Employer’s Guide to the Georgia Minimum Wage

As an employer, understanding and adapting to the nuances of minimum wage regulations is vital for both legal compliance and fostering a positive working environment. In Georgia, where the minimum wage law is shaped by both federal and state guidelines, this means staying informed about the specific intricacies of the Georgia minimum wage to ensure fair compensation practices within your organization.

In this post, we will explore everything that employers in The Peach State need to understand about the Georgia minimum wage, including exemptions and special cases. We will also explore additional wage laws that businesses need to be aware of to ensure a fair, equitable and compliant workplace for their employees.

• US Minimum Wage Tiers
• History of the Minimum Wage in Georgia
• Georgia Minimum Wage Rates
• Exemptions & Special Cases
• Georgia Minimum Wage Enforcement
• Additional Wage Laws
• Best Practices to Ensure Wage Law Compliance
• How Factorial Can Help You Comply with Georgia’s Wage Laws
• How Centralizing Payroll Management Improves Efficiency 🚀

US Minimum Wage Tiers

The minimum wage in the United States is a complex system that consists of three primary tiers: federal, state, and municipal. Understanding these tiers is crucial to ensuring that workers are paid fairly for their labor.

Federal Minimum Wage

The federal minimum wage serves as the baseline for the entire country. It is currently set at $7.25 per hour, and it applies to all employers that are subject to the Fair Labor Standards Act (FLSA). However, the federal minimum wage is often considered to be too low to support a family or even a single individual, and as a result, many states have enacted their own minimum wage laws that are higher than the federal rate.

State Minimum Wage

As of 2023, there are 22 states and the District of Columbia that have minimum wages that exceed the federal rate. These states either have a flat state minimum wage that applies to all employers, or they have a tiered minimum wage system that takes into account the size of the employer. For example, some states have higher minimum wages for large employers than for small ones.

Municipal Minimum Wage

In addition to state minimum wages, some cities and counties have also enacted their own municipal minimum wage laws. These laws are often referred to as “living wage” laws, and they are designed to ensure that workers can afford basic necessities such as food, housing, and healthcare.

Navigating the Tiered System

The tiered minimum wage system in the United States can make it difficult for employers to know what wage they are required to pay their employees. In general, employers must pay the highest minimum wage that applies to them. For example, if a state has a minimum wage of $8.25 per hour and a city has a minimum wage of $9.00 per hour, then employers in that city must pay their employees $9.00 per hour.

The tiered minimum wage system is constantly evolving, as states and cities continue to enact new laws. Employers should stay informed about the minimum wage laws in their jurisdiction to ensure that they are compliant.

History of the Minimum Wage in Georgia

The minimum wage in Georgia has a long and somewhat complicated history. The state’s first minimum wage law was enacted in 1933, during the Great Depression. The law set the minimum wage at $0.25 per hour, which was significantly lower than the prevailing wage at the time. However, the law was largely ineffective, as it was not enforced by the state government.

In 1965, the federal Fair Labor Standards Act (FLSA) was amended to apply to Georgia. The FLSA set the minimum wage at $1.15 per hour, which was still below the prevailing wage in the state. However, the FLSA was more effectively enforced than the state’s previous minimum wage law.

In 1973, the federal minimum wage was increased to $1.60 per hour. This was the first time that the federal minimum wage had been raised above the prevailing wage in Georgia. The increase was followed by a series of smaller increases in the 1970s and 1980s.

In 1989, the federal minimum wage was increased to $3.35 per hour. This was the largest single increase in the minimum wage in history. However, the increase was not indexed to inflation, so the minimum wage began to erode in real terms.

Georgia’s First Minimum Wage Law

In 1991, Georgia passed its own minimum wage law, which set the minimum wage at $4.25 per hour. This was higher than the federal minimum wage at the time, but it did not keep up with inflation.

In 1996, the federal minimum wage increased to $5.15 per hour. Georgia’s minimum wage remained at $4.25 per hour.

In 2007, Georgia’s minimum wage increased to $5.85 per hour. This rate increased to $6.55 per hour in 2008 and $7.25 per hour in 2009, in line with adjustments to the federal minimum wage.

Georgia Minimum Wage Rates

The minimum wage is the lowest hourly wage that an employer can legally pay an employee. In Georgia, the minimum wage is tiered, depending on the size of the employer. Moreover, minimum wage rates are the same everywhere in Georgia. In other words, unlike other states including California and Illinois, there are no municipal minimum wage rates in Georgia.

