Minimum Wage Changes Are Coming. Here Are 3 Things You Need to Know to Comply

In January 2017, 40 states and jurisdictions across the country raised the minimum wage for small businesses. And while nearly 4.3 million low-wage workers celebrated the change, many small business owners pondered the impact the rise would have on their bottom lines.

So TSheets surveyed 500 small business owners in the US to find out how they feel about minimum wage on the rise.

The results? While 14 percent of business owners surveyed claim they would be forced to let employees go if the minimum wage were to jump in their state, 1 in 3 businesses owners thinks increased wages could boost their business.

However, if the minimum wage were to continue to rise, there are a few important items that could go against FLSA regulations and land small business owners with an FLSA wage and hour lawsuit.

To clear things up, we spoke to Frank Tresnak, business development manager at Symmetry Software, to see how business owners can prepare for the influx minimum wage changes and what they should always keep in mind.

1. Your Location Is More Than Your ZIP Code

In order to know what you’re required to pay employees, “you need to know for sure the exact jurisdiction you’re in,” Tresnak said. “But knowing the ZIP code isn’t enough.”

If you’ve got employees in multiple locations or on the go, determining the jurisdiction in which the work is actually performed isn’t always clear.

“Let’s say you’ve got an employee who’s a plumber,” Tresnak explained. “Your office is in Phoenix, but your plumber is out on the job, working in different locations each and every day. Are you going to track the time spent in each of those different locations, taking into account the different minimum wage rates in each place?”

If you’ve got remote employees, this equation gets even trickier. In any case, these are definitely not riddles you should attempt to solve on your own. Consult with your accountant and outline the best practices for your business.

2. Your Business Size, Benefits, and Industry All Matter

Minimum wage rates vary based on the size of your business, your employee benefits, the industry you’re in, and the type of work your employees do.

“Minimum wage rates also change whether you’re a server or a food worker, whether you’re a tipped employee or you share tips, and in some places, it’s different for fast food workers than it is for other low-income positions,” said Tresnak.

That’s a lot to sift through.

Again, Tresnak recommends meeting with your accountant or employment counsel to ensure compliance. “They live and breathe this stuff every day.

3. Stay on Top of Pending Legislation

It can be hard to know which legislation does and does not apply to your business, and how to prevent your business from running afoul of the many minimum wage regulations.

Even more difficult is keeping track of minimum wage changes coming down the pipeline.

“Most businesses don’t have much of a system to track these things,” said Tresnak, “and the challenge really comes in at the local taxing jurisdiction level.”

So how do you stay in the know?

“First thing, make sure you stay in touch with your payroll provider,” Tresnak advised. If you provider has an outlet for information regarding minimum wage, jump on it. Frank also recommends staying in contact with your local chamber of commerce, because “rates are subject to change — and change quickly!”

Thank you to Kim Harris from TSheets.com for contributing to the SmartBiz Small Business Blog!

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