Minimum Wage Exceptions

If keeping your payroll as lean as possible is your goal, you may be able to take advantage of minimum wage exceptions. 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 minimum wage applies to full-time students as well as high school students enrolled in vocational education programs.

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 $7.25 minimum wage.

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.

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 business owned by their parents — with the exception of manufacturing, hazardous jobs or mining.

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 $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. The minimum hourly cash wage is $2.13. However, those employees must earn the difference between $7.25 and $2.13 ($5.12 per hour) in tips. Otherwise, you would need to increase the base hourly wage to bring the total to $7.25.