The Fair Labor Standards Act (FLSA) was passed in 1938 and governs how employers pay their employees. The Department of Labor (DOL), which enforces this law, has issued rules and regulations on various aspects of the FLSA including:
· the payment of minimum wage and overtime;
· the definition of hours worked;
· exemptions from the FLSA; and
· record keeping
Who is covered?
According to the DOL’s Handy Reference Guide to the Fair Labor Standards Act, the FLSA applies to:
“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:
(1) 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
(2) 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 (whether operated for profit or not for profit); or
(3) is an activity of a public agency.”
Even if your company doesn’t meet this definition, you may still have employees who are covered by the FLSA working for you if they engage in “interstate commerce”, which has been very broadly defined and includes those individuals who regularly use the mail or telephones.
What is minimum wage?
The current minimum wage under the FLSA is $7.25 per hour. Although many employers compensate employees on an hourly basis, some organizations pay their non-exempt employees on a “piece rate” or “salaried” basis. In these circumstances, employers are obligated to make sure that the rates paid equate to at least minimum wage for all hours worked.
Unless the employee is otherwise exempt from the overtime provisions of the law, they are entitled to be paid at least time-and-one-half of their regular rate of pay for all hours worked more than 40 in a workweek. While that seems to be fairly straight-forward, employers need to be aware that the “regular rate of pay” isn’t simply the hourly rate you pay your employee. The regular rate includes, among other things, such payments as shift differentials and non-discretionary bonuses/incentives.
In order to calculate minimum wage and overtime properly, it’s important to understand how the FLSA defines hours of work. For example, travel time, time spent in training and time spent waiting for equipment to be repaired would be regarded as hours worked and the employee must be paid for that time.
The FLSA, however, does not require employers to provide rest or meal periods to employees. While some states impose this requirement on employers, the FLSA does not. What the FLSA says, though, is that IF the company provides a break of 20 minutes or less, it must be counted as hours worked and must be paid. However, if the employee takes a meal period of 30 minutes or more, that time may be unpaid as long as the employee is completely relieved of duty. So, that begs the question...what about minutes 21-29? It’s a gray area and there have been various rulings on the topic. It’s recommended if you are going to try to implement a meal period of 20 or 25 minutes that you consult with your employment law attorney to help you determine whether or not it must be counted as hours worked.
Even though the FLSA does not require rest or meal breaks, employers are required to give nursing mothers lactation breaks. Specifically, “Employers are required to provide ‘reasonable break time for an employee to express breast milk for her nursing child for 1 year after the child’s birth each time such employee has need to express the milk.” Employers are also required to provide “a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public, which may be used by an employee to express breast milk.’”
The nursing mother break only applies to non-exempt employees. Employers with fewer than 50 employees are not required to comply with this break requirement if it would impose an undue hardship. There are a number of factors that are used to determine what constitutes an undue hardship.
There are certain positions that are exempt from some provisions of the FLSA. There are five (5) “white collar” exemptions that exempt certain individuals from the minimum wage and overtime requirements of the FLSA. To qualify for one of these exemptions, the individual must perform certain duties and be paid a minimum guaranteed weekly salary. Currently, there are proposed regulations pending that would substantially increase the minimum guaranteed weekly salary and may change some of the duties requirements.
There are other exemptions as well. For example, farmworkers, employees of motion picture theaters, and employees of railroads and air carriers are generally exempt from overtime pay.
Because many of these exemptions tend to fall within specific industries, it’s recommend you consult with your employment law attorney to determine which, if any, exemptions may apply to your organization.
The FLSA imposes specific record keeping requirements on employers. Employers are required to keep for each non-exempt employee:
The following is a listing of the basic records that an employer must maintain:
1. Employee's full name and social security number.
2. Address, including zip code.
3. Birth date, if younger than 19.
4. Sex and occupation.
5. Time and day of week when employee's workweek begins.
6. Hours worked each day.
7. Total hours worked each workweek.
8. Basis on which employee's wages are paid (e.g., "$9 per hour", "$440 a week", "piecework")
9. Regular hourly pay rate.
10. Total daily or weekly straight-time earnings.
11. Total overtime earnings for the workweek.
12. All additions to or deductions from the employee's wages.
13. Total wages paid each pay period.
14. Date of payment and the pay period covered by the payment.
These records must be kept for a minimum of 3 years.
The FLSA can be very challenging to administer and this article touches on only a few basic areas covered by the law. FLSA is one of the most litigated laws in the country and carries with it the potential for individual liability. Employers are encouraged to learn more about this law by visiting the Department of Labor website and/or attending a comprehensive training program to learn more about this
NOTE: Many states have similar wage payment laws that may be stricter than the FLSA. For example, Florida’s current minimum wage rate is $8.05 and is adjusted each year to reflect changes in inflation. It’s recommended that employers check the laws for each state in which they operate.
Contributed by Christine Crews, SPHR, SHRM-SCP is Vice President of Human Resource Services for the Employers Association Forum, Inc. (EAF). EAF is a non-profit corporate membership-based association dedicated to serving the business and HR communities with world-class HR tools, hotlines & legal compliance, news & trends, surveys & economic data, benefits & insurance, risk management, training & consulting, and leadership & organizational development. HCCMO members receive discounted rates on all EAF classroom training at EAF’s training center in Longwood. Click here to learn more about EAF membership benefits http://eafinc.org/about-eaf/value-of-membership/.