The federal Fair Labor Standards Act established a minimum wage for full-time and part-time workers. However, it's not the whole story. States have their own laws and, most recently, some counties and cities have passed "living wage" laws. In addition, special minimum-wage laws exist for employees under 20 years old, apprentices and students, those working at seasonal recreation businesses, and others. To keep your operation legal, you'll need a three-part approach:

1. Know the minimum-wage law for your state – which employees are covered and how much to pay.
2. Know when to pay overtime – usually over 40 hours in a workweek and 1½ times the regular pay rate.
3. Keep accurate payment records.

Action Steps
The best contacts and resources to help you get it done

Know the laws

Twenty-one states, four individual city governments and one federally recognized Indian tribe have set minimum wages higher than the federal rate.

I recommend: Find your state information at FindLaw, which lists minimums and number of hours after which overtime kicks in, and at PayPerShop, offering minimums and links to payroll resources by state. See the federal regulations from the U.S. Department of Labor.

Hang the signs

Most states require employers to hang posters stating labor laws, including minimum-wage and overtime laws.

I recommend: Buy posters of state and federal labor laws at GovernmentPoster.com and LaborLawCenter.com.

Keep pay records handy

The federal Fair Labor Standards Act requires employers to keep records about the employee and data about the hours worked and wages earned. There is no standard form, but there is a basic list of records to maintain.

I recommend: Get a checklist of required basic records from the Department of Labor. Store those records easily with Optima Confidential Employee Record Software.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  In general, businesses must abide by the federal law if they have $500,000 or more in annual sales or if their employees engage in 'interstate commerce: -- making phone calls to or from other states, sending mail out of state or handling goods passing between states.
• •  If your employees earn tips from customers, your state labor department may allow you to pay them less than the minimum wage, so long as what you pay plus the tips add up to at least the minimum hourly wage.
• •  When in doubt, your best move is to contact your state's labor department for clarification.