Utah has maintained the federal minimum wage since the Fair Labor Standards Act (FLSA) was established in 1938. The state has never set a separate, higher minimum wage rate. Despite this fact, there are still a number of important considerations for employers operating within the state. Understanding the nuances of the Utah minimum wage, including provisions for tipped employees and young workers, is crucial to ensure fair labor practices and compliance with both federal and state laws.
With this in mind, read on to find out everything you need to know about the Utah minimum wage.
- How Minimum Wage Works in the U.S.
- Federal Minimum Wage: Timeline
- What Is the Utah Minimum Wage?
- Are Any Employees Exempt from the Utah Minimum Wage?
- What Other Utah Wage Laws Are There?
- Best Practices for Employer Wage Law Compliance
- What can you do with Factorial’s payroll 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.
Federal Minimum Wage: Timeline
Before we explore the Utah minimum wage, let’s take a look at a timeline of the federal minimum wage to help us understand its evolution and impact on the state’s wage laws.
Key Milestones in the History of the Federal Minimum Wage
- 1938. The FLSA establishes the first federal minimum wage of $0.25 per hour. This provides workers with a baseline income and lays the groundwork for future labor standards.
- 1950. The federal minimum wage increases to $0.75 per hour, expanding coverage to air transport industry workers. This increase is a reflection of post-war economic growth and an improvement in living standards.
- 1966. The federal minimum wage increases to $1.40 per hour. This increase ensures wages keep up with productivity and the cost of living, reducing poverty significantly. Coverage is extended to public schools, nursing homes, laundries, and the construction industry
- 1981. The federal minimum increases to $3.35 per hour and remains unchanged for almost a decade. This wage stagnation leads to an increase in income inequality.
- 1989. Changes to the law require businesses that make $500,000 or more per year to follow minimum wage rules, and the federal minimum wage is increased to $3.80 per hour.
- 1997. The federal minimum wage increases to $5.15 per hour during the Clinton administration. This raise is part of a series of increases aimed at boosting the income of low-wage workers. However, even though it provides a significant boost in nominal wages, it still lags behind inflation and cost of living increases.
- 2007-2009. The federal minimum wage increases in three stages up to $7.25 per hour, where it has remained until now despite rising living costs. This is the longest period in U.S. history without an increase. There are currently no plans to increase the federal minimum wage.
What Is the Utah Minimum Wage?
The Utah minimum wage is currently $7.25 per hour, in line with the federal minimum wage. Twenty states use the federal minimum wage of $7.25 including Alabama, Georgia, Indiana, Kentucky, Louisiana, North Carolina, Pennsylvania, Tennessee, Texas, Wisconsin, Oklahoma, and Utah. 30 states have state minimum wages that are above the federal minimum wage, such as California, Florida, and Massachusetts.
The Utah minimum wage applies to most workers in the state unless they are exempt under specific federal or state laws.
Specifically, Utah employers must offer non-exempt employees the following minimum hourly wage:
- $7.25 per hour. This is the federal minimum wage, and it applies to most workers in Utah. This rate has been in effect since July 24, 2009.
- $2.13 per hour. This rate typically applies to workers who earn tips, such as servers. Under federal law, employers can pay tipped employees a lower cash wage as long as the sum of the cash wage and tips received is at least equal to the federal minimum wage of $7.25 per hour. If the combined amount of the tips and the $2.13 cash wage does not equal at least $7.25 per hour, the employer must make up the difference.
Will the Utah Minimum Wage Increase?
Since the Utah minimum wage has not been raised any higher than the federal rate of $7.25 per hour, in effect since 2009, low-wage workers have struggled to keep up with the rising cost of living. As a result, there have been numerous calls to increase the Utah minimum wage and better support low-wage workers.
The most notable push has come from advocacy groups like the Utahns Against Hunger, who have been vocal proponents; state legislators who have introduced proposals to gradually increase the minimum wage to $15 over the coming years; and labor unions, who have been at the forefront of the movement. Polls and surveys also demonstrate that a significant portion of the state’s residents support increasing the Utah minimum wage. This public support puts pressure on lawmakers to consider changes that would benefit low-wage workers.
Are Any Employees Exempt from the Utah Minimum Wage?
Since Utah does not have a state-specific minimum wage and follows the federal minimum wage of $7.25 per hour, the exemptions to the Utah minimum wage are essentially the same as those outlined under federal law.
