labor lawAdivision of labor law center

Five states increased their minimum wages effective July 1, 2008. They include: Illinois, Michigan, West Virginia, Kentucky and Nevada.

In Illinois, the state minimum wage increased 25 cents from $7.50 to $7.75 per hour. This is the second step in a 3-tiered increase. The state minimum wage will increase again in 2009. The law applies to any employer with 4 or more workers who are not family members.  More details here.

Michigan’s minimum wage also increased 25 cents per hour from $7.15 to $7.40.  The state minimum wage has risen nearly $2.00 since 2005, despite sluggish job growth, problems for the automotive industry and the loss of a number of major employers. The law applies to employers with 2 or more workers. More details here.

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The Indiana minimum wage will be increasing – yet again – on July 24, 2008. The federal FLSA (Fair Labor Standards Act) dictates which companies must pay their employees the federal minimum wage.

According to the FLSA, all local, state and federal government agencies must pay workers the federal minimum wage. Health care facilities, hospitals, schools and all companies earning over $500,000 per year are also covered by FLSA. Businesses engaged in interstate commerce must follow the FLSA standards, too. This rule can apply, too, to employees who handled business with out-of-state customers or vendors, too, even if the company as a whole doesn’t conduct interstate commerce.

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Indiana is one of several states with a minimum wage tied to the federal minimum wage. This means that when the federal minimum wage increases, so does the Indiana state minimum wage. The next raise will occur on July 24, 2008, when both the federal and Indiana state minimum will go up 70 cents from $5.85 to $6.55 per hour.

The Wage and Hour Division of the Indiana Department of Labor is responsible for enforcing the minimum wage law.

The federal minimum wage is enforced by the U. S. Department of Labor’s Wage and Hour Division.

The Fair Labor Standards Act (FLSA) details who is eligible for the federal minimum wage. Any business conducting interstate commerce must pay its workers the federal minimum. In some cases, even if the company as a whole doesn’t engage in interstate commerce, employees who deal with out-of-state customers may be eligible. FLSA applies to schools, hospitals and health care facilities and all government agencies (local, state and federal). In addition, all companies with annual revenue greater than $500,000 are required to pay its workers the federal minimum wage.

In Indiana, the state minimum wage law also applies to smaller companies in the state. Also in Indiana, employees under the age of 20 may be paid a training wage of $4.25 per hour during the first 90 days on the job.

Employees who work more than 40 hours in one payroll week are entitled under both federal and Indiana law to overtime pay at 1.5 the normal hourly rate.

Tipped workers can be paid $2.13 per hour. This practice applies as long as the employees receive an average of $3.72 per hour in tips. Otherwise, the company must pay the worker enough so that tips and wages equal the minimum wage. After July 24, 2008, the tips must equal at least $4.37 per hour.

Overtime for tipped workers must equal at least $8.78 per hour in salary and tips. After the minimum wage increases on July 24, 2008, this amount will increase to $9.83 per hour.

The Indiana state minimum wage doesn’t apply to all state employees. Several exceptions, (subsections (a) - (p) of the Indiana Code 22-2-2-3) permit employers to pay employees in certain groups a wage lower than the state minimum. Note that though these workers are exempt from the state minimum wage, they may be eligible for the federal minimum wage.

Workers at many summer camps may be legally paid less than the minimum wage. The reasoning is that these employees perform duties for camping, recreational or guidance facilities, which are often operated by nonprofit charitable, religious or educational organizations.

If an employee is less than 16 years old, he or she may be paid a wage lower than the minimum. This exception also applies to independent contractors, commissioned salespeople, and anyone who works for his or her parent, child or spouse.

Persons attending regular classes at a school, college or university who also work for that school can receive wages at a rate lower than the state minimum wage. Nursing students, medical interns, residents, student funeral directors are examples of this type of employee. To be exempt, the institutions must be chartered or approved by law, and the students must be enrolled and attending classes.

