Small Business Guide to Louisiana Minimum Wage Laws

Employers in Louisiana need to pay close attention to wage laws to stay compliant and ensure employees are paid correctly. While the state doesn’t set its own minimum wage, federal regulations still apply and dictate how much businesses must pay their workers. Understanding these laws keeps payroll smooth and avoids unnecessary penalties.

Louisiana’s approach to wage compliance is straightforward on the surface but includes important details, especially when dealing with tipped employees or changes to federal wage laws. Missing these details can lead to payroll errors that are both costly and avoidable.

This guide explains minimum wage laws in Louisiana, including the federal wage standard, specific rules for tipped employees, and what employers need to know to manage payroll without headaches.

Federal and Louisiana Minimum Wage

Louisiana doesn't have a separate state minimum wage. Employers must follow the federal minimum wage of $7.25 per hour. All non-exempt workers in Louisiana are entitled to at least $7.25 per hour, regardless of their job role or industry.

Tipped Employee Basics

• Employers must pay tipped employees a cash wage of $2.13 per hour, based on federal requirements.

• Combined cash wages and tips must total at least $7.25 per hour. Employers must make up any shortfall if tips don't meet this threshold.

• Employees own their tips, but employers can enforce federally compliant tip pooling arrangements where tips are shared among eligible staff.

Employers That Must Adhere

The Fair Labor Standards Act (FLSA) governs wage requirements for most businesses in Louisiana. Employers falling under FLSA must follow federal minimum wage and overtime rules, leaving little room for exceptions.

• Businesses with $500,000 or More in Annual Sales: Companies generating $500,000 or more in gross annual revenue are obligated to comply fully with FLSA wage laws. This applies regardless of industry or the number of employees.

• Interstate Commerce Operations: Any business involved in interstate commerce must adhere to the FLSA. This includes selling goods or services across state lines, conducting business transactions with customers in other states, or even using the internet for interstate activity.

Small employers not meeting these criteria aren't automatically exempt. Federal laws may still apply if specific employees handle tasks involving interstate commerce, such as shipping products, processing out-of-state orders, or making interstate phone calls. Employers should evaluate their workforce and operations closely to identify any overlooked connections to interstate commerce.

Overtime Requirements

Federal overtime laws apply to all non-exempt workers in Louisiana. Employees who work more than 40 hours in a single workweek must be paid one and a half times their regular hourly rate for every additional hour worked. Employers are responsible for calculating overtime pay accurately and ensuring compliance with federal guidelines.

Precise recordkeeping is mandatory. Employers need to log daily hours worked and track total hours for each workweek. Any failure to document hours correctly could result in unpaid wages or legal disputes. Employers must be proactive in reviewing shift schedules to stay ahead of potential compliance issues.

Some employees are exempt from overtime pay based on their job duties and salary. Managers, executives, and certain professional roles may fall into exemption categories under the FLSA. To determine if an employee qualifies as exempt, employers must use the duties test outlined by federal law. This test evaluates the employee's primary responsibilities, decision-making authority, and salary level.

Steps to maintain compliance:

• Track Total Weekly Hours: Monitor workweeks closely to identify any employee exceeding 40 hours. Calculate overtime pay promptly and accurately.

• Assess Job Roles: Regularly review job descriptions and responsibilities for exempt employees to ensure they meet FLSA criteria.

• Document Everything: Maintain detailed records of time worked, overtime calculations, and payroll adjustments for audit purposes.

Overtime violations often occur when employers fail to monitor hours closely or misunderstand exemption rules. By focusing on accurate tracking and regularly updating employee classifications, businesses can avoid costly mistakes and ensure fair pay for their workforce.

Exemptions and Special Cases

Louisiana employers must account for specific exemptions under federal law when determining minimum wage and overtime eligibility. These exemptions apply to clearly defined roles based on duties, responsibilities, or employment status. Misclassifying employees can lead to costly wage disputes and noncompliance penalties, so getting it right is non-negotiable.

Executive, Administrative, and Professional Employees

Certain roles are exempt employees from both minimum wage and overtime pay under the FLSA. To qualify, employees must meet specific criteria outlined in the duties test and earn a salary above the federally established threshold. Key exemptions include:

• Executive Employees: Managers responsible for overseeing a department or subdivision, supervising at least two full-time employees, and holding authority over hiring, firing, or promotions.

