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Federal Wage Law: The Fair Labor Standards Act

The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and child labor standards affecting full-time and part-time workers in the private sector and in Federal, State, and local governments. The Wage and Hour Division of the Department of Labor (DOL) administers and enforces FLSA. Special rules apply to State and local government employment involving fire protection and law enforcement activities, volunteer services, and compensatory time off instead of cash overtime pay.

Basic Wage Standards

Covered nonexempt workers are entitled to a minimum wage of not less than $7.25 an hour (as of April 2017). Overtime pay at a rate of not less than one and one-half times their regular rates of pay is required after 40 hours of work in a workweek.

Wages required by FLSA are due on the regular payday for the pay period covered. Deductions made from wages for such items as cash or merchandise shortages, employer-required uniforms, and tools of the trade, are not legal to the extent that they reduce the wages of employees below the minimum rate required by FLSA or reduce the amount of overtime pay due under FLSA.

While FLSA does set basic minimum wage and overtime pay standards and regulates the employment of minors, there are a number of employment practices which FLSA does not regulate, such as:

  • Vacation, holiday, severance, or sick pay;
  • Meal or rest periods, holidays off, or vacations;
  • Premium pay for weekend or holiday work;
  • Pay raises or fringe benefits; and
  • A discharge notice, reason for discharge, or immediate payment of final wages to terminated employees.

Keep in mind that some states do have laws under which such claims (sometimes including fringe benefits) may be filed. Also, FLSA does not limit the number of hours in a day or days in a week an employee may be required or scheduled to work, including overtime hours, if the employee is at least 16 years old.

FLSA: Who is Covered?

A covered enterprise is the related activities performed through unified operation or common control by any person or persons for a common business purpose, and:

  • Whose annual gross volume of sales made or business done is not less than $500,000 (exclusive of excise taxes at the retail level that are separately stated); or
  • Is engaged in the operation of a hospital, an institution primarily engaged in the care of the sick, the aged, or the mentally ill who reside on the premises; a school for mentally or physically disabled or gifted children; a preschool, an elementary or secondary school, or an institution of higher education; or
  • Is an activity of a public agency.

Employees of firms which are not covered enterprises under FLSA still may be subject to its minimum wage, overtime, and child labor provisions if they are individually engaged in interstate commerce or in the production of goods for interstate commerce, or in any closely-related process or occupation directly essential to such production.  

Domestic service workers such as day workers, housekeepers, chauffeurs, cooks, or full-time babysitters are covered if:

  • Their cash wages from one employer are at least $1,000 in a calendar year (or the amount designated pursuant to an adjustment provision in the Internal Revenue Code), or
  • They work a total of more than 8 hours a week for one or more employers.

Tipped Employees

Tipped employees are those who customarily and regularly receive more than $30 a month in tips. The employer may consider tips as part of wages, but the employer must pay at least $2.13 an hour in direct wages.

The employer who elects to use the tip credit provision must inform the employee in advance and must be able to show that the employee receives at least the minimum wage when direct wages and the tip credit allowance are combined. If an employee's tips combined with the employer's direct wages of at least $2.13 an hour do not equal the minimum hourly wage, the employer must make up the difference.  

Employer-Furnished Facilities

The reasonable cost or fair value of board, lodging, or other facilities customarily furnished by the employer for the employee's benefit may be considered part of wages.

Industrial Homework

The performance of certain types of work in an employee's home is prohibited under the law unless the employer has obtained prior certification from the Department of Labor. Restrictions apply in the manufacture of knitted outerwear, gloves and mittens, buttons and buckles, handkerchiefs, embroideries, and jewelry (where safety and health hazards are not involved). The manufacture of women's apparel (and jewelry under hazardous conditions) is generally prohibited.  

Subminimum Wage Provisions

The FLSA provides for the employment of certain individuals at wage rates below the statutory minimum. These include student-learners (vocational education students), as well as full-time students in retail or service establishments, agriculture, or institutions of higher education. Also included are individuals whose earning or productive capacity is impaired by a physical or mental disability, including those related to age or injury, for the work to be performed.  

Exemptions

Some employees are exempt from the overtime pay provisions or both the minimum wage and overtime pay provisions. Because exemptions are generally narrowly defined under FLSA, an employer should carefully check the exact terms and conditions for each.

Following are examples of exemptions which are illustrative, but not all-inclusive. These examples do not define the conditions for each exemption.

Exemptions from Both Minimum Wage and Overtime Pay

  • Executive, administrative, and professional employees (including teachers and academic administrative personnel in elementary and secondary schools), outside sales employees, and employees in certain computer-related occupations;
  • Employees of certain seasonal amusement or recreational establishments, employees of certain small newspapers, seamen employed on foreign vessels, employees engaged in fishing operations, and employees engaged in newspaper delivery;
  • Farm workers employed by anyone who used no more than 500 "man-days" of farm labor in any calendar quarter of the preceding calendar year;
  • Casual babysitters and persons employed as companions to the elderly or infirm.

Exemptions from Overtime Pay Only

  • Certain commissioned employees of retail or service establishments; auto, truck, trailer, farm implement, boat, or aircraft salesworkers, or parts-clerks and mechanics servicing autos, trucks, or farm implements, who are employed by nonmanufacturing establishments primarily engaged in selling these items to ultimate purchasers;
  • Employees of railroads and air carriers, taxi drivers, certain employees of motor carriers, seamen on American vessels, and local delivery employees paid on approved trip rate plans;
  • Announcers, news editors, and chief engineers of certain nonmetropolitan broadcasting stations;
  • Domestic service workers living in the employer's residence;
  • Employees of motion picture theaters; and
  • Farmworkers.

