Can I Hire Children as Employees?
Taxes and Laws You Need to Know About
Question: Can I Hire Children as Employees? What Laws and Taxes Do I Need to Know About?
If you are considering hiring children in your business, there are some laws and tax issues you need to know about. This article also addresses legal and tax issues in hiring your own children to work in your business.
Child Labor Laws Apply to Children of Owners
The U.S. Department of Labor has a number of laws relating to businesses having children as employees.
The primary law is the Fair Labor Standards Act (FLSA), which includes a number of hour and pay regulations. These laws are designed to protect the children from overly harsh work conditions (no more "sweat shops").
Age certification and Work Permits
Before hiring a young worker, determine the child's age. Ask for an ID (driver's license, birth certificate, or other). Don't rely on the child to give you the correct age. You will need to know the exact age of the child to know what restrictions are applicable. Federal laws do not require work permits for young workers, but check with your state to see if it requires such permits.
Employment Restrictions for Children
The FLSA sets 14 years of age as the minimum age for employment, and limits the number of hours worked by minors under the age of 16.
The FLSA also prohibits minors from working in hazardous jobs, such as driving and operating power equipment and it includes requirements that apply to specific types of jobs, like agricultural work or jobs requiring the operation of motor vehicles.
Some exceptions may apply, including children working for parents (see below).
Other Age Restrictions
- Minors age 16 and 17 may perform any job not declared a hazardous job or occupation, and are not subject to restrictions on hours
- Minors age 14 and 15 may work outside school hours in various non-manufacturing, non-mining, nonhazardous jobs. This work has restrictions on days and hours: No more than three hours on a school day, 18 hours in a school week, eight hours on a non-school day, or 40 hours in a non-school week.
- In addition, minors under age 16 may not begin work before 7 a.m. or work after 7 p.m., except from June 1 through Labor Day, when evening hours are extended until 9 p.m.
- Minors age 14 and 15 may work only in a limited number of occupations: retail, food service, and gasoline service establishments specifically listed in the regulations.
State Child Labor Laws
U.S. states also have child labor laws in place, some of which may be more restrictive than federal laws. When state laws and federal laws differ, the most restrictive (most protective) law applies. Find out more about your state's child labor laws by going to your state employment office website.
Status of Child Workers
Before you hire any children as employees (including your own children), clearly define the status of these workers. Making them part-time or classifying them as "summer workers" can avoid misunderstandings about benefits and pay. Include information about the status of minor workers in your employee handbook or policies/procedures manual.
New Hire Forms for Children
In general, new hire paperwork for children hired as employees in your business must be the same as for all other hires. Especially, newly hired minors must complete Form W-4 before they receive their first paycheck, to indicate federal income tax withholding, and you must withhold federal income tax from paychecks of minors, unless the individual claims exemption from withholding.
Read more about new hire forms all employees must complete.
Pay and Benefits for Children
- You must pay minor workers the same minimum wage as other employees; however, a special minimum wage (currently 4.25) may be paid to employees under the age of 20 during their first 90 days of employment. Be sure you inform new workers of the hourly wage you will be paying them.
- You must withhold FICA taxes (Social Security/Medicare) from minors and pay your employer share of these taxes, the same as for other employees.
- You must pay overtime after 40 hours of work in a week, with the same regulations as for other employees.
- If the minor employee qualifies for any benefits, you must provide and pay for these benefits in the same manner as other employees.
- FLSA regulations do not require you to pay for vacations or holidays for summer help, but some states might.
In general, it's a good practice to provide minor workers and summer employees the same benefits as other employees.
Hiring Your Children as Employees
If you hire your children to work in your business, some of the FLSA regulations don't apply. These exemptions do not apply if your business is a corporation. The work your children are doing must be both necessary and essential to your business.
- Minimum age rates do not apply, but you should pay your children a reasonable wage.
- Minimum age restrictions do not apply, except in mining, manufacturing, and other occupations where children under 18 are not permitted to work.
- Your children do not have to pay federal income taxes, if they are below the minimum amount of compensation.
Disclaimer: The information in this article and on this site is intended to be general, and is not intended to be tax or legal advice. Every business situation is unique, and state and federal laws are constantly changing. Be sure to consult your tax and legal advisors before making any business decisions.