South Carolina follows at-will employment and right-to-work laws, and while it defaults to federal regulations for minimum wages, overtime pay, and tipped employees, there is a growing push to increase the South Carolina minimum wage beyond the federal level. This movement is fueled by concerns that the current federal minimum wage, which has not increased since 2009, is insufficient to meet the rising cost of living in many parts of the state.
So, what is the South Carolina minimum wage, and can we expect to see an increase any time soon? What other wage laws do South Carolina employers need to take into account when they pay their workers?
In today’s post, we will explore everything you need to know about the South Carolina minimum wage to help you maintain compliance and support fair labor practices within your organization
Minimum Wage in the U.S.
The minimum wage in the United States is an important part of the economy, setting the lowest amount that workers can be paid for their work. It helps ensure that employees earn a basic level of income. However, the minimum wage is not the same everywhere; it varies depending on federal, state, and local laws.
Let’s take a look at how the minimum wage works at these different levels, starting with the nationwide federal rate, then looking at the rules in different states, and finally exploring how some cities and towns set their own minimum wages to meet local needs.
Federal Minimum Wage
As the baseline, the federal minimum wage is the lowest hourly rate employers in the U.S. can legally pay their employees. It is set by the Fair Labor Standards Act (FLSA) and was last raised in 2009 to $7.25 per hour. This rate, which ensures that employers comply with a basic level of compensation regardless of their location or industry, is significantly lower than the median hourly wage of all workers in the United States ($35.00 per hour).
State Minimum Wages
Recognizing regional variations in local economies and the cost of living, there are now many state minimum wage laws that set the threshold higher than the federal rate. These state-level mandates ensure that workers in higher-cost areas receive a wage that reflects their cost of living. For example, the minimum wage is $12.00 per hour in New Mexico, $15.00 per hour in Maryland, and $16.28 per hour in Washington State (the highest rate in the country).
Municipal Minimum Wages
To further address regional economic environments, some cities and counties have implemented local minimum wage mandates that are higher than both federal and state rates. This approach ensures that workers in urban centers (where the cost of living is often higher) receive a wage that reflects their specific environment.
Finally, in addition to regional differences, the minimum wage can also vary based on industry. For example, the minimum wage for tipped employees in the service industry is typically lower than the minimum wage for non-tipped workers. This is because many states expect tipped employees to receive a significant portion of their income from tips.
Federal Minimum Wage: Timeline
Before we explore the South Carolina minimum wage, let’s take a look at a timeline of the federal minimum wage to help us understand its evolution and impact on the state’s wage laws.
Key milestones in the history of the federal minimum wage:
- 1938. The FLSA establishes the first federal minimum wage of $0.25 per hour. This provides workers with a baseline income and lays the groundwork for future labor standards.
- 1950. The federal minimum wage increases to $0.75 per hour, expanding coverage to air transport industry workers. This increase is a reflection of post-war economic growth and an improvement in living standards.
- 1966. The federal minimum wage increases to $1.40 per hour. This increase ensures wages keep up with productivity and the cost of living, reducing poverty significantly. Coverage is extended to public schools, nursing homes, laundries, and the construction industry
- 1981. The federal minimum increases to $3.35 per hour and remains unchanged for almost a decade. This wage stagnation leads to an increase in income inequality.
- 1989. Changes to the law require businesses that make $500,000 or more per year to follow minimum wage rules, and the federal minimum wage is increased to $3.80 per hour.
- 1997. The federal minimum wage increases to $5.15 per hour during the Clinton administration. This raise is part of a series of increases aimed at boosting the income of low-wage workers. However, even though it provides a significant boost in nominal wages, it still lags behind inflation and cost of living increases.
- 2007-2009. The federal minimum wage increases in three stages to $7.25 per hour, where it has remained until now despite rising living costs. This is the longest period in U.S. history without an increase. There are currently no plans to increase the federal minimum wage.
What Is the Current South Carolina Minimum Wage?
The South Carolina minimum wage is currently $7.25 per hour, in line with the federal minimum wage. Twenty states use the federal minimum wage of $7.25 including Alabama, Georgia, Indiana, Kentucky, Louisiana, North Carolina, Pennsylvania, Tennessee, Texas, Wisconsin, Oklahoma, and Utah. 30 states have state minimum wages that are above the federal minimum wage, including California, Florida, and Massachusetts.