Partial Exemptions from Overtime Pay

  • Employees engaged in certain operations on agricultural commodities and to employees of certain bulk petroleum distributors.
  • Hospitals and residential care establishments may adopt, by agreement with their employees, a 14-day work period instead of the usual 7-day workweek, if the employees are paid at least time and one-half their regular rates for hours worked over 8 in a day or 80 in a 14-day work period, whichever is the greater number of overtime hours.
  • Employees who lack a high school diploma or who have not attained the educational level of the 8th grade, can be required to spend up to 10 hours in a workweek engaged in remedial reading or training in other basic skills without receiving time and one-half overtime pay for these hours. However, the employees must receive their normal wages for hours spent in such training and the training must not be job specific.

Child Labor Provisions

The FLSA child labor provisions are designed to protect the educational opportunities of minors and prohibit their employment in jobs and under conditions detrimental to their health or well-being. These include restrictions on hours of work for minors under 16 and lists of hazardous occupations orders for both farm and non-farm jobs considered too dangerous for minors to perform.

Nonagricultural Jobs (Child Labor)

For non-farm work, the permissible jobs and hours of work, by age, are as follows:

  • Youths 18 years or older may perform any job, whether hazardous or not, for unlimited hours;
  • Youths 16 and 17 years old may perform any non-hazardous job, for unlimited hours; and
  • Youths 14 and 15 years old may work outside school hours in various non-manufacturing, non-mining, non-hazardous jobs under the following conditions: no more than 3 hours on a school day, 18 hours in a school week, 8 hours on a non-school day, or 40 hours in a non-school week.  

Fourteen is the minimum age for most non-farm work. However, at any age, youths may deliver newspapers; perform in radio, television, movie, or theatrical productions; work for parents in their solely-owned non-farm business (except in manufacturing or on hazardous jobs); or, gather evergreens and make evergreen wreaths.

Farm Jobs (Child Labor)

In farm work, permissible jobs and hours of work, by age, are as follows:

  • Youths 16 years and older may perform any job, whether hazardous or not, for unlimited hours;
  • Youths 14 and 15 years old may perform any non-hazardous farm job outside of school hours;
  • Youths 12 and 13 years old may work outside of school hours in non-hazardous jobs, either with a parent's written consent or on the same farm as the parent(s);
  • Youths under 12 years old may perform jobs on farms owned or operated by parent(s), or with a parent's written consent, outside of school hours in non-hazardous jobs on farms not covered by minimum wage requirements.

Minors of any age may be employed by their parents at any time in any occupation on a farm owned or operated by their parents. Additionally, you'll want to check out the laws applicable to your state.

Recordkeeping

The FLSA requires employers to keep records on wages, hours, and other items. Most of the information is of the kind generally maintained by employers in ordinary business practice and in compliance with other laws and regulations. The records do not have to be kept in any particular form and time clocks need not be used. With respect to an employee subject to the minimum wage provisions or both the minimum wage and overtime pay provisions, the following records must be kept:

  • Personal information, including employee's name, home address, occupation, sex, and birth date if under 19 years of age;
  • Hour and day when workweek begins;
  • Total hours worked each workday and each workweek;
  • Total daily or weekly straight-time earnings;
  • Regular hourly pay rate for any week when overtime is worked;
  • Total overtime pay for the workweek;
  • Deductions from or additions to wages;
  • Total wages paid each pay period; and
  • Date of payment and pay period covered.

Records required for exempt employees differ from those for nonexempt workers. Special information is required for homeworkers, for employees working under uncommon pay arrangements, for employees to whom lodging or other facilities are furnished, and for employees receiving remedial education.

Enforcement

The Wage and Hour Division's authorized representatives conduct investigations and gather data on wages, hours, and other employment conditions or practices, in order to determine compliance with the law. Where violations are found, they also may recommend changes in employment practices to bring an employer into compliance.

It is a violation to fire or in any other manner discriminate against an employee for filing a complaint or for participating in a legal proceeding under FLSA. Willful violations may be prosecuted criminally and the violator fined. A second conviction may result in imprisonment. Violators of the child labor provisions are subject to a civil money penalty for each employee who was the subject of a violation.

Employers who willfully or repeatedly violate the minimum wage or overtime pay requirements are subject to a civil money penalty.

Recovery of Back Wages

Listed below are methods which FLSA provides for recovering unpaid minimum and/or overtime wages.

  • Wage-Hour may supervise payment of back wages.
  • The Secretary of Labor may bring suit for back wages and an equal amount as liquidated damages.
  • An employee may file a private suit for back pay and an equal amount as liquidated damages, plus attorney's fees and court costs.
  • The Secretary of Labor may obtain an injunction to restrain any person from violating FLSA, including the unlawful withholding of proper minimum wage and overtime pay.

An employee may not bring suit if he or she has been paid back wages under the supervision of Wage-Hour or if the Secretary of Labor has already filed suit to recover the wages. A two-year statute of limitations applies to the recovery of back pay, except in the case of willful violation, in which case a three-year statute applies.

Equal Pay Provisions

The equal pay provisions of FLSA prohibit sex-based wage differentials between men and women employed in the same establishment who perform jobs that require equal skill, effort, and responsibility and which are performed under similar working conditions. These provisions, as well as other statutes prohibiting discrimination in employment, are enforced by the Equal Employment Opportunity Commission.

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Federal wage laws can be confusing, but are extremely important to understand if you are a small business owner or operator. Start learning more about the laws in your state. And if you are involved in litigation related to wages or any other matter, you should speak with a small business attorney in your area today and get a free case review.

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