Although North Carolina tends to align with federal standards when it comes to employment law, there are specific state regulations and exemptions that local businesses need to be aware of. This includes the minimum wage in North Carolina.
In today’s post, we will explore everything you need to know about the minimum wage in North Carolina, including rates, exemptions and best practices to ensure compliance with all wage laws in The Tar Heel State.
- How Minimum Wage Works in the U.S.
- What Is the Current Minimum Wage in North Carolina?
- Exemptions & Special Cases
- Additional North Carolina Labor Laws
- Wage Law Compliance Best Practices
- How Factorial Can Help You Comply with The Minimum Wage in North Carolina
- 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 local 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.
What Is the Current Minimum Wage in North Carolina?
The minimum wage in North Carolina is currently $7.25 per hour, in line with federal standards. North Carolina last raised its state minimum wage in 2008, when it increased it by 70 cents (from $6.55 per hour). Employers in North Carolina must pay at least $7.25 per hour to all employees. The $7.25 per hour state minimum wage applies to the state of North Carolina, county and local governments, and government institutions.
Historically, North Carolina has never set a minimum wage higher than the federal rate, maintaining alignment with national standards. Looking ahead, the minimum wage in North Carolina is expected to remain at the federal level due to a lack of bipartisan legislative support for an increase at the state level.
Exemptions & Special Cases
While the minimum wage in North Carolina applies to most adult workers over the age of 18 who are employed by a business with two or more employees, there are certain exemptions that you need to be aware of.
Here’s an overview of these exemptions:
- Tipped employees. You can pay tipped employees a reduced rate of $2.13 per hour if their tips bring their total earnings to at least $7.25 per hour. If they don’t, then you must cover the tip deficit.
- Youth workers. In line with federal minimum wage requirements, you can pay employees under 20 a reduced rate of $4.25 per hour during the first 90 days of employment. After 90 days, you must pay them the full minimum wage in North Carolina.
- Full-time students. You can pay full-time students, learners and apprentices less than minimum wage, but you must pay at least 90% of the minimum wage in North Carolina (currently equates to $6.53 per hour).
- Workers with disabilities. If an employee with a disability has a certificate from the North Carolina Wage and Hour Bureau, employers can pay less than the minimum wage. Generally, this must be no less than 50% of the standard minimum wage, except in certain circumstances.
Additional North Carolina Labor Laws
In addition to the minimum wage in North Carolina, the state has several supplementary labor and wage laws that employers need to understand.
Let’s explore these additional North Carolina labor laws in a bit more detail so you can make sure your employee handbook meets all requirements.
Sick Leave
There are no laws in North Carolina that require employers to provide holiday, sick, or vacation leave. However, under the Fair Labor Standards Act (FLSA), if an employer does offer these types of leave, they must comply with their established policies and agreements. For example, if an employer offers paid sick leave, they must ensure that employees receive it as specified in their employment terms.
Right-to-Work Law
North Carolina is one of the few states in the country that prohibits the negotiation of collective bargaining agreements between public employers and employee unions. However, public employees still have the right to organize and join employee associations. This is known as North Carolina’s “Right-to-Work” law, which prohibits the use of union membership (or non-membership) as a condition for getting hired.
Pay Transparency
While North Carolina currently doesn’t have a law requiring employers to disclose the expected salary in public job posts, there are laws that grant employees the right to share their wages openly. This is intended to promote pay transparency and pay parity and help identify and address wage discrimination.
Overtime
North Carolina adheres to the federal overtime regulations set by the Fair Labor Standards Act (FLSA). Specifically, North Carolina 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. These records must be stored for a period of at least three years.
North Carolina does not have additional state-specific overtime laws beyond those stipulated by the FLSA.
Meal and Rest Breaks
While North Carolina does not mandate meal or rest breaks for employees over the age of 16, it strongly encourages employers to provide breaks to promote employee well-being and productivity. For those under 16, employers must offer a 30-minute break after five consecutive hours of work.
Payment of Wages
Employers in North Carolina must pay employees on regular paydays. This can be either weekly, biweekly, semi-monthly, or monthly. The paydays must be specified in advance, and employers must provide written notice of any changes to pay schedules. Additionally, wages must be paid in lawful money or by negotiable instruments, including checks or direct deposit with the employee’s consent.
Finally, employers must maintain records for at least three years that indicate the employee’s name, address, birthdate, classification, rate of pay, total hours worked in each pay period, total wages paid and an itemization of fringe benefits. If an employee believes that their employer has violated any of these rights, they can file a complaint with the Wage and Hour Division.
Wage Deductions
According to North Carolina law, you cannot make deductions from an employee’s wages without written consent, unless legally permitted. Permitted deductions include those required by law (such as taxes) or those voluntarily authorized by the employee (such as insurance premiums or savings plans).
Final Paychecks
If you terminate an employee, whether voluntarily or involuntarily, North Carolina law requires you to issue their final paycheck by the next regular payday. This paycheck must include all wages earned up to the date of termination.
Equal Pay
Finally, the North Carolina Equal Pay Act prohibits private employers from discriminating in pay based on an individual’s membership in a protected class. This aligns with the Federal Equal Pay Act which also aims to ensure that all employees receive equal pay for equal work (pay parity).
Specifically, according to the Equal Pay Act, all employees have a right to pay equity and protection against sex-based compensation discrimination. This means that if multiple individuals are performing substantially equal jobs that require similar levels of skill, effort, and responsibility, and under similar working conditions, then you must pay them the same wage or salary, regardless of gender. All forms of pay are covered by this law, including salary, overtime pay, bonuses, stock options, profit sharing and bonus plans, life insurance, vacation and holiday pay, cleaning or gasoline allowances, hotel accommodations, reimbursement for travel expenses, and additional fringe benefits.
Wage Law Compliance Best Practices
And that’s pretty much everything you need to know about the minimum wage in North Carolina 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 North Carolina?
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 during 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 minimum wage in North Carolina, 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 an employer 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
For tipped employees, North Carolina employers can pay a lower minimum wage of $2.13 per hour, provided that tips plus hourly wage equate to at least the federal minimum wage of $7.25 per hour. If tips and the reduced wage do not meet the minimum wage requirement, make sure your business makes up the difference.
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. Make sure 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 help you maintain accurate and reliable records so that you can focus on other important parts of your business while staying compliant with North Carolina 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 North Carolina wage laws and time-tracking legal requirements.
How Factorial Can Help You Comply with The Minimum Wage in North Carolina
Ensuring compliance with the minimum wage in North Carolina 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 North Carolina’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 North Carolina minimum wage requirements, overtime pay, holiday pay, and other relevant regulations to ensure compliance with North Carolina 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 North Carolina’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 rates for the minimum wage in North Carolina, fostering a positive and compliant work environment for all.
