Can You Legally Pay Employees Less Than Minimum Wage

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Paying employees less than minimum wage is a complex issue, and it's essential to understand the laws surrounding it.

In the United States, federal law requires employers to pay employees at least the federal minimum wage, which is $7.25 per hour.

Some states have higher minimum wage rates, such as California, where the minimum wage is $15 per hour for employers with 26 or more employees.

However, there are certain exceptions that allow employers to pay employees less than the minimum wage, such as student workers or tipped employees.

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Wage Law Exceptions: What They Are

Some employees are exempt from minimum wage laws, which means their employers can pay them less than the minimum wage. Full-time students and minors under 18 working in certain occupations are two examples of exempt employees.

Outside salespersons and motor vehicle salespersons are also exempt from minimum wage laws. Part-time childcare employees who work primarily in the home of their employers are another example of exempt employees.

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Tipped employees, such as servers and bartenders, can make less than minimum wage as long as their tips, combined with their hourly wages, meet the minimum wage requirement. However, if their tips are not enough, their employer must make up the difference.

Employers can also pay subminimum wages to disabled workers, but some states, like New Jersey, are phasing this practice out. Here are some specific categories of exempt workers:

  • Full-time students
  • Outside salespersons
  • Motor Vehicle salespersons
  • Part-time childcare employees who primarily work in the home of their employers
  • Minors under 18 (unless working in certain occupations)
  • Individuals working at summer camps, conferences, or retreats organized by non-profit religious organizations and associations
  • Tipped employees (if tips, combined with hourly wages, meet minimum wage requirement)

Note that these exemptions can be complex, and employers must ensure that non-exempt employees receive the minimum wage they are entitled to.

Wage Laws

Wage laws are in place to protect employees from being underpaid. The Fair Labor Standards Act (FLSA) is the primary federal law governing minimum wage in the United States, and it stipulates that all private sector employees of covered businesses are entitled to receive no less than the federal minimum wage of $7.25 per hour.

Employers must ensure that non-exempt employees get the minimum wage they are entitled to, no matter what. If they don't, they can incur lawsuits, fines, and penalties. The FLSA covers individual employees who are "engaged in commerce or in the production of goods for commerce", which can include employees who produce goods or services that will be sent out of state.

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Some states have minimum wages above or below the federal requirement, and employees must be paid according to the higher wage. Employers can face serious consequences for violating wage laws, including fines, lawsuits, and penalties that can even result in the revocation of their business license.

Here are some examples of businesses that are covered under the FLSA:

  • Hospitals
  • Schools and colleges
  • Government agencies
  • Employers of domestic service workers (such as housekeepers)
  • Residential care facilities
  • Business with a gross annual dollar volume of sales or business volume exceeding $500,000

Wage Laws 101

The Fair Labor Standards Act (FLSA) is the primary federal law governing minimum wage in the United States, passed in 1938.

Employers must ensure that non-exempt employees receive the minimum wage they are entitled to, or face lawsuits, fines, and penalties.

Covered businesses under the FLSA include hospitals, schools and colleges, government agencies, and employers of domestic service workers.

Employees are protected by the FLSA if their work regularly involves interstate commerce or producing goods for interstate commerce.

Some examples of employees who are engaged in interstate commerce include those who produce goods, make telephone calls to persons located in other states, handle records of interstate transactions, travel to other states on their jobs, and do janitorial work in buildings where goods are produced for shipment outside the state.

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The FLSA stipulates that all private sector employees (with specified exceptions) of covered businesses are entitled to receive no less than the federal minimum wage of $7.25 per hour.

States can have minimum wages above or below the federal requirement, and employees must be paid according to the higher wage.

Employers can face significant legal consequences when they illegally pay under the federal minimum wage, including lawsuits, fines, serious penalties, and loss of business license.

Some jobs are exempt from minimum wage laws, including tipped employees, executive, administrative, professional, and outside sales employees, and independent contractors.

Independent contractors are not covered by minimum wage laws, but deciding who is a contractor can be complicated and often requires consulting with an employment attorney.

Employers may use tactics to skirt minimum wage laws, such as timesheet manipulation, misclassifying employees, and using the complex joint employer rules.

Here are some examples of jobs that are exempt from minimum wage laws:

  • Tipped employees
  • Executive, administrative, professional, and outside sales employees
  • Independent contractors

Employment Tribunal Claim

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If you're not paid the minimum wage, you can make a claim to an employment tribunal. You must choose either to do this or to complain to HMRC, but you can't take the same issue through both legal processes.

There are strict time limits for making a claim to an employment tribunal. For a single underpayment or non-payment, you have 3 months minus 1 day from the date you should have been paid. If there were several wrong underpayments or non-payments in a row, you have 3 months minus 1 day from the most recent wrong deduction.

You can claim up to 2 years back, but only if either of the following apply: there's less than 3 months between each underpayment or non-payment, or the underpayments or non-payments are linked, such as being caused by the same error.

Here are the key time limits to keep in mind:

  • 3 months minus 1 day from the date you should have been paid for a single underpayment or non-payment
  • 3 months minus 1 day from the most recent wrong deduction for multiple underpayments or non-payments

Making a claim to an employment tribunal can be a complex process, but it's often the best way to get the compensation you deserve.