Here’s an overview of these exemptions:
- Tipped employees. Firstly, 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.
- Student workers. Secondly, you can pay full-time college or high school students 85% of the Utah minimum wage provided those students are enrolled in a work-study program or work 20 hours (or less) per week.
- Young workers. In addition, 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 Utah minimum wage.
- Employees with disabilities. Finally, you can pay employees with a disability a lower rate provided you obtain a certificate from the U.S. Department of Labor. This special permission allows employers to pay wages based on the productivity of the worker, which might be less than the Utah minimum wage.
What Other Utah Wage Laws Are There?
Aside from the Utah minimum wage, the state has a number of additional wage laws that employers need to understand as these can have an impact on an employee’s wages.
Let’s explore these additional Utah wage laws in a bit more detail so you can make sure your employee handbook meets all requirements
Overtime Pay
Utah follows federal overtime pay laws under the Fair Labor Standards Act (FLSA). This means that you must offer eligible employees overtime pay if they work beyond their contracted hours.
To determine if an employee is eligible or exempt, you first need to determine what their FLSA status is.
Consider the following:
- Salary level. Firstly, are you paying the employee more than $43,888 per year?
- Salary basis. Secondly, do you offer them a guaranteed minimum compensation amount, regardless of the hours they work?
- Duties. Finally, have you contracted them to perform an exempt job duty? (Professional duties that require specialized education; executive duties such as supervising a team; or administrative duties that require the use of discretion and judgment)
If an employee meets any of the above criteria, then they are considered exempt from the FLSA and you have no obligation to pay them overtime. However, if your employees are non-exempt (they do not meet any of the above criteria) then you must follow the FLSA’s overtime rules. Essentially this means that you must offer them overtime pay for any hours worked over 40 in a workweek at a rate not less than time and a half.
Payment of Wages
In Utah, employers must adhere to specific payday requirements to ensure timely and fair compensation for their employees. Understanding these regulations is crucial for maintaining compliance and fostering a positive work environment.
Here are the key points to be aware of.
Employers must:
- Establish regular paydays.
- Pay wages at least twice a month (semimonthly or biweekly).
- Pay wages within ten days after the close of the pay period. If a payday falls on a Saturday, Sunday, or legal holiday, you must pay wages earned during the pay period on the day before the Saturday, Sunday or legal holiday.
Employers in Utah can pay wages in cash, check, direct deposit, or payroll card, provided that the employee consents to direct deposit or payroll card payments in writing.
Finally, employers must pay a discharged employee all wages within 24 hours after termination. If work is stopped because of an industrial dispute, wages earned must be paid at the next regular payday. If an employee doesn’t have a written contract for a definite period or resigns, earned wages must be paid on the next regular payday.
Wage Deductions
According to Utah’s Wage and Hour Laws, you can only legally make deductions from an employee’s wages under certain conditions.
Accepted reasons include:
- Mandatory deductions. Firstly, as an employer, you must deduct state and federal taxes. You must also deduct FICA (Social Security and Medicare) contributions. Check out this payroll checklist for more information.
- Court-ordered deductions. Secondly, you must withhold wages if a court orders you to do so.
- Agreed deductions. Finally, employers and employees can agree to certain deductions if they have a written and signed agreement. These can include:
- Repaying a loan or advance, or recovering a payroll overpayment
- Cost of merchandise bought by the employee
- Uniforms
- Insurance premiums
- Contributions to retirement or investment plans
- Costs for breakage, loss of merchandise, inventory shortages, or cash shortages, provided the employee was solely responsible for the loss or damage.
Child Labor Laws
Under Utah law, a minor is any person under the age of 18 years. However, certain individuals between 16 and 18 are exempt from Utah’s child labor laws, including high school graduates, married minors and those working in agriculture.
Generally speaking, however, according to Utah’s child labor laws:
- Working hours. Firstly, minors under 16 cannot work during school hours unless authorized by school authorities, more than 4 hours on a school day, more than 8 hours on a non-school day, before 5:00 a.m. or after 9:30 p.m., or more than 40 hours in a week.
- Occupations. Secondly, minors are restricted from working in hazardous occupations unless part of an authorized apprenticeship or rehabilitation program. Nonhazardous jobs are permitted for those 14 and older, and certain light jobs are allowed for those 12 and older.
- Breaks and meal periods. Finally, all minor employees must receive a meal period of at least 30 minutes no later than five hours after the beginning of their workday. They must also receive a paid rest break of at least 10 minutes for every four hours worked. Minors cannot work more than three consecutive hours without a ten-minute rest period.
