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Top 5 Minimum Wage Laws for Small Business

By Christopher Coble, Esq. on April 06, 2016 | Last updated on March 21, 2019

With New York and California enacting $15-per-hour minimum wage laws, and many other cities and states following suit, it can be hard to keep up with all the new minimum wage requirements. So we've got you covered.

From the federal minimum wage to tips in the service industry, here are five essential minimum wage laws that small businesses need to know:

1. $9 Minimum Wage: Good or Bad for Business?

Don't freak out -- the federal minimum wage remains $7.25. The $9 figure was a proposal from President Obama, but isn't law yet. But be aware that the Department of Labor merely sets the floor for minimum wages -- states and even are free to enact higher minimum laws and many of them do.

2. Do You Have To Pay Minimum Wage For Side Work?

Yep. That's what got Ruby Tuesday in so much trouble. If your service industry employees earn sub-minimum wage and make up the gap in tips, you have to pay them minimum wage for the time spent not making tips, i.e. folding napkins and re-filling ketchup bottles.

3. Should Tipping Be Banned?

Many minimum wage laws revolve around the service industry, where workers who make tips can be paid less than the minimum wage. If you take tips off the table, however, federal and state minimum wage laws would apply.

4. When You Don't Have to Pay Minimum Wage

There are some exceptions to federal and state minimum wage laws. You may not have to pay the federal minimum wage if your small business has less than $500,000 in annual sales, but your state may have different requirements.

5. Minimum Wage Debate Divides Small Biz

Any time a proposal to raise the minimum wage comes up, many small business owners contend they will be forced to cut staff or go out of business entirely. But there are recent studies that show that, even in the restaurant industry, minimum wage hikes don't hurt businesses.

To ensure that your small business is minimum wage law compliant, you should discuss local, state, and federal compensation laws with an experienced wage and hour attorney near you.

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