The Definitive Guide to Utah Minimum Wage Compliance

Utah employers must navigate a straightforward but impactful set of rules when it comes to paying workers. Minimum wage laws in Utah are clear-cut, yet they carry significant implications for payroll practices and compliance.

The state’s minimum wage mirrors federal law, but unique provisions under the Utah Minimum Wage Act shape how businesses must approach compensation. From tipped employees to minors and exemptions, the details matter for every employer managing payroll.

This guide breaks down Utah's requirements, starting with the current minimum wage rate and the foundational rules employers need to follow.

Understanding Utah's Current Minimum Wage

Utah’s minimum wage is $7.25 per hour, which aligns directly with the federal minimum set by the Fair Labor Standards Act (FLSA). This rate has remained unchanged since 2009 and applies to nearly all industries and roles across the state. Any future increases to the federal rate will automatically apply in Utah unless the state legislature enacts a higher standard.

The Utah Minimum Wage Act defines the parameters of this wage requirement, specifying who qualifies for the minimum hourly rate. For example, employees under the age of 18 may be paid a training wage of $4.25 per hour during their first 90 days of employment. Additionally, tipped employees can earn $2.13 per hour in direct wages, provided their tips bring their total earnings to at least $7.25 per hour.

All private, public, and nonprofit employers operating in Utah must pay the minimum wage unless their business qualifies for an exemption. Exemptions might apply to certain smaller operations or specific roles, but these exceptions are narrowly defined. Employers bear the responsibility of knowing whether their organization qualifies for these exemptions.

Tipped Employees and Wage Requirements

Tipped employees in Utah have specific wage rules that every employer must follow. Employers can pay a minimum cash wage of $2.13 per hour to workers who regularly receive tips. However, the total compensation for tipped employees, including hourly wages and tips, must always meet or exceed the $7.25 minimum wage.

If the tips an employee earns don't bring their total pay up to the required $7.25 per hour, the employer is obligated to make up the difference. This responsibility ensures tipped workers are not underpaid, regardless of how much they earn in gratuities during a shift.

Accurate recordkeeping is absolutely necessary to stay compliant. Employers need to document:

• Tips reported by employees: Employees should regularly report tips through payroll systems or designated forms.

• Hours worked: Employers must track exact hours to calculate total earnings and ensure compliance with minimum wage laws.

• Shortfall adjustments: Any additional wages paid by the employer to meet the $7.25 minimum must be clearly recorded.

These records not only verify compliance but also protect businesses from potential disputes or penalties. Employers who manage tipped workers should prioritize clear processes for tracking and documenting all relevant wage and tip information.

Exceptions and Special Cases

Certain employees in Utah are not covered by the standard $7.25 minimum wage, and specific rules apply depending on their age or employment type. Employers must pay close attention to these exceptions to avoid compliance issues and ensure fair treatment.

Training Wage for Employees Under 20

Workers under 20 years old may be paid $4.25 per hour during their first 90 calendar days of employment. This training wage is temporary and designed to encourage hiring and onboarding of young workers. Once the 90-day period ends, employers are required to increase their hourly pay to at least $7.25. The training wage may only be applied to new hires under 20, and reapplying the lower rate is prohibited. Employers should track the start and end dates of this period carefully to avoid underpayment.

Minimum Wage for Minors Under 18

After the initial 90 days, minors under the age of 18 must be paid a minimum of $7.25 per hour. No exceptions allow employers to continue the lower training wage for employees who are no longer within the designated timeframe. Employers should also remain aware of additional restrictions for minors, such as limits on work hours and job duties.

Employment Exemptions

Certain employment types are exempt from Utah's minimum wage requirements. These exemptions typically align with federal standards and include specific roles or employment relationships:

• Student Learners: High school or college students participating in vocational or work-study programs may be paid below the minimum wage, but only if the role meets strict federal guidelines.

• Family Business Workers: Immediate family members working for a family-owned business, such as parents, children, and spouses, may not be subject to minimum wage laws.

• Jobs Covered by Federal Statutes: Employees in roles governed by other federal statutes, such as agricultural workers or certain seasonal positions, may have different wage requirements.

Employers must confirm eligibility for any exemption before applying lower pay rates. Keeping clear and accurate documentation for each instance is important for compliance and to address any potential disputes.

