Fair Labor Standards Act
Reflects Section 541 Regulatory Changes Effective August 23, 2004 Note: These regulations become effective on August 23, 2004 Additional information as well as the full text of the regulations is available on the DOL Fair Pay site at http://www.dol.gov/fairpay.]
Most employers are covered by the Fair Labor Standards Act (FLSA). It covers public agencies and businesses engaged in interstate commerce or providing goods and services for commerce. The FLSA provides guidelines on employment status, child labor, minimum wage, overtime pay, and record-keeping requirements. It determines which employees are exempt from the Act (not covered by it) and which are non-exempt (covered by the Act). It establishes wage and time requirements when minors can work. It sets the minimum wage that must be paid, and mandates when overtime must be paid.
Penalties for Non-Compliance
The Fair Labor Standards Act is administered by the Department of Labor. Employers who willfully or repeatedly violate the Act may be penalized up to $10,000 per violation. Second convictions can impose $10,000 and/or imprisonment up to 6 months.
The Minimum Wage
The minimum wage is currently $5.15 per hour. It is subject to review by the Federal government, and may be changed from time to time. (Note: many states have higher minimum wage provisions which supercede the FLSA).
Overtime
Employees covered by the Fair Labor Standards Act must be paid at least one and one half times their regular rate for all hours worked in excess of 40 in a week (seven consecutive days).The regular rate of pay must be determined to calculate overtime pay, and it includes: the base rate, bonuses, commission, piece rates, incentives, shift differentials, and training pay.
The regular rate of pay excludes: premium pay under a union contract for Saturdays, Sundays, and holidays; pay for time not worked (i.e. vacation, sick time, holidays); contributions to pension and insurance plans; gifts; employer discretionary bonuses; distributions from profit sharing plans that meet Wage and Hour regulations contributions to bona fide thrift and savings plans; and longevity pay.
Executives who can be exempt from overtime under the Act are those:- Who are compensated on a salary basis at a rate of not less than $455 per week (or $380 per week, if employed in American Samoa by employers other than the Federal Government), exclusive of board, lodging or other facilities;
- Whose primary duty is management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision;
- Who customarily and regularly direct the work of two or more other employees; AND
- Who have the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight.
- They receive total annual compensation of at least $100,000; AND
- They customarily and regularly perform any one or more of the exempt duties or responsibilities of an executive, administrative or professional employee.
- Who are compensated on a salary or fee basis at a rate of not less than $455 per week (or $380 per week, if employed in American Samoa by employers other than the Federal Government), exclusive of board, lodging or other facilities;
- Whose primary duty is the performance of office or non-manual work directly related to management or general business operations of the employer or the employer’s customers; AND
- Whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
- Who are compensated on a salary or fee basis at a rate of not less than $455 per week (or $380 per week, if employed in American Samoa by employers other than the Federal Government), exclusive of board, lodging or other facilities,
- OR on a salary basis which is at least equal to the entrance salary for teachers in the educational establishment by which employed; and
- Whose primary duty is performing administrative functions directly related to academic instruction or training in an educational establishment or department or subdivision within such an establishment.
- Who are compensated on a salary or fee basis at a rate of not less than $455 per week (or $380 per week, if employed in American Samoa by employers other than the Federal Government), exclusive of board, lodging or other facilities; AND
- Whose primary duty is the performance of work:
- Requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction; OR
- Requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.
- Whose primary duty is making sales as defined by the Act OR obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; AND
- Who is customarily and regularly engaged away from the employer’s place or places of business in performing such a primary duty.
- Who are compensated on a salary or fee basis at a rate of not less than $455 per week (or $380 per week, if employed in American Samoa by employers other than the Federal Government), exclusive of board, lodging or other facilities
- OR who are compensated on an hourly basis at a rate not less than $27.63 an hour; AND
- Whose primary duty consists of:
- The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications;
- The design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or systems design specifications;
- The design, documentation, testing, creation or modification of computer programs related to machine operating systems; OR
- A combination of the above duties, the performance of which requires the same level of skills.
- Name, address, date of birth if under 19
- Day and hour on which the work week begins
- Number of hours worked each day and total number of hours worked each week
- Inclusions and exclusions from regular rate of pay
- Total daily or weekly straight time earnings
- Total overtime earnings
- Total deductions from earnings
- Total wage each period
- Date of payment, amount, and period included in payment
NOTE: State requirements may require additional records be maintained.
Hours of Work
All time spent in an employee’s principal duties and all essential ancillary activities must be counted as work time. Principal duties include productive tasks. Work time is compensable if expended for the employer’s benefit, if controlled by the employer, or if allowed by the employer. Activities which occur before or after an employee’s principal duties need not be counted as work time. Some examples:
Clothes Changing and Washing: Not compensated unless done at the workplace at the employer’s request or because of the nature of the principal duties, such as handling toxic chemicals. May be subject to a collective bargaining agreement.
Travel time: Travel to and from work is not generally compensable. Travel in the course of the day, such as from one job site to another, is compensable work time. Travel out of town may be compensable, depending on when it occurs and whether the trip is overnight.
Meal periods and breaks: Meal periods and breaks: Meal periods are not compensable if they last for 30 minutes or more; if the employee is relieved of all duties; and if the employee is free to leave the workstation. Breaks of 20 minutes or less are considered work time, and are compensable.
Training time: Training is not considered work time if all these conditions are met: It is outside of regular work hours; attendance is in fact voluntary; no productive work is performed there; and the training is not directed toward making the employee more proficient in their present job.
Child Labor
The FLSA prohibits the employment of oppressive child labor and regulates the hours which children may permissibly work. The requirements become more strict as the age decreases. Children are divided into three groups: 16 and 17 year olds, 14 and 15 year olds, and all younger children, for regulatory purposes. The hours that they may work and the occupations at which they may work vary from group to group. Anyone under the age of 18 is considered a child. States frequently regulate the employment of minors, and the requirements vary from state to state.