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The compensation package that you offer your employees is important not only because it costs you money, but because, let's face it, it's the primary reason employees work for you. Compensation packages with good pay and benefits can help you attract and retain the best employees.
Regarding the payment of wages or salary to employees, there are a couple of areas that you need to concern yourself with:
- Deciding what to pay employees: Pay programs, just like employment itself, have a life cycle. From the moment you bring an employee on until the moment that employee terminates employment with you, you'll run into issues that need your attention, like finding out how much other employers are paying, how to negotiate the salary for a new hire, or deciding what kind of raise a current employee should get.
- Complying with wage and hour law: Almost every employer has to comply with certain laws concerning minimum wage, overtime pay, equal pay for equal work, child labor, recordkeeping, and posting. The laws can be tricky, involved, and further compounded by state wage and hour laws. It's crucial for you, as an employer, to understand these laws and how they apply to you.
- Doing payroll: In addition to the "life cycle" issues of a pay program, you'll face the recurring job of doing payroll and the tasks it entails, including: setting up a payroll system, calculating the hours an employee works, calculating the employee's regular pay rate, making deductions from the employee's pay, and getting the money into the employee's hands.