Payment of Wages and Final Paychecks

Utah employers have specific obligations under the Utah Payment of Wages Act (PWA) to ensure wages are paid accurately and on time. These rules cover everything from when employees should be paid to how final paychecks are handled after separation. Understanding these requirements is key to staying compliant and maintaining trust with employees.

Payday Frequency and Final Paycheck Timelines

Employers must establish regular and predictable paydays. The PWA requires that wages be paid no later than 10 days after the end of a pay period unless a longer timeframe is agreed upon in writing. Pay periods and schedules should always be communicated clearly to employees.

When an employee leaves the company, the timing for their final paycheck depends on the reason for separation:

• For terminated employees: The final paycheck is due within 24 hours of termination.

• For employees who resign: Employers must issue the final paycheck by the next scheduled payday.

Final payments must include any earned wages, overtime, commissions, or bonuses. Employers should ensure all calculations are correct and avoid delays that could lead to legal disputes.

Legal Deductions

Only specific deductions are allowed under the PWA. Employers cannot withhold wages arbitrarily or without proper authorization. Common permitted deductions include:

• Legally mandated withholdings: Federal and state taxes, Social Security, and Medicare contributions.

• Court-ordered deductions: Garnishments or child support payments.

• Employee-approved deductions: Voluntary contributions to retirement plans, health insurance premiums, or other benefits with written consent.

Employers must always obtain written authorization for deductions related to damages, uniform costs, or shortages. Wage deductions that result in pay below the minimum wage are prohibited.

Handling Wage Disputes

Wage disputes often occur when employees believe they were underpaid or not compensated for all hours worked. The PWA provides a clear process for resolving these conflicts. Employees can file a wage claim with the Utah Antidiscrimination and Labor Division (UALD), which oversees investigations and mediations. Employers are required to respond promptly to claims and provide documentation like payroll records or timecards.

Maintaining accurate records and ensuring clear communication about pay policies can help employers avoid disputes. When disputes arise, prompt and transparent resolution is necessary to comply with state laws and protect employer-employee relationships.

Retaliation Prohibitions

Employees who report wage issues or file claims are protected against retaliation under the PWA. Retaliation includes firing, demoting, or penalizing employees for asserting their rights. Employers found engaging in retaliation can face additional penalties and liability.

Employers should document all actions taken during wage disputes to demonstrate compliance with regulations and avoid claims of retaliation. Treating employees fairly, even in contentious situations, is not just a legal requirement—it's a cornerstone of a productive workplace.

Working Hours and Minor Employment

Utah employers have clear obligations when it comes to managing work schedules for minors. State labor laws outline exactly how many hours young workers can clock in, when they must take breaks, and what documentation employers need to keep. Staying compliant is straightforward when you follow the rules closely.

Maximum Hours for Minors Under 16

Minors under 16 have stricter rules to ensure their work doesn't interfere with education or well-being. Employers must limit their shifts based on specific timeframes:

• School days: No more than 4 hours per day.

• Non-school days: Up to 8 hours per day.

• Weekly cap: A total of no more than 40 hours.

• Permitted work hours: Shifts must fall between 5:00 a.m. and 9:30 p.m. on school nights. On non-school nights, work may extend until 11:00 p.m.

Breaks are equally important. Employers must provide a 30-minute meal break within the first 5 hours of a shift and ensure minors take a 10-minute rest break for every 4 hours worked. Continuous work exceeding 3 hours without a break is not allowed.

Conditions for Minors 16 and Older

Minors aged 16 and 17 can work longer hours compared to their younger counterparts. There's no daily or weekly limit on hours, but employers should schedule shifts responsibly to avoid conflicts with school commitments. Break requirements remain in place, with a mandatory 30-minute unpaid meal break for shifts longer than 5 hours.

Night work for this group has fewer restrictions. However, employers should avoid scheduling late-night shifts that could impact school attendance or academic performance.

Recordkeeping Responsibilities

Accurate recordkeeping is non-negotiable for compliance. Employers must document start and end times for every shift, the duration and timing of meal and rest breaks, and the total hours worked each day and week.

Records should be updated daily and stored securely. These logs may be requested during inspections or investigations by the Utah Labor Commission. Failing to maintain detailed records can result in penalties, so consistency and attention to detail are key.

