Discussion:Minimum wage on employed spouse?

I have a client whose wife joined NASE and was told that all she has to do is have the husband pay her $100 a month for 28 hours in order to qualify for NASE benefits and the 105 plan.

However, some concern has been posted about her $3.57 hourly wage.

Is there an exemption for the spouse with regard to the Federal / State (GA) minimum wage for a family owned business where the spouse is employed. If you have any links either way, I would sincerely appreciate it.

Thanks,

Michael

I don't think my sole proprietor who employs his wife part time would apply. He doesn't pass the income test below nor does he provide intestate commerce per the section below:

"All employees of certain enterprises having workers engaged in interstate commerce, producing goods for interstate commerce, or handling, selling, or otherwise working on goods or materials that have been moved in or produced for such commerce by any person, are covered by FLSA.

A covered enterprise is the related activities performed through unified operation or common control by any person or persons for a common business purpose and -

  1. whose annual gross volume of sales made or business done is not less than $500,000 (exclusive of excise taxes at the retail level that are separately stated); or
  2. is engaged in the operation of a hospital, an institution primarily engaged in the care of the sick, the aged, or the mentally ill who reside on the premises; a school for mentally or physically disabled or gifted children; a preschool, an elementary or secondary school, or an institution of higher education (whether operated for profit or not for profit); or
  3. is an activity of a public agency.

Does this sound right to you?

Michael

Interstae commerce is a very exceedingly low threshhold to pass. In many cases merely handling goods that have come out of state is enough to trigger. In a couple of cases using the interstate highway or having a place of business near an offramp was enough.

The only family member exemption I am aware of is for agricultural workers. It really depends on what the wife does for the business, and what kind of business it is. She may fall under one of the other exemptions for min wage.

But really, is the wife going to file a wage complaint with the DOL?

FYI Michael, regarding state vs. federal law: My understanding is the law that holds the highest standard is the one that needs to be followed. For example, in Hawaii if a company only pays the federal minimum wage, it would be breaking the law. The reason is that Hawaii's minimum wage is higher. The other thing is that states can set their own rates, but they cannot set them lower than the federal minimums.

The reason isn't as sinster as is sounds, Natalie. The owner's wife was told by NASE that to qualify as an employee and--therefore--qualify for the 105 HRA plan they offer she had to work 7 hours per week and get paid at least $100 per month. However, it seems that they point to the $100. Since the wages can be deposited back into the business account once she deposits her paycheck, we are really only talking about the payroll taxes on the salary. There is no sinister desire behind it.

Well, I meet with them at 9:30 today and I honestly do not know what to tell them. If there is no exemption for the wife, we will have to rework it to pay the wife minimum wage it seems. She, of course, isn't going to report him for being a slave labor shop but if audited, I think the IRS would have something to say about the back payroll taxes on the wage difference, no?

As for their business, he has a band that travels to other States and plays at church events. I know the interstate commerce act can be tricky but it isn't worth pushing it as an exemption to end up in tax court. She does bookkeeping and administrative functions for the business.

Michael

Sometimes little things like this can make a person like me paranoid, so be kind and indulge me. I have always suggested that in cases of hiring wives and children that to be sure the money is deposited in their accounts.

Death & Taxes...I wouldn't ever jump on you--you are a great help to me. What I actually meant was that once she cashes the check and puts it into her personal account, she is free to do with it what she wants. My point--which I so eloquently didn't make--was that at some point, she can choose to reinvest more capital into the business. I didn't actually mean that they would write themselves a check and then deposit it directly to the bank account. Thanks for keeping me honest, I was tired this morning when I wrote that.

Michael

The lower wage may not be adjusted for inflation and COLA. Also there are a few instances were the FLSA would not apply. In that case, the lower wage would be the permissible limit.