Unpaid Wages

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If your employer is paying you less than minimum wage, you have rights. In New Jersey, employees have the right to receive the minimum wage and be paid for overtime hours. This means that if you're working long hours, you should be getting paid for them.

Employers might try to skirt minimum wage laws by manipulating timesheets or misclassifying employees. They might under-report hours worked or claim that an employee is an independent contractor when they're actually an employee. This can be tricky to spot, but if you suspect something's off, don't hesitate to reach out to an experienced employment lawyer.

If you're being paid less than minimum wage, you should contact a lawyer for advice on how to fight for your rights.

Unpaid Wages: Get Help

If you're not receiving the minimum wage you're entitled to, you have rights as an employee. You can contact a New Jersey Employment attorney at McOmber McOmber & Luber, P.C. for a free consultation.

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In New Jersey, you have the right to receive the minimum wage and be paid for overtime hours. If your employer is violating wage & hour laws, such as denying earned sick leave, you should seek help.

The Fair Labor Standards Act (FLSA) is the primary federal law governing minimum wage in the United States. It was passed in 1938 and stipulates that all private sector employees are entitled to receive no less than the federal minimum wage of $7.25 per hour.

Some states have minimum wages above or below the federal requirement, and employees must be paid according to the higher wage. For example, in New Jersey, the minimum wage is higher than the federal requirement.

If you think you're not receiving the minimum wage, you can contact our office at 1-614-949-1181 for a free consultation with a minimum wage attorney.

Here are some examples of employees who are engaged in interstate commerce and are protected by the FLSA:

  • Produce goods (such as a worker assembling components in a factory or a secretary typing letters in an office) that will be sent out of state;
  • Regularly make telephone calls to persons located in other States;
  • Handle records of interstate transactions;
  • Travel to other States on their jobs;
  • And do janitorial work in buildings where goods are produced for shipment outside the State.

Employers must ensure that non-exempt employees get the minimum wage they are entitled to — no matter what. If they don't, they can incur lawsuits, fines, and penalties.

Underpayment of Wages

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Employers can face significant legal consequences when they underpay wages, including lawsuits, fines, and penalties. Employers may attempt to evade their obligations using tactics like timesheet manipulation, misclassifying employees, and using joint employer rules to shift liability.

If you suspect your employer is using one of these tactics, do not hesitate to contact an experienced employment lawyer for advice on how to fight for your rights. Under-reporting hours worked is a common tactic employers use to avoid paying minimum wage.

Employers who underpay wages may also face penalties, including serious fines per wage violation, court costs, attorneys' fees, and other damages in lawsuits. The Fair Labor Standards Act protects employees who are engaged in interstate commerce, including those who produce goods for interstate commerce.

If the wages you are paid do not equal an amount that is more than the federal or state-mandated minimum wage for every hour worked, then you may have a claim against your employer for failing to pay the minimum wage. An employer's annual gross sales or business volume exceeding $500,000 does not automatically exempt them from paying minimum wage.

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Some common examples of employees who are protected by the FLSA include those who produce goods for interstate commerce, handle records of interstate transactions, and travel to other states on their jobs. If you believe your employer has underpaid you, contact our office at 1-614-949-1181 for a free consultation with a minimum wage attorney.

In some cases, one business may violate the law by not paying minimum wage and then attempt to shift liability for the violation to the other business. Both employers are responsible for worker protections, like minimum wage, when an employee has more than one employer for the work they perform.

Employment Issues

If you're not being paid the minimum wage, you can make a claim to an employment tribunal. You have to choose between this and complaining to HMRC, as you can't use both processes for the same issue.

You have strict time limits to make a claim to an employment tribunal: 3 months minus 1 day from the date you should have been paid for a single underpayment or non-payment, or from the most recent wrong deduction if there were several.

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You can claim back up to 2 years, but only if there's less than 3 months between each underpayment or non-payment, or if the underpayments are linked, such as being caused by the same error.

If you win your case, your employer can't make your situation worse, and you can't be treated unfairly as a result of making the claim.

New York Wage Laws

In New York, the minimum wage laws are a bit more complex than in other states. The current minimum wage in New York state is $14.20 per hour.

But here's the thing: if you're in New York City, Nassau County, Westchester County, or Suffolk County, the minimum wage is actually $15.00 per hour. This applies to both large and small employers.

You may be wondering how this affects your business. Well, if you have 11 or more employees, you're subject to the $15.00 per hour minimum wage in these counties.

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If you have 10 or fewer employees, you're also subject to the $15.00 per hour minimum wage in these counties. Yes, it's the same rate for small employers!

It's worth noting that even if you're not in one of these counties, you're still entitled to the federal minimum wage of $7.25 per hour. But in New York, you're entitled to the higher minimum wage rate, which is currently $14.20 per hour.

Here's a quick rundown of the minimum wage rates in New York:

So, to sum it up: in New York, you're entitled to the higher minimum wage rate, which is currently $14.20 per hour in most of the state and $15.00 per hour in New York City, Nassau County, Westchester County, and Suffolk County.

Angel Bruen

Copy Editor

Angel Bruen is a seasoned copy editor with a keen eye for detail and a passion for precision. Her expertise spans a variety of sectors, including finance and insurance, where she has honed her skills in crafting clear and concise content. Specializing in articles about Insurance Companies of Hong Kong and Financial Services Companies Established in 2013, Angel ensures that each piece she edits is not only accurate but also engaging for the reader.

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