How to Determine Employee Wages

Part of establishing your own business, is determining how you will compensate your employees. It is very important to determine an amount that is within your budget, but at the same time high enough to keep your future employees happy.

Instructions

Difficulty: Easy

Things You’ll Need:

• Purpose of your business
• Job descriptions
• Hours of your business

1. Establish a detailed job description of each employee tasks and the complexity of such. Decide what is expected of each employee in terms of education, experience and skills in order to successfully carry out such required tasks.
2. Determine how many hours and days will be required from each employee in order to complete such tasks. Decide if you will pay hourly wages and/or commission. If you decide to pay minimum wages, find out what is the amount of the Federal Minimum Wage with the Federal Department of Labor. This is an amount established by the Federal Government as to how much is the minimum hourly compensation for every employee.
3. Research what the compensation offered by similar businesses is and even what the competition is paying to its employees. Remember to establish competitive wages so that employees will want to work and stay working for you.
4. Determine if you will offer additional benefits such as medical, dental and 401K plans. Sometimes employees will accept lower competitive wages if the benefits are excellent.

Tips & Warnings

• Check with your local State Department to see if it has established a different minimum wage for the type of job your employee will perform. Not all states have set the same minimum wage as the Federal minimum.
• Overtime is any work over forty hours per week for an hourly worker. It is required under the Fair Labor Standards Act of 1938 that employers pay employees working more that forty hours per week time-and-a-half, or 150 percent of the worker's salary for those hours exceeding the weekly average.
• Employees in the executive, administrative or professional capacity are exempt from receiving overtime pay regardless of the number of hours they work. States also have their own laws and regulations governing overtime. Verify with your State’s Department of Labor for specific regulations.
• As an employer you will have to report your employee wages and may have to make some deductions such as Social Security and Medicare. Find out with the IRS and your State Department of Revenue how to report such withholdings.