Special laws apply to teens at work
By Cora BarnhartBankrate.com

Once a teen and an employer find each other, the hard part is over, right? Maybe not. Laws for hiring teenagers are different, and breaking them can run a business owner afoul of labor laws or the IRS.

For starters, if a business owner employs a teen outside his immediate family, certain child labor provisions stated in the Fair Labor Standards Act (FLSA) go into effect.

First of all, teens hired for nonagricultural employment must be at least age 14. If they are younger, their jobs must be exempt from child labor standards or not covered by the FLSA. Employers will also need to obtain an age certificate recognized by their state's Wage and Hour division.

These provisions also restrict younger teens' working hours during the school year and the summer. A 14- or 15-year-old may work up to eight hours on a non-school day and 40 hours on a non-school week. During the school year, hours are restricted to three per day and 18 per week. Work must be performed between 7 a.m. and 7 p.m. Hours are extended to 9 p.m. from June 1 through Labor Day.

At 16, restrictions lessen
For 16- and 17-year-olds, there are no restrictions on the number of hours worked, but there are restrictions on the types of jobs that may be performed.

No one under 18 may work in one of 17 job types declared hazardous by the Secretary of Labor. They jobs include regularly driving a vehicle, exposure to radioactive substances, or working in the area of grocery store slicers or ceramic tile cutters.

States may also have their own, more stringent regulations restricting the jobs that teens can work. Check with the local office of your state labor department.

Show me the money
The FLSA also requires that employees receive the adult minimum wage of $5.15, but special rules apply to youths younger than 20 during their first 90 days of employment. A minimum wage of $4.25 may be paid to teens for their first 90 consecutive calendar days of employment. Once 90 consecutive days of employment are completed, the worker must receive the minimum wage. Also, their work can't displace other workers.

Parents who own an entire business as a sole proprietor, partner or stockholder face fewer FLSA restrictions when they hire their own children. However, while they don't have to worry about rules applying to age, hours of work or time of day for their employed children, they do need to abide by these for the rest of their staff. In addition, employers who also hire teens from outside the immediate family then must pay their own working children at least the minimum wage.

Tax time
Health, retirement and other benefits available to full-time employees don't have to be offered to part-time workers. However, if a business decides to exclude these employees, the American Institute of Professional Bookkeepers recommends that the business state this in a written document. Federal law also doesn't require holiday pay for part-timers, but check your state's requirements regarding lunch periods and other breaks.

While wages for teens are exempt from Federal Unemployment Tax, they are subject to federal income and Federal Insurance Contributions Act (FICA) taxes. The only exception to paying FICA, more commonly known as Social Security, applies to parents who are sole owners or sole partners of a business when they employ immediate family members younger than age 18.

One of the first things a business owner should do when hiring a teen is to the teen complete Form W-4, Employee's Withholding Allowance Certificate. Withhold federal income tax from all your employees, even summer help. Send the IRS a copy of any W-4 that claims the employee is exempt.

Claiming the correct number of allowances ensures the amount withheld comes as close to taxes owed as possible. For many teens, this will be just one allowance, but they can claim zero allowances if they want more tax withheld. There are cases where this is especially appropriate, such as with teens who earn additional income from a second job or an investment. Claiming zero allowances will prevent too little tax from being withheld.

Parents may wonder whether their teen should file a return. If a parent provides at least half of the teen's support, making the teen a "dependent," the teen probably should file a return. Dependent teens must file a return if their income was more than $4,250 in 1998.

The IRS also includes investment income, such as interest on a teen's savings account and dividends, when determining a teen's annual income.

teenage workers are allowed to subtract certain amounts from their income before figuring the tax due on it. These include the personal exemption and the standard deduction, but a teen who can be claimed as a dependent isn't entitled to a personal exemption. The standard deduction will be his earned income plus $250, but can't exceed $4,250.

For more information about taxes during the teen years, consult IRS Publication 4: the Student's Guide to Income Tax, which is available online from the IRS.

-- Posted: June 18, 1999