Employers Need to Be Aware of Differences in Federal and State Labor Laws

Employers cannot rely solely on the guidelines in the Fair Labor Standards Act. So, if you think you know that Act inside and out and you are safe … think again. Why? Because each state also has its own set of rules, regulations and laws by which you must abide if you are a resident of their state. And that can get you into trouble.

Generally speaking, the law with the greatest benefit to the employee is the one that must be followed. Take for example whether or not employers may deduct a cash drawer shortage from an employee’s paycheck.

How you handle cash drawer shortages with employees is based on law - state or federal!The federal law says, “It depends.” If an employee is making minimum wage, and any deduction would reduce their hourly wage to less than minimum wage, then the answer is no, you may not deduct a shortage. However, if the employee is making more than minimum wage per hour, a deduction can be made only to the point their hourly wage equals minimum wage.

This is how explains it:

For example, if the employee were paid $7.60 an hour and worked 30 hours in the workweek, the maximum amount the employer could legally deduct from the employee’s wages would be $10.50 ($.35 X 30 hours). If the employee is paid an hourly wage of $9.25 per hour and worked 30 hours in the workweek, the maximum amount the employer could legally deduct from the employee’s wages would be $60.00 ($2.00 X 30 hours), so the full $15.00 deduction for the cash register shortage would be allowed under law.

HOWEVER! And that’s a big however, if you are an employer in the state of Indiana, there are different rules in this instance. In Indiana, according to the Inside Indiana Labor publication of the Indiana Depart of Labor, employers are NOT allowed to deduct cash drawer shortages from an employee’s wages at any time, regardless of the rate of pay.

So once again, employers have to be aware and on top of both federal and state laws regarding employees, wages, and payroll. That’s a lot to learn, know and understand, no matter what kind of small business you own.

According to Teresa Ray of The Payroll Department, that is one of the biggest reasons small business owners opt to outsource payroll. Working with an experienced and professional payroll service can relieve you of having to fight the battle of ignorance of the law, because we all know that that is not a valid defense if you make an error.

Teresa and her team are the resource for employers in Indiana, helping them to comply with all the rules and regulations concerning payroll. In addition, they can handle the deposit and reporting requirements for you so you don’t have to worry about that element of payroll either.

It’s nice to have a payroll resource you can rely on when it comes to being a small business owner. Call The Payroll Department today at (317)852-2568 (Brownsburg) or at (317)800-0191 (Zionsville) to find out how to make your role as entrepreneur easier.

-Elaine of The Payroll Department Blog Team

Posted in: Operating a Small Business, Payroll, Payroll Processing, Rules, Regulations and Laws

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