Organizations that provide assistance to the disabled through rehabilitation, therapy or employment may pay their disabled (physical and mental) employees less than the minimum. These organizations, however, must be nonprofit to be exempt.

The Indiana state minimum wage law has a specific exception for members of religious orders who work for that order. For example, licensed, commissioned or ordained ministers, sextons, Christian Science readers and rabbis would be exempt. Volunteers who provide services for charitable or religious organizations are also exempt.

A lot of workers doing agricultural labor are exempt from the state minimum wage. Workers raising, shearing or caring for bees, wildlife, livestock, furbearing animals or poultry also come under the exceptions to the Indiana state minimum wage law. Employees who work with fruit and vegetables, specifically drying, packing, processing, packaging and freezing, are exempt, too.

The Indiana state minimum wage law mirrors the federal minimum wage. As a result, when the federal minimum goes up on July 24, 2008 from $5.85 to $6.55 per hour, the Indiana minimum will go from $5.85 to $6.55 per hour, too.

On July 24, 2009, both Indiana and federal minimum wages will go up again, from $6.55 to $7.25 per hour.

The Fair Labor Standards Act (FLSA) requires certain employers to pay workers the federal minimum wage. All companies that conduct interstate business, or that earn over $500,000 per year are covered by FLSA. State, local and federal government agencies are also covered, as are schools, healthcare facilities and hospitals.

In Indiana, the state minimum wage also covers smaller companies operating in the state.

Overtime, both under FLSA and Indiana state law, is defined as any time worked over 40 hours in one payroll week. Employers covered by FLSA and by Indiana state law must pay workers an overtime rate of 1.5 times the standard hourly rate.

Federal and state laws require tipped workers be paid at least $2.13 per hour, but only as long as that employee receives tips that average at least $3.72 per hour. If the tipped employee doesn’t earn enough tips, then the employer must make up the difference between wages earned plus tips and the minimum wage.

When the minimum wage increases on July 24, 2008, the tip credit for regular hours will increase from $3.72 to $4.37 per hour.

For tipped workers that put in overtime, the combined tips and wages earned must be at least $8.78 per hour. After July 24, 2008, when the minimum wage increases, employees working for tips must earn $9.83 per hour when working overtime.

Enforcement of the FLSA comes under the auspices of the U. S. Department of Labor’s Wage and Hour Division. Similarly, the Wage and Hour Division of the Indiana Department of Labor enforces the state minimum wage laws.

Though the Indiana state minimum wage law applies to the majority of the employees in the state, there a number of exceptions to the law. Under Subsections (a) through (p), employers may pay certain types of employees less than the minimum wage.

Independent contractors and commissioned salespeople fall into the exempt category, as do employees who work for their parent, spouse or child. Workers under the age of 16 may also be paid less than minimum wage.

Many agricultural laborers are exempt from the state minimum wage. Workers who process, pack, dry, package or freeze fruits and vegetables are exempt. Any employee engaged in caring for, raising or shearing wildlife, furbearing animals, bees, poultry or livestock is part of the exempt group. Harvesting maple syrup, hatching poultry and operating ditches and canals for farming are occupations outlined in the exceptions to the minimum wage.

Students can be paid less than minimum wage when they work for the school they attend. For example, a nurse is training for her degree at a university and works at the hospital as part of her training. She may legally be paid less than the minimum wage for her hospital work. She must be attending classes on a regular basis, and her school must be chartered or approved by law.

Organizations who hire mentally or physically disabled persons may pay these workers less than minimum wage. Their organizational structure, however, must be geared to assisting the disabled, by offering employment, therapy or rehabilitation in a non-profit capacity.

Volunteers who provide services for a charitable or religious organization are exempt from the minimum wage law. The state law holds a special exemption for members of religious orders who work for that order. For example, licensed, ordained or commissioned ministers, rabbis, sexton and Christian Science readers would all be exempt from the state minimum wage.

