No, Seriously: Don't Forget the Minimum Wage

03 June 2014 Privacy, Cybersecurity & Technology Law Perspectives Blog

Start-up companies are often in cost-saving mode, but when it comes to employees, be prepared to pay at least a minimum wage. Many companies forget about it.

All companies, regardless of size, must pay either the applicable state minimum wage (currently $8.00 per hour in Massachusetts) or $455 per week of salary for someone who qualifies under one of the so-called “White Collar” exemptions from overtime (Executive, Professional or Administrative). If you choose the hourly option, the Company must also pay 1.5 times the hourly rate for all “overtime” (i.e., all hours over 40 in a workweek).

There is no basis in law to defer an employee’s compensation for extended periods time, and no basis to compensate purely on equity or options, if the employee is not making at least the required minimum wage. Employees cannot waive these rights in a contract or otherwise. In one case, an employee of a start-up who unambiguously agreed by contract to defer payment of wages until the company obtained financing prevailed in a suit against the company for payment of those wages. You don’t want to be in that position by surprise.

And there are real consequences to violating these rules. Under Massachusetts law, the company will have to pay the employee three times the employee’s damages and attorney’s fees if successful in an unpaid wage claim. In addition, the managers and officers of the company can face personal liability for failure to pay minimum wages or overtime. The Massachusetts Attorney General can also pursue criminal penalties against employers, managers, and officers for violating the wage and hour laws, which include both monetary fines and up to two years of jail time.

Before signing any employment agreements or offer letters or otherwise bringing on employees, consultants and interns, entrepreneurs should understand the wage and hour laws in their state and consult with an attorney to see the best way to structure the relationship with the potential hire.

This blog is made available by Foley & Lardner LLP (“Foley” or “the Firm”) for informational purposes only. It is not meant to convey the Firm’s legal position on behalf of any client, nor is it intended to convey specific legal advice. Any opinions expressed in this article do not necessarily reflect the views of Foley & Lardner LLP, its partners, or its clients. Accordingly, do not act upon this information without seeking counsel from a licensed attorney. This blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Communicating with Foley through this website by email, blog post, or otherwise, does not create an attorney-client relationship for any legal matter. Therefore, any communication or material you transmit to Foley through this blog, whether by email, blog post or any other manner, will not be treated as confidential or proprietary. The information on this blog is published “AS IS” and is not guaranteed to be complete, accurate, and or up-to-date. Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Foley expressly disclaims all other guarantees, warranties, conditions and representations of any kind, either express or implied, whether arising under any statute, law, commercial use or otherwise, including implied warranties of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites. In some jurisdictions, the contents of this blog may be considered Attorney Advertising. If applicable, please note that prior results do not guarantee a similar outcome. Photographs are for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.

Related Services

Insights

Bad Holiday Season News! Estimates of an increase of Cyberattacks 20%!
13 December 2019
Internet, IT & e-Discovery Blog
Driving the Future of Automotive Technology
12 December 2019
Manufacturing Industry Advisor
Massachusetts Governor Proposes Facility Fee Ban
12 December 2019
Health Care Law Today
American Rule Prevails; PTO May Not Collect In-House Attorneys' Fees as "Expenses"
12 December 2019
IP Litigation Current
ACCC 46th Annual Meeting & Cancer Center Business Summit
04-05 March 2020
Washington, D.C.
Foley/Deloitte Compliance and Privacy Officer Roundtable
27 February 2020
Boston, MA
Let’s Talk Compliance
24 January 2020
Orlando, FL
New England Alliance Annual Meeting
15-17 January 2020
Woodstock, VT