From the May 2009 issue of the General Ledger.
Firms owned by parents that employ their children. Owners’ children can work for the firm, regardless of age, number of hours worked or time of day—if the parent(s) own 100% of the business. Children under 16 cannot do hazardous work such as use lawn mowers, sewing machines, etc., work where food is cooked, or work near flammable or hazardous material.
Minimum wage: 100% of owners hiring only immediate family members need not pay the minimum wage. But if owners regularly employ nonfamily members, they must pay even family members the minimum wage.
Owners’ children under 21: Wages are exempt from FUTA.
Owners’ children under 18: Wages are exempt from FICA—if the parents are sole owners or sole partners—but FIT must be withheld on W-2s filed for the children.
Other children under 18: Obtain an age certificate recognized by the U.S. Department of Labor (DOL) and your state Wage and Hour Division (WHD) and return it to the workers upon termination. DOL generally accepts a state age certificate, but ask your state WHD to be sure. These workers may not perform hazardous work.
Other children aged 14-15 can work 8 hrs/day, 40 hrs/wk, June 1-Labor Day, between 7 a.m. and 9 p.m. if school is not in session. Exceptions: These limits do not apply to news carriers or children who are employed exclusively by a parent/sole-proprietor. For agricultural jobs, contact the DOL.
Other children under 14 cannot be hired unless they work for a parent/sole owner.
Paid holidays. Under federal law, paying part-time and summer help for holidays is optional any time of year.
Paid vacation. No law requires paid vacation, but if you give paid vacation, some federal and state laws apply.
Benefits. Providing health insurance or other benefits to temporary and part-time employees is optional; if not available, it should be so stated in a written benefits plan.
Federal W-4. Obtain from all summer employees, even students working part-time and foreign students.
FITW. Withhold from all summer employees unless their W-4 results in no withholding.
FICA. Withhold from all workers, even those receiving Social Security benefits and high school students, unless under 18 working for sole-owner parents.
Overtime pay under federal law. Pay overtime for all hours physically worked over 40 hours in the workweek. When computing overtime, you need not include paid time-off (e.g., holidays or vacation days). Do not try to substitute paid nonwork hours for work hours to make all hours straight time, thus avoiding overtime pay.