You want to hire children of friends to work in your business. Before you hire minors (under legal maturity age) there are some laws and tax issues you need to know about. This article also addresses legal and tax issues in hiring your own children to work in your business.
Child Labor Laws
The U.S. Department of Labor has a number of laws relating to businesses having children as employees. The primary law is the Fair Labor Standards Act (FLSA), which includes a number of hours and pay regulations. These laws are designed to protect the children from overly harsh work conditions (no more "sweatshops").
FLSA provisions don't:
- Require minors to have a work permit or working papers (many states do)
- Restrict the number of hours or times of day that workers 16 and over may work (many states do)
- Apply if there is no FLSA employment relationship (if the child is not an employee)
- Require breaks, meal periods, or fringe benefits (some states do)
- Regulate discrimination, harassment, verbal or physical abuse, or morality (other federal and state laws do)
Federal labor laws spell out certain restrictions on hiring children, and each state has specific laws relating to child labor. Check out your state's child labor laws, which may differ from federal laws. Whichever is the stricter law (most protective) in a specific situation rules.
Age Certification and Work Permits
Before hiring a young worker, determine the child's age. Ask for an ID (driver's license, birth certificate, or other). Don't rely on the child to give you the correct age. You will need to know the exact age of the child to know what restrictions are applicable and to prove in case of an inspection or audit.
Employment Restrictions for Children
The FLSA sets 14 years of age as the minimum age for employment and limits the number of hours worked by minors under the age of 16.
The FLSA also prohibits minors from working in hazardous jobs, such as driving and operating power equipment and it includes requirements that apply to specific types of jobs, like agricultural work or jobs requiring the operation of motor vehicles. Some exceptions may apply, including children working for parents (see below).
Job, Hours, and Work Condition Restrictions
- Minors age 16 and 17 may perform any job not declared a hazardous job or occupation and are not subject to restrictions on hours.
- Minors age 14 and 15 may work outside school hours in various non-manufacturing, non-mining, nonhazardous jobs. This work has restrictions on days and hours: No more than three hours on a school day, 18 hours in a school week, eight hours on a non-school day, or 40 hours in a non-school week.
- In addition, minors under age 16 may not begin work before 7 a.m. or work after 7 p.m., except from June 1 through Labor Day, when evening hours are extended until 9 p.m.
- Minors age 14 and 15 may work only in a limited number of occupations: retail, food service, and gasoline service establishments specifically listed in the regulations.
Youth Minimum Wage
You may pay employees under age 20 a minimum wage of not less than $4.25 an hour during their first 90 days (consecutive). You can't take any action to replace employees over age 20 or cut their hours, wages, or benefits to hire a youth and pay them the youth minimum.
Defining the Status of Child Workers
Before you hire any children as employees (including your own children), clearly define the status of these workers. Making them part-time or classifying them as "summer workers" can avoid misunderstandings about benefits and pay. Include information about the status of minor workers in your employee handbook or policies/procedures manual.
New Hire Forms for Children
In general, new hire paperwork for children hired as employees in your business must be the same as for all other hires. Especially, newly hired minors must complete Form W-4 before they receive their first paycheck, to indicate federal income tax withholding, and you must withhold federal income tax from paychecks of minors unless the individual claims exemption from withholding.
Pay and Benefits for Children
- After the minor has been employed for 90 days, you must pay the same minimum wage as other employees. If your state's minimum wage is higher than the federal minimum wage, you must pay employees the higher state minimum wage.
- You must withhold federal (and state) income taxes and FICA taxes (Social Security/Medicare) from minors and pay your employer share of these taxes, the same as for other employees.
- You must pay overtime after 40 hours of work in a week, with the same regulations as for other employees.
- If the minor employee qualifies for any benefits, you must provide and pay for these benefits in the same manner as other employees.
- FLSA regulations do not require you to pay for vacations or holidays for summer help, but some states might.
In general, it's a good practice to provide minor workers and summer employees the same benefits as other employees. If the minor employees are part-time and your business has other part-timers who receive different benefits from full-time employees, you can consider the minor workers part-time for benefit purposes.
Hiring Your Children as Employees
If you hire your own children to work in your business, some of the FLSA regulations don't apply. These exemptions do not apply if your business is a corporation. The work your children are doing must be both necessary and essential to your business.
- Minimum age rates do not apply, but you should pay your children a reasonable wage.
- Minimum age restrictions do not apply, except in mining, manufacturing, and other occupations where children under 18 are not permitted to work.
- Your children do not have to pay federal income taxes if they are below the minimum amount of compensation.
It's a good idea to get help from an employment attorney before hiring minors, to make sure you don't miss an important state or federal regulation.