• Administrative Employees: Workers engaged in non-manual office work directly tied to business operations or management, requiring independent judgment on significant matters.

• Professional Employees: Roles demanding advanced knowledge in fields such as law, medicine, or engineering, typically acquired through formal education or specialized training.

Employers should carefully document job descriptions, salaries, and daily responsibilities to ensure exempt employees meet all FLSA requirements.

Youth Employees

Workers under 20 years old may earn a training wage of $4.25 per hour for the first 90 consecutive calendar days of employment. After this period, wage rates must increase to at least $7.25 per hour. Employers are prohibited from using the training wage to replace existing employees or reduce staff hours.

Tracking the 90-day period is critical for payroll compliance. Employers should maintain accurate start dates and monitor when the training wage period ends to adjust pay rates promptly.

Seasonal, Agricultural, and Other Specialized Roles

Specific industries and roles have unique wage rules under federal guidelines. Employers must evaluate the nature of employment to determine whether exemptions apply:

• Seasonal Workers: Temporary employees hired for short-term needs, such as during holidays or peak seasons, may fall under unique pay requirements depending on the employment arrangement.

• Agricultural Workers: Farmworkers on small operations with limited labor forces may be exempt from minimum wage laws. Employers should verify the size of their farm and operational scope before determining eligibility.

• Specialized Roles: Casual babysitters and companions for elderly individuals are examples of positions with narrowly defined exemptions. Employers must confirm specific criteria set by the FLSA to avoid misclassification.

Every exemption has strict conditions. Employers must review job roles thoroughly, maintain detailed records, and align payroll practices with federal standards to ensure compliance.

Penalties for Non-Compliance

Ignoring minimum wage laws in Louisiana can lead to severe financial and legal consequences for employers. The FLSA enforces strict penalties that include back wages, substantial fines, and potential lawsuits. These penalties add up quickly, especially when violations involve multiple employees or persist over time.

Back Wages and Per-Employee Fines

Employers who violate wage laws must compensate affected employees with back pay. This includes the unpaid difference between what employees received and what they were legally entitled to earn, such as unpaid overtime. The FLSA allows back pay recovery for up to two years of violations, or three years if the employer knowingly broke the law.

Civil penalties also apply, with fines of up to $2,074 for each employee impacted. If payroll errors affect more than one employee, the total penalty can balloon. For example, an employer shortchanging 10 employees could face fines exceeding $20,000, in addition to back wages owed.

Lawsuits and Legal Costs

Employees can file lawsuits to recover unpaid wages, and courts often side with workers in these cases. Beyond the owed wages, employers may also end up paying the employee's legal fees and court expenses. In situations involving deliberate violations, courts may award liquidated damages, doubling the total amount owed.

Class-action lawsuits pose an even greater risk. When multiple employees unite against an employer for wage violations, the financial liability becomes significantly larger. These cases not only drain resources but also damage the employer's reputation.

Wage Audits and Documentation Failures

Wage audits are a common consequence of non-compliance. The Department of Labor will request detailed wage records to verify adherence to FLSA requirements. Employers unable to provide accurate documentation risk automatic penalties.

Auditors typically request:

• Time Records: Logs showing exact hours worked by employees each day and week.

• Overtime Pay Records: Evidence that employees received time-and-a-half pay for all hours worked over 40 in a workweek.

• Tip Credit Documentation: Records proving that tipped employees consistently earned at least $7.25 per hour when combining tips with base wages.

Incomplete or inaccurate records often result in additional fines or extended investigations. Employers must maintain consistent, well-documented payroll records to mitigate risks during audits.

Regularly reviewing payroll practices, ensuring accurate classifications, and keeping detailed records minimize the likelihood of penalties. Non-compliance isn't just a payroll issue—it's a risk to the business as a whole.

Navigating minimum wage laws in Louisiana requires attention to detail and the right tools to ensure compliance and accurate payroll. By prioritizing precise recordkeeping, using reliable software, and staying informed about federal regulations, you can avoid costly penalties and maintain a positive relationship with your employees. If you're looking for a comprehensive solution to streamline your HR and payroll processes while ensuring compliance, book a demo with us today and discover how we can help your business thrive.