Minimum Wage Rates for Large Employers

For large employers with 50 or more employees, the current minimum wage is $7.25 per hour. There is no indication the Georgia legislature is planning to increase the state minimum wage, so it appears that the state’s minimum wage rate will remain at the federal level.

Minimum Wage Rates for Small Employers

For small employers with fewer than 50 employees, the current Georgia minimum wage is $5.75 per hour. This rate has been in effect since July 24, 2009. However, because the Fair Labor Standards Act has established a higher federal minimum wage of $7.25 per hour, most employees must earn a minimum wage of $7.25 per hour (with some limited exceptions). This minimum wage is not scheduled to increase in 2024.

Georgia Minimum Wage for Tipped Employees

There is a separate minimum wage for tipped employees in Georgia. Tipped employees are those who receive tips from customers as part of their compensation. In Georgia, the minimum hourly wage for tipped employees is $2.13 per hour. However, the employer can take a “tip credit” to make up the difference between the tipped employee’s hourly wage and the regular minimum wage. The tip credit is currently $5.12 per hour. This means that if a tipped employee earns at least $7.25 per hour in tips, the employer does not have to pay them any additional hourly wage.

However, if a tipped employee’s hourly wage plus tips do not equal at least $7.25 per hour, the employer must make up the difference. This is called the “tipped employee minimum wage guarantee”.

Exemptions & Special Cases

The Georgia minimum wage law includes certain exemptions and special cases that employers in the state need to be aware of.  For example, certain categories of workers are exempt from the general minimum wage requirements.

These exemptions include:

• Interns. Interns who receive academic credit or are paid a stipend or educational allowance are exempt from minimum wage laws.
• Certain agriculture workers. Agricultural workers employed on piece-rate basis or by certain types of farms are exempt from minimum wage requirements.
• Subminimum wages. Certain occupations, such as newspaper delivery carriers and service employees in private households, may be eligible for subminimum wages.

In addition, there are also special cases that require careful consideration.

These include:

• Tip-based employees. As we saw above, employers can pay tipped employees a lower hourly wage, provided their tips bring their total earnings up to the minimum wage. However, employers must make up the difference if tips do not meet this threshold.
• Non-profit sector. Employees working for certain non-profit organizations, such as those engaged in charitable or educational activities, may be exempt from the requirement of paying tipped employees the minimum wage, provided the employees receive training or instruction provided by the organization.
• Youth. Employers can pay employees under the age of 20 a training wage of $4.25 per hour during the first 90 days of employment.

Employers should carefully review these exemptions and special cases to ensure they are compliant with Georgia’s minimum wage laws and are accurately paying their employees.

Georgia Minimum Wage Enforcement

The Georgia Department of Labor’s (GDOL) Wage and Hour Division is responsible for enforcing the Georgia minimum wage law. This division plays a pivotal role in ensuring compliance with the minimum wage requirements, investigating complaints of unpaid wages, and taking legal action against employers who violate the law.

Specifically, the GDOL Wage and Hour Division has the following key responsibilities:

• Educating employers and employees about their rights and responsibilities under the minimum wage law.
• Providing information and guidance on compliance matters, including the calculation of minimum wage rates, payroll practices, and record-keeping requirements.
• Receiving and investigating complaints of unpaid wages.
• Issuing citations and orders for employers who violate the law.
• Taking legal action against non-compliant employers, including civil penalties and potential criminal charges.

Employers play a crucial role in upholding the minimum wage law by ensuring compliance with the following key measures:

• Paying employees the applicable minimum wage rate, in line with the size of the organization.
• Maintaining accurate payroll records that accurately reflect employee hours worked and wages paid.
• Providing employees with written notices of their minimum wage rights and responsibilities.
• Resolving any discrepancies or disputes related to wages promptly and equitably.
• Responding to GDOL Wage and Hour Division Investigations.

In the event of a GDOL Wage and Hour Division investigation, employers should cooperate fully with the agency’s inquiries.

This includes:

• Promptly responding to requests for information and documentation.
• Making available all payroll records and other relevant documentation.
• Cooperating with interviews and providing clarifying information if needed.
• Addressing any non-compliance issues identified by the GDOL in a timely and corrective manner.

Additional Wage Laws

Beyond the minimum wage, Georgia has several additional wage laws that employers must comply with to ensure fair compensation and compliance with state regulations.

