Complete Guide to South Carolina Minimum Wage Laws

Knowing how minimum wage laws work is vital for both employers and employees. In South Carolina, where no state-specific minimum wage exists, the federal minimum of $7.25 per hour sets the standard across the state. This baseline affects paychecks, hiring practices, and overall business operations.

Understanding the current wage laws and keeping up with legislative updates helps businesses stay compliant and ensures employees are paid fairly. Below is an overview of South Carolina's minimum wage framework and recent legislative efforts aimed at changing it.

South Carolina Minimum Wage Overview

South Carolina follows the federal minimum wage of $7.25 per hour, as the state does not have its own minimum wage law. The Fair Labor Standards Act (FLSA) requires this rate for most workers, and it has remained unchanged since 2009. Unlike states that set higher rates or adjust wages annually, South Carolina defaults to the federal standard without additional modifications or increases.

Recent legislative proposals have aimed to create a state minimum wage. For instance, the South Carolina Minimum Wage Act proposed setting a state rate two dollars above the federal wage, with annual adjustments for inflation. Another proposal, Bill 3226, suggested gradually increasing the state minimum wage to $10.10 per hour by 2028, followed by inflation-indexed adjustments. While these efforts reflect growing momentum, no state-specific wage laws have passed, leaving employers and employees to adhere to the federal minimum.

Who Must Comply with South Carolina Wage Laws

South Carolina employers operating under the FLSA must adhere to the federal minimum wage of $7.25 per hour. This applies to businesses grossing $500,000 or more annually or engaging in interstate commerce. Specific industries such as hospitality, retail, healthcare, and manufacturing often meet these criteria and are required to follow federal wage laws.

Even smaller businesses not meeting FLSA thresholds may still be obligated to pay the federal minimum wage if employees perform work connected to interstate commerce. For example, handling goods shipped across state lines or providing support for federal contracts can trigger compliance requirements.

South Carolina does not enforce a state-specific minimum wage, leaving the federally mandated rate as the baseline. Employers must also ensure compliance with federal guidelines for tipped employees, overtime, and youth employment. Industry-specific rules may apply, depending on the nature of the business or workforce.

The state operates under an at-will employment doctrine, meaning employers can terminate or modify employment terms without cause, as long as no laws are broken. However, employers cannot reduce wages below the federal standard or retaliate against employees for asserting their rights under wage laws.

Staying compliant requires attention to federal rules and keeping accurate payroll records. Noncompliance can result in penalties, back pay obligations, or lawsuits, so employers must remain vigilant.

Exemptions and Special Categories

South Carolina wage laws include specific exemptions and reduced wage categories designed for particular employment situations. These rules allow employers to pay less than the standard federal minimum wage of $7.25 per hour in defined cases, but only when strict requirements are met.

Tipped employees fall into a unique category. Employers can pay a minimum cash wage of $2.13 per hour, provided the employee's tips bring their total earnings to at least $7.25 per hour. If tips do not cover the difference, employers must make up the shortfall. Clear recordkeeping for tips is mandatory to ensure compliance.

Certain workers may also qualify for subminimum wages:

• Employees under 20 years old: Employers may pay a training wage of $4.25 per hour during the first 90 consecutive calendar days of employment. After this period, the federal minimum wage applies.

• Full-time students: Retail, agricultural, and higher education employers with the proper certification can pay students up to 85% of the federal minimum wage.

• Workers with disabilities: Employers holding special certificates can legally pay reduced wages to individuals whose disabilities affect their productivity.

These wage exceptions require precise documentation and adherence to federal guidelines. Employers who fail to meet these standards risk financial penalties and liability for back wages.

Overtime Pay Requirements

Overtime rules apply to nonexempt employees who work more than 40 hours in a single workweek. Under federal law, these employees must receive one-and-a-half times their regular hourly rate for all overtime hours.

This requirement covers most industries. However, exemptions exist for roles like certain administrative, executive, or professional positions. Misclassifying employees as exempt or failing to track hours accurately can lead to significant compliance issues. Employers must carefully review job duties and maintain detailed records to avoid costly errors.

Potential Future Wage Changes and Pending Bills

South Carolina lawmakers have introduced significant legislative proposals to raise the minimum wage, which could reshape how employers calculate wages and manage payroll. These developments emphasize the importance of tracking legislative changes to remain compliant and prepared.

Bill 216: South Carolina Minimum Wage Act

Bill 216 suggests establishing a state minimum wage set at $2.00 above the federal minimum wage. It includes a mechanism for annual adjustments tied to inflation, calculated by the Department of Employment and Workforce. If passed, the law would require employers to implement higher wage rates and continually adjust pay structures based on inflation updates.

The proposal also outlines protections for employees. It prohibits retaliation by employers against workers who exercise their rights under the act. Employees could seek legal action to recover unpaid wages, receive liquidated damages, and cover attorney's fees. Employers would need to address compliance risks quickly to avoid civil penalties or class action lawsuits.

