Information Center

Employee Compensation

A new business owner may have questions about the minimum wage, overtime pay, child labor, employee sick leave and record keeping. The US Department of Labor and certain state agencies are charged with enforcing employee rights, and many times the law is complex and detailed. A new business owner should stay informed in order to avoid legal difficulties. An attorney who is competent and experienced in business planning and employment law can assist you with your questions today.

Minimum Wage

Federal law establishes a minimum wage for covered nonexempt employees. The US Department of Labor's Wage and Hour Division enforces the wage through the Fair Labor Standards Act (FLSA).

A business owner is not required to pay minimum wage to an employee who routinely makes at least $30 per month in tips. The rate of pay plus tips, however, must bring the employee's earnings up to the minimum wage level. State law may set a higher standard for the minimum wage.

Child Labor

FLSA child labor regulations limit or prohibit certain persons younger than 18 years old from working at some jobs. Generally, when state law offers stronger protection for children, the state law supplements federal law.

Weekend, Night and Overtime Pay

The FLSA does not require extra pay for non-overtime weekend or night work. Additional payment for working weekends or nights is determined by agreement between employer and employee.

The FLSA requires that covered nonexempt workers be paid not less than time and one-half the regular rate of pay for time worked over 40 hours per week. The FLSA does not limit the number of hours per day or per week that employees aged 16 or older can work.

FLSA Exemptions

Some employees, such as certain salespeople and computer workers, are exempt from the FLSA minimum wage and/or overtime provisions. The requirements are very specific; in general, exemptions are narrowly construed against the employer.

Vacation Pay, Sick Pay and Holiday Pay

The FLSA does not require payment for time not worked. This includes vacation time, sick leave and holidays. Such benefits are a matter of agreement between employer and employee. Some states have their own requirements in this area.

Severance Pay

The FLSA does not require severance pay. Severance pay is a matter of agreement between employer and employee.

Breaks and Meal Periods

The FLSA does not require breaks or meal periods. A new business owner should be aware, however, that his or her state may require them. A business owner should therefore consult local law to determine if breaks and meal periods are necessary or if such time is a matter of agreement between employer and employee.

Pension Plans

The Department of Labor's Employee Benefits Security Administration enforces provisions of the Employee Retirement Income Security Act (ERISA). Additionally, the Internal Revenue Service (IRS) establishes standards for vesting, participation and other issues in private pension plans.

The Family Medical Leave Act

The Family Medical Leave Act (FMLA) provides certain employees with the option of taking 12 weeks of unpaid, job-protected leave due to specific family or medical reasons. FMLA applies to employers with at least 50 employees.

Speak with an Attorney

In paying and overseeing employees, it is vital to follow federal law. Keep in mind that the law in your state may supplement federal employment law. Contact an attorney for assistance in navigating these regulations.

Copyright ©2009 FindLaw, a Thomson Business

DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.

Return to Main