Overtime Pay in Utah

Overtime pay rules in Utah follow the federal Fair Labor Standards Act (FLSA). Employees qualify for overtime when they work more than 40 hours in a single workweek. Employers are responsible for applying the correct standards to ensure compliance and fair compensation.

Calculating Overtime Pay

Overtime wages must be paid at one-and-a-half times the employee's regular hourly rate. For hourly workers, this is straightforward—multiply their hourly rate by 1.5 for each hour worked over 40.

For salaried employees, the regular hourly rate is determined by dividing their weekly earnings by the total hours worked. This calculation must include non-discretionary bonuses, commissions, and other payments tied to performance or production.

For example:

• An employee earning $18 per hour is entitled to $27 per hour for overtime.

• A salaried worker earning $1,000 per week and working 50 hours has a regular hourly rate of $20 ($1,000 ÷ 50). Overtime pay would be $30 per hour for hours over 40.

Employers must ensure wages are calculated accurately and documented to avoid disputes or penalties.

Exempt vs. Nonexempt Employees

Utah employers must distinguish between exempt and nonexempt employees to determine eligibility for overtime pay. Nonexempt employees are entitled to overtime, while exempt employees are not.

To classify an employee as exempt, employers must meet three criteria:

• Salary Basis: The employee must receive a fixed salary not reduced based on work quality or hours worked.

• Salary Level: The salary must meet the federal threshold of $684 per week as of January 2025.

• Job Duties: The employee must perform executive, administrative, or professional duties that meet federal definitions.

Misclassifying an employee as exempt can result in legal and financial consequences. Employers should carefully review job descriptions, actual duties, and pay structures to ensure compliance.

Detailed records of hours worked, pay rates, and overtime calculations are necessary for audits, wage claims, or disputes. Accurate documentation helps protect the employer and provides transparency for employees.

Recordkeeping and Posting Obligations

Employers in Utah are required to follow specific rules about recordkeeping and workplace postings to comply with labor laws. These requirements ensure transparency and help protect both businesses and employees. Staying organized and proactive with these obligations can prevent costly disputes and penalties.

Labor Law Posters

Federal and Utah labor law posters must be displayed where employees can easily see them. Common locations include break rooms, near time clocks, or other areas where employees regularly gather. Posters should include information about minimum wage laws, overtime, and employee rights.

For remote or hybrid teams, employers need to provide digital access. This can mean sharing PDFs of required notices through an employee portal or email. Employers should update posters regularly, especially after changes to state or federal laws. Outdated posters can lead to compliance issues.

Time-Tracking, Tip Reporting, and Payroll Records

Accurate time-tracking is non-negotiable for employers. Document all hours worked, including regular shifts, overtime, and breaks. For nonexempt employees, tracking overtime hours is especially important to ensure proper payment. Using electronic time-tracking systems can help reduce errors and ensure consistency.

For tipped employees, employers must maintain detailed records of tips. This includes:

• Tips reported by employees: Workers should provide daily or shift-end tip reports.

• Tip credits applied: Employers need to document any tip credits used to meet the minimum wage requirement.

• Shortfall adjustments: Record any instances where the employer compensates for tips that don't meet the required minimum wage.

Payroll records are equally important and should include:

• Employee names, addresses, and job titles.

• Pay rates, hours worked, and total gross wages for each pay period.

• Deductions such as taxes, garnishments, and authorized withholdings.

• Net wages paid and the dates wages were issued.

Employers must retain these records for at least three years under federal law, though some state-specific rules may require longer storage periods.

Why Proper Recordkeeping Matters

Detailed records protect employers from wage disputes, audits, and legal risks. They provide clear evidence of compliance and streamline responses to employee inquiries or investigations. Good recordkeeping practices also save time by reducing confusion and errors.

Using reliable methods for tracking hours, tips, and payroll can simplify compliance. Electronic systems are often a good option because they ensure accuracy and make records easy to retrieve when needed. Organizing and securely storing records is key to staying prepared for any compliance checks or disputes.

Navigating Utah's minimum wage laws is essential for maintaining compliance and fostering a fair, productive workplace. By staying informed and using the right tools, you can simplify payroll processes and focus on growing your business. If you're ready to streamline your HR tasks and ensure compliance, book a demo with GoCo today and discover how our platform can support your success.