Minimum Wage & Hourly Wage Forms
How to Comply With Minimum Wage and Compensation Law
Whether your company is a multi-million dollar corporation, or the "mom and pop" shop down the street, it is necessary to comply with wage laws and to be forthright in revealing each compensation agreement that you may have with your top executives. You want to meet your expenses, while still offering an hourly wage or salary to each employee that fairly reflects the job that they do. Depending on an employee's function and pay scale within the company, an employee may either be an exempt employee on a salary, or you may pay them a job wage by the hour and pay for overtime during busier times when they work beyond a standard work week. The Department of Labor, Wage and Hour Division has set up guidelines to help assure that employees are paid fairly, without placing their employers in a position of hardship.
One of the most noted provisions is the one regarding minimum wage, but even though a lot of people talk about the minimum wage, there is still some confusion. Currently, the federal minimum wage is $7.25 per hour as of July 24, 2009, however, there are cases where the actual minimum wage may be either more or less than that amount. Several states have minimum wage laws on the books that are either higher or lower. In those states with a higher minimum wage, such as Washington, whose minimum wage in $9.19 per hour, employers must pay the majority of their non exempt employees the state minimum wage, and those with lower minimums must pay wages at the federal rate.
There are various exceptions to the minimum wage, however. Those who are working in conjunction with a vocational program and disabled workers who are unable to be fully productive are not subject to minimum wage. Young workers under 20 years old may also receive the youth minimum wage of $4.25 per hour for their first 90 days of employment. Tipped employees, such as restaurant servers, have a minimum wage of $2.13 per hour. After they receive tips from customers, the prevailing wage is much higher, making their paycheck a bit more attractive.
Exempt vs. Nonexempt
Employees can be either exempt or non-exempt. Exempt employees do not earn an hourly wage, and are not eligible for overtime pay. There are some things that will bring an employee to an exempt status. The first is their annual pay. Those who make less than the statutory amount, $23,600 as of this writing, are nonexempt, regardless of their job duties and responsibilities. A person's responsibilities within their position are the other thing that will make them an exempt employee.
The Federal Labor Standards Act (FLSA) indicates that there is a minimum amount of money that an employee can earn if they perform any work. They should have executive job duties, including supervising at least two full time employees, and be authorized to make decisions on the job status of others, i.e.. hiring and firing. Those in learned professions, such as doctors, engineers, scientists, teachers, clergy, and registered nurses are considered exempt employees. Technicians and licensed practical nurses (LPNs) are not. Administrative employees receive an exempt status when their work is directly related to management and general business operations and a primary component of their position involves exercising their own judgment in significant matters.
Those who receive the highest salaries in the company will likely be the executives of the company. Especially when the public has a stake in the company, knowing executive compensation becomes important. Shareholders are the most concerned about this, but even consumers need access to executive compensation, including any incentive plan they might receive. A company's annual proxy statement, tracked by the SEC, should provide information on executive pay for anyone who feels the need to know this information.
Not all compensation is paid right away for many employees. Many have deferred compensation plans that are not subject to immediate taxation. The most common of these are retirement programs, such as 401Ks, are substantial. In these cases, a portion of an employee's paycheck is transferred by direct deposit into their retirement account. A company may also match an employee's contribution in order to help their retirement fund to build faster. This needs to be tracked properly so that it is tracked and taxed correctly at the appropriate time.