Hiring your Dependent Children in your Business

GENERAL FEDERAL CHILD LABOR RULES

Under the Fair Labor Standards Act (FLSA), there are essentially four different tiers for labor standards covering non-farm employment for children. They break down as follows:

• Children under the age of 14,
• Children 14 and 15,
• Children 16 and 17, and
• Children 18 and older

The first tier of labor standards for children covers those who are under the age of 14. In general, such children are not allowed to perform any non-farm work for any number of hours. Children delivering newspapers, babysitting on a casual basis, working as an actor or model, or employed as a homeworker making evergreen – and only evergreen – wreaths (someone in Congress must have had a serious “axe to grind” against deciduous trees, huh?) are exempt from these rules, however, and may generally work at any age (at least from a Federal labor law perspective).

The second tier of child labor laws covers children who are 14 and 15 years old. Such children may be employed, but have a substantial amount of restrictions placed upon that employment, including the numbers of hours they can work per day and per week (which varies depending upon whether school is in session), when those hours can be worked (which varies depending upon the time of year), and what sorts of jobs they can have.

By the time children are 16, they can generally work as many hours as they wish and at whatever time(s) they like.  In general, the only restrictions to which they are subject are those that prevent them from working jobs that have been deemed “hazardous” by the Department of Labor, such as jobs that involve “exposure to radioactive substances and ionizing radiation”, “coal mining”  or “working in wrecking , demolition, and ship-breaking operations”.

And finally, once a child reaches the age of 18, there are no longer any restrictions on their employment. They are considered full adults in the eyes of the law, and may work whatever hours they want (subject to “normal” labor restrictions), whenever they want, and doing whatever they want.

EXEMPTION TO FLSA CHILD LABOR LAWS FOR THE EMPLOYMENT OF A CHILD IN A PARENT-OWNED BUSINESS
Now if all of that sounds utterly complicated, but you’ve been considering hiring one or more of your own young children to work with you in your business, here’s the good news… unless you own a hazardous business, it likely doesn’t matter!

In addition to more narrow exemptions to the general rules, such as those that allow certain student-learners to engage in certain otherwise-prohibited work, there is a broad exemption to the child labors laws for young children employed in businesses owned solely owned by their parents. Such children may, at any age, typically work an unrestricted number of hours, at any time of day or night, so long as the parent-owned business is not involved in mining, manufacturing, or one of the aforementioned occupations designated as hazardous by the Department of Labor.

Notably (and despite a substantial number of generally credible, well-respected websites saying otherwise), this exemption is available regardless of the entity structure of the parents’ business, so long as the business is wholly owned by the parents. In fact, as stated in Section e00(a)(2) of Chapter 33: Child Labor, of the Department of Labor’s Wage and Hour Division’s Field handbook:

The exemption applies only when the parent is the sole employer of the minor. If the parent is a partner in a partnership or an officer of a corporation, the parental exemption does not apply unless the parents are the only members of the partnership or the sole owners of the corporation.

Mike McVay, Tax Accountant 
850-725-5696
Mike@MikeMcVay.com