HR mistakes cost more than small businesses can afford
This 8-part blog series highlights a few of the many laws that apply to all businesses or to those with 11+, 15+, 20+, or 50+ employees. We also provide best practice tips to help small businesses avoid costly mistakes. Many of our examples also apply to non-profit agencies and the public sector.
TIP 2: Employee Pay – Paying by the Rules
If you have employees, you are required to follow some basic rules about their pay.
- You must pay a minimum wage. This amount differs from state to state. The federal minimum wage and the Kentucky minimum wage is $7.25/hour. Some states have raised the minimum wage to $10/hour for 2020.
- You are required to follow the FICA laws (Federal Insurance Contribution Act of 1935). This means you must deduct, from their wages, 6.2% for Social Security and 1.45% for Medicare (for a total of 7.65%) and send that money to the federal government. Your payroll service can handle this, or you will need to make sure your bookkeeper/payroll clerk knows how to do this for you. If you need assistance, you can hire a consulting bookkeeper who can handle your payroll for you. (We can provide an excellent recommendation in the Louisville area.)
- You must follow the Equal Pay Act of 1963 and the Lilly Ledbetter Fair Pay Act of 2007. Simply put, this means all employees in the same position must be paid in the same salary range. For example, you cannot pay a woman less than a man if they are doing the same job. Nor can you pay a younger person less than an older person. That said, a new employee can make less than a seasoned employee due to a lack of knowledge and experience. But once the new employee has learned the job, they should be equal to others in the same position.
To ensure pay equality, we recommend a Classification and Compensation Study. We can help you with this. Call us for details.
Questions? Contact us today!
