3
   

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

 
 
Reply Mon 30 Mar, 2009 02:06 am
The title really says it all, I am curious how about what legal distinctions make the $1 salary different from a violation of minimum wage.

See, it got me thinking. I know of dozens of CEOs and executives working for $1 (Google folks, Steve Jobs etc etc) and wonder what is preventing a sweat shop from doing the same things to circumvent minimum wage.
  • Topic Stats
  • Top Replies
  • Link to this Topic
Type: Question • Score: 3 • Views: 4,329 • Replies: 9
No top replies

 
View best answer, chosen by Robert Gentel
msolga
 
  1  
Reply Mon 30 Mar, 2009 02:28 am
@Robert Gentel,
Quote:
See, it got me thinking. I know of dozens of CEOs and executives working for $1 (Google folks, Steve Jobs etc etc) and wonder what is preventing a sweat shop from doing the same things to circumvent minimum wage.


Pardon my ignorance, Robert, but this is the first I've heard of $1 salaries. Could you supply a little more information, please?
Robert Gentel
 
  1  
Reply Mon 30 Mar, 2009 02:35 am
@msolga,
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.
msolga
 
  1  
Reply Mon 30 Mar, 2009 02:44 am
@Robert Gentel,
Thanks for explaining , Robert. I hadn't read your other thread.


0 Replies
 
msolga
 
  1  
Reply Mon 30 Mar, 2009 03:05 am
@Robert Gentel,
Quote:
what is preventing a sweat shop from doing the same things to circumvent minimum wage.


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.
jespah
 
  1  
Reply Mon 30 Mar, 2009 04:08 am
@msolga,
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).
ebrown p
 
  2  
Reply Mon 30 Mar, 2009 04:52 am
@Robert Gentel,
Quote:


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

0 Replies
 
dlowan
 
  1  
Reply Mon 30 Mar, 2009 06:16 am
@jespah,
After reading that letter, I kind of wondered how voluntary it was in AIG's case, though?
0 Replies
 
parados
  Selected Answer
 
  2  
Reply Mon 30 Mar, 2009 07:22 am
@Robert Gentel,
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.
Robert Gentel
 
  1  
Reply Tue 31 Mar, 2009 09:26 am
@parados,
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.
0 Replies
 
 

Related Topics

 
  1. Forums
  2. » How does the law reconcile minimum wage and $1 salaries?
Copyright © 2020 MadLab, LLC :: Terms of Service :: Privacy Policy :: Page generated in 0.04 seconds on 11/25/2020 at 09:31:26