Like many other parts of the country, Missouri has its own state-specific minimum wage law. This law sets the standard for the lowest amount that employers can legally pay their workers, ensuring that employees receive fair compensation for their labor. In today’s guide for employers, we will explore the current Missouri minimum wage and share best practices to help you comply with all of Missouri’s state-specific labor laws.
- How Minimum Wage Works in the U.S.
- The Missouri Minimum Wage
- Exemptions & Special Cases
- Additional Missouri State Labor Laws
- How Are Missouri Labor Laws Enforced?
- Wage Law Compliance Best Practices
- How Factorial Can Help You Comply with Missouri Wage Laws
- What can you do with Factorial’s payroll management software? 🚀
How Minimum Wage Works in the U.S.
The United States operates a tiered minimum wage system, with varying rates set at the federal, state, and municipal levels. This creates a complex system for determining the minimum wage for workers across the United States.
- Federal Minimum Wage. The federal minimum wage, established by the Fair Labor Standards Act (FLSA), serves as the baseline wage for non-exempt employees nationwide. The current federal minimum wage stands at $7.25 per hour.
- State Minimum Wage. Many states have enacted their own minimum wage laws. These state minimum wages often exceed the federal rate, aiming to align with the local cost of living and labor market conditions.
- Municipal Minimum Wage. A growing number of cities and counties have also implemented their own minimum wage limits, often higher than both state and federal minimum wage rates. These municipal-level minimum wages reflect the unique economic circumstances of specific localities.
The Missouri Minimum Wage
The Missouri Department of Labor and Industrial Relations updated the Missouri minimum wage this year to $12.30 per hour, effective January 1, 2024.
At a minimum, all private businesses in Missouri must pay the $12.30 hourly rate, with a few exceptions (as we will see below). Missouri’s minimum wage law does not apply to public employers.
But, what about tipped employees?
The rules are a little different here. Employers in Missouri must pay tipped employees at least 50 per cent of the Missouri minimum wage. They must also cover any tip losses to ensure the employee’s total compensation equates to a minimum of $12.30 per hour.
Is anyone else exempt from the Missouri minimum wage?
Yes, there are a few additional exemptions and special cases, as we will see in the next section.
Exemptions & Special Cases
While the Missouri minimum wage applies to most adult workers in the state, there are certain exemptions that you need to be aware of.
Here’s an overview of these exemptions:
- Tipped employees. As we just saw, tipped employees must be paid at least 50% of the minimum wage (currently $6.15 per hour). Employers must also pay any amount necessary to ensure their total earnings meet or exceed the full Missouri minimum wage of $12.30 per hour.
- Retail or service. Retail or service businesses with an annual gross income of less than $500,000 can pay employees less than the Missouri minimum wage.
- Full-time students. Certain full-time students who are working part-time can be paid less than the Missouri minimum wage, as long as it is not less than 85%. This is intended to allow students to gain work experience while continuing their education.
- Agricultural and farm employees. Most agricultural and farm employees are exempt from the Missouri minimum wage.
Additional Missouri State Labor Laws
In addition to the Missouri minimum wage, the state has several supplementary wage laws that employers need to understand and apply.
Let’s explore these additional Missouri wage laws in a bit more detail so you can make sure your employee handbook meets all requirements.
Family and Medical Leave
While Missouri does not have a state-specific family and medical leave law, employees are covered under the federal Family and Medical Leave Act (FMLA). Under this federal Act, eligible employees are entitled to up to 12 weeks of unpaid, job-protected leave per year while maintaining their health insurance coverage. All government agencies, elementary and secondary schools, and companies with 50 or more employees are covered by this law. FMLA covers a wide range of situations, including illness, childbirth, adoption, and military family circumstances.
Pay Discrimination
The Missouri Human Rights Act (MHRA) prohibits pay discrimination based on race, color, religion, national origin, sex, ancestry, age, disability, and, in some cases, sexual orientation and gender identity. The Missouri Commission on Human Rights enforces these protections
This is in addition to the protections offered by Title VII of the Civil Rights Act of 1964.