The South Carolina minimum wage applies to most workers in the state unless they are exempt under specific federal or state laws.
Specifically, South Carolina employers must offer the following minimum hourly wage:
- $7.25 per hour. This is the federal minimum wage, and it applies to most workers in South Carolina. This rate has been in effect since July 24, 2009.
- $2.13 per hour. This rate typically applies to workers who earn tips, such as servers. Under federal law, employers can pay tipped employees a lower cash wage as long as the sum of the cash wage and tips received is at least equal to the federal minimum wage of $7.25 per hour. If the combined amount of the tips and the $2.13 cash wage does not equal at least $7.25 per hour, the employer must make up the difference.
Finally, there are no municipal minimum wage ordinances in South Carolina.
Are Any Workers Exempt from the South Carolina Minimum Wage?
Since South Carolina does not have a state-specific minimum wage and follows the federal minimum wage of $7.25 per hour, the exemptions to the South Carolina minimum wage are essentially the same as those outlined under federal law.
Here’s an overview of these exemptions:
- Tipped employees. Firstly, you can pay tipped employees a reduced rate of $2.13 per hour if their tips bring their total earnings to at least $7.25 per hour. If they don’t, then you must cover the tip deficit.
- Student workers. Secondly, you can pay full-time college or high school students 85% of the South Carolina minimum wage, provided those students are enrolled in a work-study program or work 20 hours (or less) per week.
- Young workers. In addition, you can pay employees under 20 a reduced rate of $4.25 per hour during the first 90 days of employment. After 90 days, you must pay them the full South Carolina minimum wage.
- Employees with disabilities. You can pay employees with a disability a lower rate provided you obtain a certificate from the U.S. Department of Labor. This special permission allows employers to pay wages based on the productivity of the worker, which might be less than the South Carolina minimum wage.
- Agricultural workers. Agricultural workers are exempt from the South Carolina minimum wage provisions if they are employed by smaller farms that are not subject to the FLSA.
- Casual babysitters and companions for the elderly. Finally, individuals employed as casual babysitters or companions to the elderly or infirm are exempt from South Carolina minimum wage requirements.
Will the South Carolina Minimum Wage Go Up?
As of 2024, there is growing momentum to raise the minimum wage in the state, but whether it will actually increase remains uncertain. Several legislative proposals have been introduced in the South Carolina General Assembly aimed at raising the South Carolina minimum wage above the federal level of $7.25 per hour. For instance, the South Carolina Minimum Wage Act proposes setting a state minimum wage at two dollars above the federal rate, with future increases tied to inflation.
In addition to legislative efforts, a statewide advisory referendum is scheduled to take place during the 2024 General Election. This referendum will allow voters to express their opinion on whether the state’s minimum wage should be raised to $15 per hour. While the referendum itself will not directly change the law, it could influence future legislative actions if there is significant public support for an increase.
Moreover, labor organizations, such as the South Carolina AFL-CIO, continue to advocate strongly for an increase, arguing that the current wage is insufficient for workers to meet their basic needs, particularly in higher-cost areas like Charleston, Columbia, and Greenville. Despite this advocacy, past efforts to raise the minimum wage have faced significant challenges, often stalling in legislative committees.
Ultimately, while there is active discussion and some legislative movement towards increasing the South Carolina minimum wage, it is unclear if or when these efforts will result in a concrete change. The outcome of the 2024 advisory referendum and the actions of the state legislature following it will be key indicators of the future direction of minimum wage laws in South Carolina.
Additional South Carolina Wage Laws
Aside from the South Carolina minimum wage, the state has a number of additional wage laws that employers need to understand as these can have an impact on an employee’s wages.
Let’s explore these additional South Carolina wage laws in a bit more detail so you can make sure your employee handbook meets all requirements
Right-to-Work Law
South Carolina is a right-to-work state. This means that employees cannot be required to join a union or pay union dues as a condition of employment. In addition, South Carolina’s Right-to-Work Law also prevents employers and unions from entering into agreements that would require union membership as a condition of employment.
Essentially, even if a majority of workers vote to unionize, individual workers cannot be forced to join the union or pay fees related to collective bargaining and other union activities.