A lot of workers at summer camps are exempt, too, because these camps are often operated by charitable, religious and educational nonprofit organizations.

While these workers are exempt under Indiana state law, they may be entitled to the federal minimum wage.

On July 24, 2008 both the Indiana and federal minimum wages will increase by 70 cents from $5.85 per hour to $6.55 per hour.

Under the federal Fair Labor Standards Act or FLSA, employers must pay the federal minimum wage. The FLSA applies to employers who engage in interstate commerce, or who have annual revenue of $500,000. In addition, the FLSA may apply to some workers who are engaged in interstate commerce, even if it does not apply to the business as a whole. Schools, hospitals and health care facilities are covered by the FLSA, as are federal, state and local government agencies. The FLSA is enforced by the Wage and Hour Division of the U.S. Department of Labor. The South Bend office can be reached at 574-236-8331.

The Indiana minimum wage law covers smaller employers in the state. By statute, the Indiana minimum wage mirrors the federal rate. So, when the federal minimum wage increases on July 24, 2008 the Indiana minimum wage will increase, as well. This law is enforced by the Wage and Hour Division of the Indiana Department of Labor.

Both the Indiana and federal minimum wage will increase again on July 24, 2009 when the rate will go up by 70 cents, from $6.55 per hour to $7.25 per hour.

Both the FLSA and the Indiana minimum wage require employers to pay workers at 1.5 times the usual hourly rate when working over 40 hours in the payroll week.

Under Indiana law, employees under 20 years of age may be paid $4.25 per hour during the first 90 consecutive days of work for an employer.

Tipped employees must be paid at least $2.13 per hour under both Indiana and federal law. If the employee does not earn an average of at least $3.72 per hour in tips over the payroll period, the employer must pay the difference between combined tips and wages earned and the minimum wage. On July 24, this tip credit will increase to $4.37 per hour. When working more than 40 hours per week, tipped employees must earn at least $8.78 per hour in wages and tips combined. On July 24, this will increase to $9.83 per hour.

More Indiana Minimum Wage

Although the Indiana minimum wage applies to most employees in the state, there are a number of exceptions under the law. Indiana Code 22-2-2-3 subsections (a) through (p) permit certain employees to be paid less than the state minimum wage.

Employees who are less than 16 years old may be paid less than the minimum wage. Independent contractors and commissioned sales people, including insurance sales people, are exempt from the Indiana minimum wage. So are employees who work for their parent, spouse or child.

The Indiana minimum wage law contains a special exemption for members of a religious order performing any service for that order. This includes any ordained, commissioned or licensed minister, rabbi, sexton or Christian Science reader. It also includes volunteers performing services for any religious or charitable organization.

Student nurses may be paid less than the minimum wage while working at a hospital or nurses training school and enrolled in classes. The nursing school must be approved under law or chartered. Medical interns and residents in an accredited hospital are exempt from the state minimum wage.

In addition, student funeral directors may be paid less than the state minimum wage while studying for an embalmer’s or funeral director’s license. In fact, students working for any school, college or university in which they are enrolled are exempt. All the aforementioned students including student nurses and funeral directors must regularly be attending classes.

People with physical or mental disabilities performing services for nonprofit organizations such as sheltered workshops are exempt from the Indiana minimum wage laws. However, these employers must be organized primarily for the purpose of providing employment, therapy or rehabilitation to the disabled, not for profit.

Many summer camp employees are exempt from the state minimum wage law because they are performing services for a camping, recreational or guidance facility operated by a charitable, religious or educational nonprofit organization.

Many workers engaged in agricultural labor are exempt from the Indiana minimum wage. This specifically includes those raising, shearing or caring for livestock, bees, poultry, furbearing animals and wildlife. It also includes those harvesting maple syrup, raising mushrooms, hatching poultry, operating ditches and canals for farming purposes. Workers engaged in drying, packing, packaging, processing or freezing fruits and vegetables are also exempt.

Some of these employees may be entitled to the federal minimum wage.