Pay Transparency
While Missouri does not have a statewide law mandating pay transparency or specific protections from retaliation for discussing or disclosing wages, certain cities within the state have implemented their own regulations to promote pay transparency.
For example, employers in Kansas City with six or more employees cannot ask for or rely on job applicants’ salary histories to make hiring decisions or determine salary, benefits or other compensation. The city also requires employers to disclose salary ranges for job postings and internal promotions, ensuring that employees and job applicants are better informed about potential earnings. This helps to identify and address wage disparities that may exist due to gender, race or other discriminatory factors.
Workers’ Compensation
Workers’ compensation is a state-mandated, “no-fault” insurance system that pays benefits to workers injured on the job to cover medical care, part of lost wages and permanent disability. In return, employers receive immunity from civil lawsuits by employees over said workplace injuries.
Employers can meet their workers’ comp obligation by purchasing insurance or by becoming a state-certified self-insurer.
Child Labor
Missouri has specific laws regulating the employment of minors. These laws set limits on the number of hours minors can work and the types of jobs they can perform. For example, children under 14 are generally not allowed to work unless under specific circumstances such as working in the entertainment industry with a permit, casual jobs, or working in the agricultural industry.
Overtime
Missouri adheres to the federal overtime regulations set by the Fair Labor Standards Act (FLSA). Specifically, Missouri overtime law requires that non-exempt employees receive overtime pay equal to 1.5 times their regular hourly pay for any hours worked over 40 in a week (overtime). These hours must be tracked and recorded, and stored for a period of at least three years.
Missouri does not have additional state-specific overtime laws beyond those stipulated by the FLSA.
Equal Pay
Missouri does not have a state-specific equal pay act. Instead, it relies on federal laws to address pay discrimination issues. The primary federal law governing equal pay is the Equal Pay Act of 1963, which also aims to ensure that all employees receive equal pay for equal work (also known as pay parity).
In addition, Missouri has employment discrimination laws that align with federal protections. For example, the Missouri Human Rights Act (MHRA) prohibits discrimination in employment on the basis of race, color, religion, national origin, sex, ancestry, age, and disability. However, while this act addresses various forms of discrimination, it does not specifically establish an equal pay requirement beyond what federal law already mandates.
How Are Missouri Labor Laws Enforced?
Missouri labor laws are enforced by the Missouri Department of Labor and Industrial Relations (DOLIR) through various divisions:
- Division of Labor Standards (DLS). Handles the Missouri minimum wage, overtime, and child labor laws, investigating complaints and conducting audits to ensure compliance.
- Missouri Commission on Human Rights (MCHR). Enforces anti-discrimination laws under the Missouri Human Rights Act.
- Division of Employment Security (DES). Manages unemployment insurance.
- Division of Workers’ Compensation. Oversees workers’ compensation claims.
Employees can file complaints with these divisions. These reports often lead to investigations that include checking records, talking to employees, and workplace inspections. If violations are found, employers may have to pay back wages, face fines or take other corrective actions. Employees can also file civil lawsuits for labor law violations. These steps help ensure Missouri’s labor laws are followed, protecting workers and encouraging fair wage practices.
Wage Law Compliance Best Practices
And that’s pretty much everything you need to know about the minimum wage in Missouri and the state’s additional wage laws! All that remains is to ensure that your business complies with these laws.
So, how can you make sure you don’t inadvertently sidestep the law in Missouri?
Simple. Just implement the following essential tips and best practices to protect your business. Plus, ensuring compliance in this way also helps you foster a positive and compliant work environment for your employees, so you can attract and retain top talent, boost employee morale, and enhance overall productivity and workplace harmony!
