If keeping your payroll as lean as possible is your goal, you may be able to take advantage of a lower federal minimum wage. Employees under age 20 can be paid a “youth minimum wage,” as low as $4.25 per hour, for the first 90 consecutive calendar days. Another lower federal minimum wage applies to full-time students as well as high school students enrolled in vocational education programs.
|Additional Minimum Wage Exceptions
Retailers, “service stores,” farmers, colleges and universities can obtain a certificate from the DOL to get a slight break on the minimum wage for full-time students. Specifically, they are permitted to pay 85 percent of that amount. Based on today’s standard federal $7.25 minimum, students could be paid $6.16 an hour. But the students can work no more than eight hours a day, up to a maximum of 20 hours a week when school is in session, and 40 hours when it isn’t.A similar program exists for high school students at least 16 years old enrolled in vocational education programs. Their minimum is 75 percent of the standard rate.Also, a fact well-known to restaurant owners is the minimum wage alternative formula for tipped workers. In many states, the federal minimum hourly cash wage is $2.13. However, in those states, tipped employees must earn the difference between the federal $7.25 minimum wage and $2.13 ($5.12 per hour) in tips. Otherwise, an employer would need to increase the base hourly wage to bring the total to the federal minimum wage of $7.25.
Note: Some states, including California, Alaska, Oregon and Washington, require employers to pay workers full state minimum wage before tips.
The 90-day clock keeps counting even when the employees are taking off permissible days, such as weekends and holidays. Ninety days is more than long enough to cover a summer job. It’s also long enough to give you a chance to assess whether a younger employee — one who isn’t just working for the summer and wants a permanent position — is worth the regular federal $7.25 minimum wage. (If your state has a higher minimum wage, which many do, employers must pay the higher state minimum wage.)
Let’s say a young employee quits after 30 days, then returns 30 days later. You would still be able to pay him the “youth minimum” for 30 days, at which point the 90 consecutive days will have been used up.
Note: This article describes federal laws and rules. Check to see if your state has additional regulations and requirements.
A Ban on Improbable Abuse
If the young employee turns 20 during that 90-day period, you need to raise his hourly wage to the standard minimum at that time. Also, the rules do not allow employers to game the system by hiring employees under age 20 only to fire them after 90 days and hire new ones. Needless to say, such a policy would not make business sense under most circumstances anyway.
Your ability to pay the federal youth minimum wage is not affected by whether the employee is working at another job and also being paid the lower minimum wage there.
No matter what the pay rate, child labor laws dictate the kinds of work young people can do at particular ages. The Fair Labor Standards Act generally sets 14 as the minimum age for most non-farm work. However, there are no minimum ages for delivering newspapers, performing in radio, television, movie, or theatrical productions. There are also no age minimums for children working in a businesses owned by their parents — with the exception of manufacturing, hazardous jobs or mining.
Limits on Hours, Job Categories
Rules for 14-15 year olds also limit the number of hours these employees can work. For example, the federal daily limit is three hours on school days, and 18 hours a week when school is in session. When they move up to the 16-17 year old age bracket, restrictions on hours worked are lifted, but like the younger employees, 16 and 17 year old employees are not permitted to work hazardous jobs.
How is a hazardous job defined? The U.S. Department of Labor (DOL) maintains a list of 17 jobs it calls hazardous. They include manufacturing, driving motor vehicles, roofing, and work which involves the use of certain kinds of power tools. The DOL’s more complete run-down on child labor is contained in a document called Child Labor Bulletin 101 WH-1130.
To stay in compliance, take time to check the applicable federal laws and regulations, as well as those in your state.
What about unpaid internships? The federal courts are littered with cases involving interns trying to file class action suits against the organizations where they are doing their internships, claiming they are de facto employees. They seek the rights accorded to regular employees, including compensation no lower than the applicable minimum wage.
Last May, for example, interns at Hearst Corporation in New York, who had sought certification as a class, were turned down by the U.S. District Court for Southern New York. Now, however, the DOL has joined their cause and filed an amicus brief with the U.S. Court of Appeals for the Second Circuit in support of their case.
If those interns ultimately win, it would not mean the end of unpaid internships. However, be aware that it is extremely difficult to comply with the federal regulations involving unpaid internships. Until the issue is resolved in the courts, you should have an attorney review any unpaid program you may have or are considering, to ensure it complies with the evolving labor law in this arena.