Employers throughout the United States are obliged to follow the federal, state, and local laws pertaining to the minimum wage of employees. The governmental regulatory bodies have set up certain parameters for employers to enforce the minimum paycheck to the employees. However, the laws may vary from state to state, which in turn has given room to unexpected minimum wage misconceptions.
These myths and misconceptions buzzing the minimum paycheck laws are proving a major hurdle for employers in compliance. Thus, it is necessary to bring the true facts to light and filter out the misleading guidelines so that organizations can adhere to the laws without getting penalized per the Federal Labor Standards Act (FLSA).
Minimum Wage Law Is Applicable to All Employees
Among the plethora of misleading facts, it is believed that all employees fall under the purview of minimum wage law as outlined in the FLSA. That is not true at all because there is a clear categorization of different employees and this minimum paycheck law is not applicable to all of them. In general, there are two types of employees; exempt employees and non-exempt employees.
The exempt employees are the ones who receive a fixed salary or a lump-sum salary not calculated on the basis of hours worked. Exempt employees are not entitled to overtime even if they work more than 40 hours a week. Contrarily, the non-exempt employees are paid based on hourly rate and they also get overtime per the hourly wage rate for the extra hours worked.
The minimum salary regulation as outlined by FLSA is only applicable to non-exempt employees. Exempt employees are not included in this category. An employer must make a clear differentiation between the exempt and non-exempt employees within their organizations to comply with the minimum paycheck laws. Some organizations make the mistake of enlisting non-exempt employees as exempt, which can have dire consequences.
Hence, it is advisable to first check the type of employees within your company and then check the FLSA laws accordingly to take appropriate action.
The Jurisdiction Issue – Minimum Wage Misconceptions
Post-COVID-19, many companies have continued to stick to the trend of remote work. So, employers in most cases may have employees working for them from different states. Now, in such scenarios, the laws related to the minimum wage become a point of concern because these laws and their wage rates may vary from one state to another.
Most organizations are under the impression that the laws governing the minimum salary should be followed in accordance with the employer’s jurisdiction. That is a red flag and can have legal consequences. The factual explanation is that the employee’s jurisdiction is considered when deciding the amount of federal minimum payroll.
So, your organization has different employees from a number of states, you will have to check their local laws to decide upon the minimum paycheck issue.
Average Of Federal, State, and Local Rates to Be Applied for Minimum Wage
In some cases, an employee may get applicable for all three minimum wages: federal, state, and local. The majority of employers implement the average rule in this situation to calculate the minimum wage. They will take the average of all three minimum paycheck limits and pay the employee per that value. This approach of deciphering the minimum salary is not at par with the FLSA regulations.
The law states that if an employee is eligible for all three minimum wage levels, then the highest one among the three should be considered. This regulation is generous towards the employee. Therefore, the employers should not calculate the average but rather choose the highest one to be compliant with FLSA rules.
For instance, if an employee is applicable for all three minimum wages which are $11, $14, and $10 for the federal, state, and local respectively. In this particular example, the state has the highest minimum paycheck limit and this should be considered by the employee.
Non-Productive Work Included or Excluded?
The common practice among employers is that the non-productive work period does not account for the minimum wage laws. Non-productive periods can be onsite or offsite training, rest breaks, or travel time. This misconception can be costly for the employees and they can get in hot water by excluding the non-productive hours from the minimum paycheck regulations.
The FLSA laws clearly state that all non-productive work hours of non-exempt employees will be fully paid by the employers considering the minimum hourly rate. Therefore, regardless of the hourly rate of the employee, an employer will have to pay the minimum hourly rate for the non-productive period. So, the employers have to move past these minimum wage misconceptions.
Deducting The Costs of Providing and Cleaning Uniforms
Many jobs for non-exempt employees may require the regular use of onsite uniforms, which are provided by the employers. The employers may deduct the costs of manufacturing, supplying, and washing these uniforms for the employees. However, the FLSA states that this deduction must not bring the paycheck of the employees below the minimum wage standard.
If the deductions for the uniforms violate the minimum paycheck limitations, then the employers have to reimburse the employees. This standardization is not followed throughout the states of the USA. In some states, labor laws strictly prohibit employers from deducting uniform costs from the non-exempt employees’ paychecks.
The employers must check with their local applicable laws. Hence, proceeding with this wage curtailment process to cover the costs of the uniforms will be easy.
Cash Drawer Shortage Scenarios
Another startling myth is that employers can seek reimbursement from employees in case of cash drawer shortage. This is applicable in some states but such deductions must not bring the employee’s paycheck below the minimum wage threshold. Furthermore, some states restrict employers from such deductions. Therefore, you have to check with your local laws before proceeding with this deduction process. Regardless of the scenario, the minimum paycheck rules are applicable in most cases.
Not Making Up Cash Wages and Tips Difference
Generally, employers consider tipped employees out of the scope of the minimum wage law. The tipped employees earn from the hourly wages plus the tips they receive. The law clarifies that employers are bound to compensate the employees if the sum of their cash wages and the tips earned don’t meet the minimum paycheck standards.
For instance, if an employee’s hourly rate is $10 and he works 40 hours a week. The minimum paycheck is $500 per week. Consider the employee earns $55 from the tips. Now the total earnings for the week would be $455; $400 from cash wage and $55 from tips. There is a deficit of $45 compared to the minimum limitations. This difference has to be covered by the employers.
Conclusion – Minimum Wage Misconceptions
There has been a stir of controversial myths regarding the FLSA minimum wage limitations. These misconceptions can create legal hurdles for employers and they may end up violating the FLSA rules and regulations. Henceforth, it is significant to get to know the actual facts regarding the minimum paycheck scenarios. Remember the factual aspects discussed above and you will not face any issues while adhering to the minimum wage laws.