Implement Accurate Payroll Practices
Maintain accurate and up-to-date payroll records to ensure proper compensation calculations. Regularly review payroll records to identify any inconsistencies or errors. You should also create a payroll checklist to make sure that you complete all necessary steps for each payroll cycle, including verifying employee hours, ensuring correct pay rates and calculating payroll tax deductions accurately.
Post Wage Notices
Display clear and readily available wage notices in your place of business. This notice should outline the Missouri minimum wage, overtime pay requirements and other relevant state wage laws. Make sure the notice is accessible to all employees and update it as regulations change.
Classify Employees Correctly
Properly classify employees as either exempt or non-exempt under the minimum wage regulations. This classification determines whether you must offer overtime pay. Carefully review the duties and responsibilities of each employee to determine their exempt or non-exempt status.
Properly Compensate Tipped Employees
Missouri law states that tipped employees must receive at least 50% of the state minimum wage ($6.15 per hour) plus tips to ensure their total earnings meet or exceed the full minimum wage of $12.30 per hour. Regularly monitor employee tips to make sure you cover any shortfalls. This practice not only complies with state regulations but also promotes fair treatment and employee satisfaction.
Track Overtime Hours
Accurately track overtime hours worked by non-exempt employees. Implement a system for employees to report overtime hours, such as using timesheets or electronic timekeeping systems. Ensure that overtime pay is calculated and paid correctly at the appropriate rate (time and a half).
Maintain Accurate Records
It’s important to maintain accurate and up-to-date records of all employee work hours and wages. Keeping precise records helps ensure employees are paid correctly and on time. Regular internal and external audits can you identify and fix mistakes, so that everything runs smoothly and compliantly.
Using employee record management software can make this easier. These systems automate time tracking, payroll processing and compliance checks, which cuts down on errors and saves time. By using this technology, you can maintain accurate and reliable records and focus on other important parts of your business while staying compliant with Missouri law.
Use the Right Payroll Software
Choosing the right payroll software is essential. In fact, you could even argue that it is the most important tool for managing employee wages and compliance. The right software helps you stay compliant by automatically adjusting for changes in minimum wage rates and managing tax withholdings. It also helps you track employee work hours, calculate overtime and holiday pay, and produce accurate pay stubs at the end of each pay period. This reduces the risk of errors, streamlines administrative tasks, and ensures that employees are paid correctly and on time, helping your business comply with all Missouri wage laws and time-tracking legal requirements.
How Factorial Can Help You Comply with Missouri Wage Laws
Ensuring compliance with the Missouri minimum wage and the state’s additional wage laws is crucial for employers to avoid potential penalties and legal disputes. Factorial can help you navigate the complexities of Missouri’s wage laws and streamline your payroll processes to maintain compliance.
- Automated payroll calculations. Firstly, Factorial’s automated payroll system eliminates manual calculations, reducing the risk of errors and ensuring accurate compensation for all employees. It automatically factors in Missouri minimum wage requirements, overtime pay, holiday pay, and other relevant regulations to ensure compliance with Missouri wage laws.
- Real-time overtime tracking. Secondly, Factorial’s time tracking feature and electronic time clock enable real-time monitoring of overtime hours. This allows you to maintain and generate accurate records and reports to identify and address any overtime issues promptly, ensuring compliance with Missouri’s overtime pay regulations.
- On-demand pay. In addition, Factorial’s on-demand pay feature allows employees to access their earned wages between pay periods, providing them with financial flexibility and enhancing employee satisfaction.
- Secure payroll processing. Moreover, Factorial employs robust payroll security measures to safeguard sensitive employee data.
- Comprehensive payroll reporting. Finally, Factorial generates detailed payroll reports, providing valuable insights into employee compensation, overtime trends, and overall payroll expenses.
By leveraging Factorial’s comprehensive payroll solution, employers can effectively manage payroll, comply with federal and state wage laws, and ensure that their employees are compensated in line with Missouri minimum wage rates, fostering a positive and compliant work environment for all.