At-Will Employment
Like most other states in the U.S., South Carolina follows the at-will employment doctrine. This means that either the employer or employee can end the employment relationship at any time and for any reason (or no reason at all), as long as it’s not illegal (for example, discrimination based on race or gender, or retaliation for whistleblowing).
There are a few exceptions to at-will employment in South Carolina. This includes employees with fixed-term employment contracts and those that are covered by a collective bargaining agreement.
Overtime Laws
South Carolina follows federal overtime pay laws under the Fair Labor Standards Act (FLSA). This means that you must offer eligible employees overtime pay if they work beyond their contracted hours.
To determine if an employee is eligible or exempt, you first need to determine what their FLSA status is.
Consider the following:
- Salary level. Are you paying the employee more than $43,888 per year?
- Salary basis. Do you offer them a guaranteed minimum compensation amount, regardless of the hours they work?
- Duties. Have you contracted them to perform an exempt job duty? (Professional duties that require specialized education; executive duties such as supervising a team; or administrative duties that require the use of discretion and judgment)
If an employee meets the above criteria, then they are considered exempt from the FLSA and you have no obligation to pay them overtime. However, if your employees are non-exempt (they do not meet any of the above criteria) then you must follow the FLSA’s overtime rules. Essentially this means that you must offer them overtime pay for any hours worked over 40 in a workweek at a rate not less than time and a half.
Reporting and Recordkeeping
Employers must comply with federal laws when it comes to employment reporting and recordkeeping. These laws are designed to ensure that accurate records of employee information and employment activities are maintained and filed for compliance, transparency, and legal purposes.
Specifically, South Carolina employers must maintain a record of the following information for at least 3 years:
- Employee personal information. Including name, address, Social Security number, and birth date for employees under 19. This is a requirement of the Fair Labor Standards Act (FLSA).
- Wage and hour records. Accurate records of hours worked daily and weekly, wage rates, total earnings, and payment dates. These records are crucial for compliance with the FLSA, which governs minimum wage, overtime pay, and other labor standards.
- Payroll records. Detailed payroll records, including information about deductions and any written agreements authorizing employee deductions. In addition, under the FLSA, employers must provide employees with a pay statement each period that includes hours worked, pay rates, total earnings, and deductions.
- Records of leave, Detailed records of leave, including paid time off (PTO), sick leave, and vacation, in line with the requirements of the Family and Medical Leave Act (FMLA). South Carolina does not have any additional state-specific leave recordkeeping requirements.
- Tax records. Employers must maintain records of tax withholdings, W-2 and W-4 forms, and other relevant tax documentation, in compliance with IRS regulations.
Prevailing Wage Laws
South Carolina does not have state prevailing wage laws. This means that for public works or government contracts, the state does not require contractors to pay their workers a specific wage rate that is higher than the federal minimum wage unless federal prevailing wage laws apply (such as the Davis-Bacon Act for federal projects).
Best Practices for Wage Law Compliance
And that’s pretty much everything you need to know about the South Carolina minimum wage and the state’s additional wage laws. All that’s left now is to make sure that your business meets the legal requirements of these laws.
With this in mind, we’ve put together a handy list of essential tips and best practices to help you protect your business from potential non-compliance fines and penalties:
- Monitor working hours. Track and calculate employee working hours and make sure you pay non-exempt employees overtime if they work beyond 40 hours in a week. Factorial’s time tracking feature enables real-time monitoring of working hours, including overtime. This allows you to maintain and generate accurate records and reports, ensuring compliance with overtime and time-tracking requirements.
- Maintain detailed records. Keep comprehensive records of all hours worked, wages paid, and deductions for at least three years. Factorial’s HRIS automates recordkeeping, storing all data in a centralized digital format for easy access and compliance with record retention laws.
- Implement an effective payroll system. Finally, ensure compliance with the South Carolina minimum wage by implementing an effective, real-time payroll system. Factorial’s payroll software automatically updates wage rates, ensuring compliance and reducing underpayment risks. What’s more, the feature integrates seamlessly with our time-tracking and scheduling software, making it easy to monitor employee hours, manage overtime, and schedule breaks. This comprehensive approach helps you maintain accurate records and adhere to all South Carolina minimum wage requirements, protecting your business from legal issues and ensuring fair treatment of your employees.
