Living wage represents a worker’s minimum income to cover their basic needs.  Federal and state laws require that employers pay all their workers a minimum rate. This amount is known as minimum wage.

According to the Society for Human Resource Management in 2012, the federal and state minimum wage rates may differ. 

In this case, the employee must receive the higher rate among the two.

The Fair Labor Standards Act established the first federal minimum wage in 1938. Workers currently receive a minimum wage of $7.25 per hour in Austin. This rate has been in place since July 2009. 

There are 29 states with rates higher than the federal minimum wage, excluding Texas.

The minimum wage in Texas is $7.25 per hour and has been the same since 2009. Employers owe you for overtime if you work more than 40 hours within a week. There are also appropriate rates for overtime.

Thankfully, the Austin City Council recently approved a $20 per hour living wage as part of the 2022-23 fiscal year budget. The initial plan was to increase it from $15 to $18 an hour. 

However, the council members pushed it to $20, considering the current economic crisis and its effect on households.

The new rate took effect in October 2022.

Minimum Wage Exemptions for Workers in Austin

Texas defaults to using the federal minimum wage rate because the state does not have one. This is why Austin uses the same rates for workers. Other cities within the state, such as Dallas and Houston, follow the same law. 

However, the state has regulations to ensure employers pay employees the proper wages per the law. This should be the same or more than the minimum wage unless the person is an exempt worker.

The list below represents all the minimum wage rates for exempt employees in Austin.

  • Tipped workers in Austin have a minimum wage of $2.13 per hour. This comes with a tip credit rate of $5.12.
  • Full-time college or high school students that are working are entitled to a minimum wage of $6.16 every hour. These student-workers have a limit of 20 hours every week. Any employer who wants to work them for more hours must pay them the full minimum wage of $7.25.
  • Workers under 20 are entitled to a minimum wage of $4.25 per hour for 90 days. An extension requires that they receive the full minimum wage of $7.25 every hour.
  • There is also a set minimum wage for people who work overtime. In Austin, the employee must get $10.88 per hour for each hour they work over the 40-hour limit.
  • City workers are eligible to receive a minimum wage of $15 per hour, with a likely increase to $22 per hour in the future.

Agricultural Piece Rates in Texas

The Texas Commissioner of Agriculture has piece rates from agricultural commodities commercially grown in substantial quantities within the state. This is possible only when there is sufficient productivity information available.

Piece rates help guarantee harvesters of average ability get paid the minimum wage while making provisions for those producing more to earn more.

The Most Common Minimum Wage Violations

Statistics show that employers make at least one mistake concerning how they pay their workers every month. Whether or not this is intentional can only be established from how the employer reacts when the employee draws their attention to the error. 

Some employers only pay their workers for some of the hours they are eligible to or fail to pay them accurate overtime rates. Additionally, some business owners hire people on a commission-only basis to avoid paying them minimum wage.

Federal laws determine how workers should be paid, not the employer. They compel employers to pay hourly employees at least twice every month. 

Under these laws, cheated employees can get a court action against their employers to receive fair compensation for their labor.

Effects of Minimum Wage Increase – How Businesses Can Prepare for It

A minimum wage increase does not only affect the employees. It also has unintended effects on the business, especially if it needs to make more profit. This is why employers should have contingencies for situations such as an increase in the minimum wage.

Below are some options available for a business owner in such a situation

  • Audit Your Expenses

You can put your cash flow in order and create an affordable hiring plan as a business owner. Sometimes you might have to hire temporary staff instead of full-time workers since it gives you the same productivity at a lower cost.

  • Hire Competent Workers

Having to replace employees all the time is expensive. It doesn’t just cost you money but also time and effort. You can reduce the cost of recruiting and training when you put in the effort to hire good employees for the long term.

Spend time analyzing applicants to find those who fit the culture of the business. Build a connection with your staff and create paths for their development.

  • Increase Prices of Goods and Services

A simple way to absorb the cost of paying workers more than an increase in the minimum wage is to increase the price of your goods and services. Forget the competition. They can only sustain their business if they keep their prices the same. The cost of doing business will force them to do the same.

  • Update Your Technology

There are aspects of business operations you can automate to reduce production costs. You can include this in your business operations and avoid paying minimum wage to a person you hire.

The Final Verdict

Federal and state laws demand that you get paid a minimum wage as a worker in Austin. This is currently $7.25 per hour, similar to the federal minimum wage. 

However, the living wage is higher in Austin. That is why most business owners in the city will pay more than $7.25 even though the law doesn’t compel them.

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