped employees. Check your state’s minimum wage laws to learn more.
      2. Youth Minimum Wage
        • The FLSA also permits a special youth minimum wage. You can pay employees under age 20 a wage of $4.25 for the first 90 days of employment. Some states have a youth minimum that is greater than the federal youth minimum wage. Again, you should check with your local and state agencies to more clarity with the Youth Minimum Wage provisions.

The FLSA also permits a special youth minimum wage. You can pay employees under age 20 a wage of $4.25 for the first 90 days of employment. Some states have a youth minimum that is greater than the federal youth minimum wage. Again, you should check with your local and state agencies to more clarity with the Youth Minimum Wage provisions.

While many businesses have payroll struggles, the employee must always come first.  Unless you want turnover, creating more training costs, or even worse should you become uncompliant with payroll taxes, you must figure out a way to bridge the gap between paying your employees and getting paid by your customers. Pendleton Capital has various programs with Invoice Factoring, Purchase Order Financing, Equipment Loans, or even Lines of Credit.

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Mr. Cox is Managing Principal with Pendleton Capital Group, Inc. – a factoring and trade financing company headquartered in Houston, TX. PCG provides professional “best practices” Factoring and Trade Financing and other small business services. His office is in Houston, TX, and he can be reached for additional information or consultation at adam@pendletoncapitalgroup.com or 713-808-9746. The company’s website can be accessed at www.pendletoncapitalgroup.com

By |2018-09-04T08:50:33+00:00September 4th, 2018|News|