Meal and Rest Breaks
Utah employment laws include federal guidelines for work breaks, ensuring employees have time to rest and recharge during their shifts.
Here’s what you need to know:
- Meal breaks. Firstly, although Utah does not require employers to provide meal breaks for adult workers, employees under the age of 16 must receive a 30-minute break for every 5 consecutive hours of work.
- Short breaks. Secondly, while Utah law also does not mandate short rest breaks (typically 5 to 20 minutes), federal standards encourage employers to offer them. When provided, employers must compensate these short durations as work time.
- Health and safety. Finally, for certain industries, such as those involving continuous operations or heavy machinery, breaks may be regulated by specific health and safety requirements (including working hours limits) to prevent accidents and ensure worker wellbeing.
Reporting and Recordkeeping
Employers must comply with both federal and state laws when it comes to employment reporting and recordkeeping. These laws are designed to ensure that accurate records of employee information and employment activities are maintained and filed for compliance, transparency, and legal purposes.
Specifically, Utah employers must maintain a record of the following information for a period of at least 3 years:
- Employee personal information, including name, address, Social Security number, and birth date (if under 19).
- Wage and hour records, such as daily and weekly hours worked, wages paid, pay rates, total earnings per pay period, and payment dates.
- Payroll records, including total additions to or deductions from wages each pay period and written agreements related to wage deductions. Employers must also provide employees with a statement each pay period detailing hours worked, rates of pay, total earnings, and any deductions made.
- Employment agreements and contracts.
- Records of leave, including sick leave, vacation, and other time off (PTO and unpaid time off).
- Tax records, including federal, state, and local tax withholdings, W-2 and W-4 forms, and tax payments made on behalf of employees.
- OSHA records of workplace injuries and illnesses.
In addition to the above, employers in Utah must report the following information to the state:
- The Utah New Hire Registry. Firstly, employers must report all new hires and rehires within 20 days of their hire date. This helps the state enforce child support orders.
- The Utah State Tax Commission. Secondly, employers must report wages and other compensation paid to employees and remit the appropriate state income tax withholdings.
- The Utah Labor Commission. Finally, employers may be required to report certain incidents, such as workplace injuries or illnesses, as part of their compliance with occupational safety and health regulations.
Wage Discrimination and Pay Equity
Finally, Utah doesn’t have its own specific pay equity law that addresses wage discrimination based on gender or other protected characteristics. Instead, the state uses the Utah Antidiscrimination Act to handle these issues. This law makes it illegal for employers to pay employees unfairly based on factors like sex, race, color, age (40 or older), religion, national origin, disability, sexual orientation, or gender identity. This aligns with the provisions of the federal Equal Pay Act.
Best Practices for Employer Wage Law Compliance
And that’s pretty much everything you need to know about the Utah minimum wage and the state’s additional wage laws. All that’s left now is to make sure that your business meets the legal requirements of these laws.
With this in mind, we’ve put together a handy list of essential tips and best practices to help you protect your business from potential non-compliance fines and penalties:
- Monitor working hours. Firstly, track and calculate employee working hours and make sure you pay non-exempt employees overtime if they work beyond 40 hours in a week. Factorial’s time tracking feature enables real-time monitoring of working hours, including overtime. This allows you to maintain and generate accurate records and reports, ensuring compliance with overtime and time-tracking requirements.
- Maintain detailed records. Secondly, keep comprehensive records of all hours worked, wages paid, and deductions for at least three years. Factorial’s HRIS automates recordkeeping, storing all data in a centralized digital format for easy access and compliance with record retention laws.
- Schedule employee breaks properly. In addition, make sure you provide regular breaks to your employees to encourage rest and productivity. Factorial’s scheduling software manages and schedules breaks effectively, ensuring compliance with federal break regulations.
- Implement an effective payroll system. Finally, ensure compliance with the Utah minimum wage by implementing an effective, real-time payroll system. Factorial’s payroll software automatically updates wage rates, ensuring compliance and reducing underpayment risks. What’s more, the feature integrates seamlessly with our time-tracking and scheduling software, making it easy to monitor employee hours, manage overtime, and schedule required breaks. By embracing this comprehensive approach, you can maintain accurate records and comply with all Utah minimum wage requirements, protecting your business from legal issues and ensuring fair treatment of your employees.