These include:

• Overtime pay. Firstly, employers must offer overtime pay to non-exempt employees in Georgia for working more than 40 hours in a workweek. Overtime pay is equal to one and one-half times an employee’s regular hourly wage. However, employers do not have to offer overtime pay to certain exempt employees, such as executives and administrative staff.
• Timekeeping. Employers in Georgia must maintain accurate records of employee hours worked for at least three years. This includes keeping records of:
  • The date and time that each employee begins and ends their shift.
  • The amount of time that each employee takes for breaks and meal periods.
  • Any overtime hours worked.
• Recordkeeping. Secondly, employers in Georgia must maintain accurate payroll records for at least three years. These records must include:
  • The employee’s name, address, and Social Security number.
  • The employee’s hourly wage rate.
  • The number of hours worked by each employee.
  • The amount of overtime pay paid to each employee.
  • Deductions taken from the employee wages.
• Payroll deductions. In addition, employers in Georgia cannot make deductions from employee wages without their written consent. However, there are a few exceptions to this rule, such as:
  • Deductions for union dues.
  • Deductions for garnishment orders.
  • Deductions for payments for uniforms or other work-related expenses.
• Pay parity. Finally, the Equal Pay Act of 1963 prohibits employers from discriminating against employees on the basis of sex by paying them unequal wages for equal work. This means that employers must pay men and women who perform equal work the same rate of pay, regardless of their gender. This ensures pay parity and promotes pay transparency.

Best Practices to Ensure Wage Law Compliance

Staying compliant with Georgia’s wage laws is crucial for maintaining a fair and equitable workplace. Here are some best practices to ensure compliance and avoid potential penalties:

• Stay updated on wage law changes. Firstly, familiarize yourself with the latest state wage laws, including Georgia minimum wage rates, overtime pay requirements, and any exemptions or exceptions. These laws are subject to change, so regularly review the Georgia Department of Labor’s (GDOL) website for updates.
• Maintain accurate payroll records. Secondly, conduct regular payroll audits to ensure the accuracy of employee hours worked and wages paid. Maintain detailed payroll records for at least three years to comply with record-keeping requirements.
• Provide written notices of wage rights. Thirdly, distribute clear and concise notices to all employees explaining their wage rights and responsibilities, including minimum wage, overtime pay, and deductions from wages.
• Comply with tipped employee regulations. In addition, make sure you understand the tipped employee minimum wage guarantee and ensure that tipped employees receive the appropriate hourly wage and tip credit. Make up the difference if the employee’s wages do not meet the minimum wage requirement.
• Handle payroll deductions carefully. Moreover, only make deductions from employee wages with their written consent and in accordance with legal exemptions. Clearly communicate the reason for any deductions and maintain documentation.
• Proactively address wage disputes. Furthermore, promptly investigate and resolve any wage disputes with employees. Open communication and a fair resolution process can prevent potential legal issues.
• Educate employees and foster a positive work environment. Finally, provide regular wage education to employees, fostering a culture of understanding and respect for wage laws.

How Factorial Can Help You Comply with Georgia’s Wage Laws

Navigating Georgia’s wage laws can be a complex task for employers. Thankfully, Factorial, a comprehensive payroll software solution tailored for small businesses, can streamline your payroll operations and help you comply with all applicable regulations.

Here are the specific benefits of using our software to manage payroll in your business:

• Efficient payroll processes. Firstly, Factorial simplifies payroll management by automating tasks like calculating wages, generating pay stubs, and issuing paychecks.
• Handle pay periods and holiday pay with ease. Secondly, Factorial seamlessly handles pay periods, including calculating and applying overtime pay, and handling deductions. It also automatically accounts for Georgia state holidays when calculating holiday pay.
• Enhanced payroll security. Thirdly, Factorial encrypts sensitive employee data and employs robust payroll security measures to protect your employees’ financial information.
• Georgia minimum wage compliance. In addition, Factorial automatically calculates and pays employees the applicable Georgia minimum wage, ensuring you remain compliant with the state’s minimum wage laws, which vary based on the size of the employer.
• Access to real-time payroll data. Moreover, Factorial provides you with real-time access to payroll data, allowing you to track employee hours worked, wages paid, deductions made, and outstanding balances. This empowers you to make informed decisions and address any discrepancies promptly.
• Advanced recordkeeping capabilities. Finally, Factorial maintains detailed payroll records for at least three years, as required by Georgia state law. It stores employee information, including hours worked, wages paid, deductions, and garnishment orders. Factorial also generates detailed reports for audit purposes, simplifying the process of ensuring compliance.

By leveraging Factorial’s comprehensive payroll and HR software solution, employers can simplify payroll management and ensure compliance with Georgia’s wage laws, ultimately enhancing their overall business efficiency and reducing administrative burdens.