Budding Company - Salary Question

[Froyn]

What is the name of your state? Michigan

I'm in the budding stages of starting my own company. At present it is myself and 3 friends that are entering into this venture together. We were discussing pay last night and it brought up an interesting question. We agree that everyone needs to be present from open until close every day possible (Being 10am-7pm Monday-Saturday (9 hours per day x 6 days = 54 hours each)) until we are able to get off the ground. This leaves us with a problem when it comes to payroll. Someone came up with the idea of giving everyone a "salary" of $350 a week (which would be enough to sustain life until the company takes off) instead of paying out hourly, which would lead to overtime every week for every person.

Doing the math, $350 per week falls short of minimum wage based on our 54 hour work week. Is this something we need to worry about if the company receives an audit? Or would we all be considered "exempt" because of the self-titles of "Salesperson"?

 

[las365]

If each of you is an owner (not a "salesperson"), I don't think you are subject to minimum wage law, but I am not a lawyer.

I can tell you that the odds of every one of you working 54 hours a week for months on end are slim to none. Anyway, if your store is open 10a-7p, someone has to be there before it opens and after it closes. You are talking more hours than 54/wk. If everyone gets the same pay and some are not putting in the hours, there will be trouble.

Is each of you putting in an equal amount of monetary funding? What are the ownership percentages? What kind of business entity is best for your business and for you as individual owners? Who controls the money? Who is responsible for doing the books, making sure taxes are paid, etc.? You need to know what happens if your business is successful, if it is not, if you and your partners continue to get along and if you do not.

Get thee to an attorney who handles business start-ups, stat. You need advice for the company and advice for yourself as an individual. One attorney may not be able to serve both roles and if s/he does, you will need for your partners to consent to multiple representation. This will cost you money. Pay it. Go! Good luck.

 

[eerelations]

As the previous poster said, if each of you is an owner, then wage and hour laws don't apply to any of you.

However, if you're the owner and your three friends are employees, then you need to be following wage and hour laws for your employees (not yourself). Simply paying them via a salary will not get you out of having to pay them OT pay.

Before you spend money on an attorney, check out the federal and your state's DOL websites for complete information on the difference between exempt and non-exempt employees - the $455/week threshold is only one small aspect of the differentials.

 

[pattytx]

And, of course, IF any of these other 3 are employees, remember that the $455/week minimum only is required for exempt employees. Nonexempt employees must receive at least minimum wage and overtime pay (in most cases). What type of retail business is this?