How does the law reconcile minimum wage and $1 salaries?

Pardon my ignorance, Robert, but this is the first I've heard of $1 salaries. Could you supply a little more information, please?

Well the thing that triggered this question was from the news about the AIG bonus scandal, where these employees agreed to $1 salaries and compensation in the form of a bonus at the end of a year. AIG structured the compensation this way in order to retain their services for a full year and it's common for executives to be paid $1 in salary with their real compensation coming elsewhere (e.g. stock options). For example, the CEO and founder of Apple, Steve Jobs, gets a $1 salary and I believe this ($1 as opposed to nothing) is for some kind of legal reason for them to qualify as an employee.

So my question is, if these guys can agree to be paid $1 for the year, and if they get their bonuses taken away, what is the legal distinction that makes this not a violation of minimum wage. I'm sure it's something simple, like ownership of stock, or requirements on other forms of compensation, but I became curious as to what is preventing circumvention of minimum wage through similar means.

Thanks for explaining , Robert. I hadn't read your other thread.

Good question. I'd guess that there's the possibility that this could happen.
It'll be interesting to hear from those with the knowledge of the legal issues that would apply in such a situation.

Those $1 salaries are probably voluntary and there is probably other consideration that the execs are getting, whether it's stock options or just recognition/good will which is something with value. Sweat shop workers don't work voluntarily for less than minimum wage (they are coerced) and they don't get any additional consideration (consideration is a legal term; it has to do with compensation and has nothing to do with people being considerate in ordinary parlance).

http://www.dol.gov/compliance/guide/minwage.htm

After reading that letter, I kind of wondered how voluntary it was in AIG's case, though?

This would be what prevents sweat shops from doing that..

http://www.lni.wa.gov/WorkplaceRights/Wages/PayReq/CommBonus/default.asp

Piece workers can be payed commission only but that commission must work out to more than minimum wage.

I guess I see no evidence of any CEO on a $1 salary getting ZERO for a bonus. If they did, it might be a violation of the minimum wage law but even stock options are considered income.

That the compensation has to add up to minimum wage makes sense. Thanks.

It also answered a question I had about commissions. I used to work for well under minimum wage for Kirby in Texas and for a used car dealer and wondered whether it was illegal. Apparently Kirby wasn't but the dealership was.

As to evidence for CEOs not adding up to minimum wage, I've seen that as well, but in very small companies where the founders aren't making a profit. I am sure there are other differentiating criteria to make it legal, such as not being employees or somesuch but that's a whole new question.