Can I Pay Family Members Below Minimum Wage?

Q.     My sister just called me and told me that my knuckle-headed nephew received a speeding ticket his first week after getting his driver’s license.  Evidently, it may run in the family …. Please do not mention it to my nephew’s grandparents –  after 25 years my first speeding ticket at 16 years old is still a fresh wound.  Being somewhat sympathetic to my nephew’s plight, I suggested that he come work at my business after school and on weekends to pay for his increased insurance premiums and the fine.  I would pay him a flat fee, under minimum wage of course, because punishment should still be punishment.  After he has paid off his ticket and he has shown me that he is a hard worker, I will consider hiring him.  Is there any issue with treating family as family and not as employees?

A.     Yes.  Under the California Labor Code, your nephew would be considered an employee and would need to be treated as such.  That means that you must pay him minimum wage and overtime, and provide Workers’ Compensation Insurance for any work-related injury.

Additionally, because your nephew is a minor, he will need a work permit.

If you fail to treat your nephew like an employee, your speeding ticket may not be your only run-in with the law.  In addition to civil sanctions, violating child labor laws and failing to pay minimum wage may subject you to criminal liability.  And, you don’t want to fight the law because, usually, the law wins.

This Legal Update / Bulletin is for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. The hypothetical question is posed to illustrate a point and does not contemplate all potential legal considerations This update should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

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