Bill 3226: Gradual Wage Adjustment

Bill 3226 introduces a phased approach to increasing wages over three years, starting with $8.75 per hour in 2026, progressing to $9.75 in 2027, and reaching $10.10 by 2028. After 2028, the bill mandates automatic annual increases linked to the Consumer Price Index for Urban Wage Earners and Clerical Workers in the South Region.

The Department of Labor, Licensing, and Regulation would oversee the adjustments and notify employers of new wage rates by November 15 each year. The bill also shields employees from retaliation for reporting violations and allows for civil and class action lawsuits, as well as enforcement by the Attorney General.

Staying Prepared for Wage Legislation

Tracking legislative updates is critical for maintaining compliance and avoiding penalties. Employers should monitor announcements from the South Carolina General Assembly and relevant state agencies regarding wage increases or adjustments.

Preparation involves reviewing payroll systems to ensure compatibility with new rates, budgeting for incremental wage increases, and training HR teams to manage compliance with any enacted wage laws. Proactive steps help businesses navigate wage changes while supporting payroll accuracy and legal compliance.

Employer Obligations and Record-Keeping

Employers in South Carolina follow federal guidelines established by the FLSA for record-keeping and payroll documentation. These federal rules require precision and consistency to avoid conflicts or penalties. Employers are expected to maintain accurate records for every employee, covering personal details, hours worked, pay rates, and deductions.

Specifically, employers must document:

• Employee information: Full name, Social Security number, address, and birth date if the individual is under 19.

• Work records: Hours worked each day and week, total wages before deductions, and overtime pay.

• Payroll activity: Dates of payment, amounts issued, and any changes such as bonuses, deductions, or adjustments.

Payroll records must be kept for a minimum of three years, while timekeeping documents like timesheets or schedules should be preserved for at least two years. Employers should ensure these records are organized and easily accessible for audits or disputes.

Pay Schedule Requirements

South Carolina enforces clear rules regarding when wages must be paid. Employers are required to issue final wages within 48 hours of separation or by the next scheduled payday, as long as it doesn't exceed 30 days. This standard applies universally, regardless of whether the employee quit, was terminated, or laid off.

Employers must also communicate pay schedules upfront and provide written notice of any pay changes at least seven days in advance if the business employs five or more individuals. Consistency and transparency in pay practices help avoid misunderstandings and reduce the likelihood of wage disputes.

Posting Requirements

Federal law mandates that employers display specific workplace notices, such as the "Employee Rights Under the FLSA" poster. This poster outlines federal minimum wage, overtime, and child labor regulations and must be placed in an area where employees can easily see it. Common locations include break rooms or near time clocks.

While South Carolina does not have its own workplace poster requirements, federal compliance is non-negotiable. Employers should stay alert for updates to federal or local regulations that may require additional postings. Regularly updating workplace posters ensures employees are informed of their rights and keeps employers compliant.

Best Practices for Compliance

Staying compliant with minimum wage laws in South Carolina requires active engagement and precise actions. Employers must remain alert to legislative updates, refine payroll systems, and adopt efficient processes to ensure wages align with legal standards.

Stay Updated on Legislative Changes

Legislative changes can impact wage requirements quickly, leaving little room for error. Employers should prioritize staying informed through reliable and official sources.

• Subscribe to legislative updates: Use South Carolina General Assembly updates to track bills like the Minimum Wage Act or other wage-related proposals.

• Monitor agency announcements: Regularly review the South Carolina Department of Labor, Licensing, and Regulation for compliance-related news.

• Engage professional support: Employment law advisors can interpret pending legislation and provide clarity on potential impacts to your payroll.

Consistent monitoring ensures no compliance deadlines or obligations are overlooked.

Conduct Targeted Payroll Audits

Reviewing payroll on a scheduled basis prevents errors from slipping through and mitigates compliance risks. Accurate payroll records are not only required but can also protect employers from disputes.

• Confirm wage rates: Double-check that all employees, including tipped workers and those on subminimum wages, receive at least $7.25 per hour in total.

• Examine overtime pay: Verify that time-and-a-half payments are calculated correctly for all eligible employees exceeding 40 hours per week.

• Review classifications: Ensure employees are properly categorized as exempt or nonexempt to avoid misapplication of wage rules.

Routine payroll reviews are essential for maintaining accurate records and avoiding costly penalties.

Use Reliable HR Software for Compliance

Manually tracking wage laws and payroll changes is time-intensive and increases the risk of errors. Streamlining payroll management with purpose-built HR software simplifies compliance and ensures accurate execution.

• Automated updates: Select software that adjusts payroll systems automatically when federal or state wage changes take effect.

• Custom compliance alerts: Use systems that send notifications for upcoming deadlines, such as annual wage adjustments tied to inflation.

• Centralized record management: Store wage data, timekeeping logs, and employee classifications in a secure, searchable platform to streamline audits and reporting.

Efficient payroll technology saves time and reduces the likelihood of compliance mistakes.

Navigating South Carolina's minimum wage laws demands attention to detail and a commitment to compliance. We understand the challenges businesses face in managing payroll accurately while staying current with legislative changes. If you're looking for a reliable partner to streamline your HR processes and ensure wage compliance, book a demo with GoCo today to discover how our platform can support your success.