Wage and Hour Laws

1938 federal law applicable to employees engaged in interstate commerce or employed by an enterprise engaged in interstate commerce; sets minimum wages and overtime and regulates youth employment.

Both federal and state laws and regulations govern the area of wages and hours of employment. The principal federal statute is the Fair Labor Standards Act of 1938 (FLSA). 2 Its purpose was to establish minimum wage and overtime pay requirements and to restrict the use of child labor.

Both federal and state laws and regulations govern the area of wages and hours of employment. The principal federal statute is the Fair Labor Standards Act of 1938 (FLSA). 2 Its purpose was to establish minimum wage and overtime pay requirements and to restrict the use of child labor.

Enterprise coverage of the FLSA is the most common way in which it protects employees. Workers will be entitled to FLSA protection if the enterprise for which they work has at least two employees engaged in interstate commerce activities or the enterprise generates a total of at least $ 500,000 per year. It extends to employees of not-for-profit and religious entities if the activity of the employed individuals is connected with commercial operations and has a "business purpose."

The FLSA is based on the power of Congress to regulate interstate commerce. The FLSA provides for two types of coverage: enterprise coverage and individual coverage. If the FLSA entitles employees to protections under either enterprise or individual coverage, then they must receive the FLSA prescribed minimum wages, overtime pay, and equal pay between the sexes.

FLSA coverage as extended to employees engaged in interstate commerce.

of the FLSA will be extended to an employee if he or she is engaged in commerce or in the production of goods for commerce among the states or a state outside the place of production. This interstate commerce activity is easily found if the employee uses an instrumentality of interstate commerce to perform their job (e.g., use of a telephone or other communication device connected to the interstate telephone system, transportation, banking, or insurance). The FLSA also covers domestic service workers in private households.

Under federal law, employees under 20 years of age may be paid an "opportunity wage." This wage rate is a subminimum hourly wage rate of at least $ 4.25 per hour for the first 90 consecutive days of employment. An employer cannot displace another employee to hire a youth at the lesser rate. 3 The FLSA also contains record keeping requirements.

Effective July 24, 2009, the federal minimum wage is $ 7.25 per hour. Under federal law, employees under 20 years of age may be paid less per hour. For hourly employees, the hourly rate of pay must be equal to the federal minimum or more per hour.

Federal law allows employers to credit tips received from customers toward the minimum wage rate to be paid the employee (" tip credit"). Employees will be deemed "tipped employees" if their occupation is one in which employees customarily and regularly receive more than $ 30 per month in tips.

Time during which employees are not required to remain on the employer's premises but are required to be available to work and thus cannot use their time for their own purposes.

Meal and Rest Periods Meal periods are not hours worked if the employee is relieved of duties to eat a meal. It is not necessary that the employee be free to leave the employer's workplace, but if employees are required to eat at desks or a work position, the employer must pay for the time. Ordinarily, 30 minutes or more is sufficient for a bona fide meal period, although shorter periods under special circumstances might be permitted.

A break in the workday, for example, to use restrooms or for coffee. Not required by FLSA, but state laws often require rest periods for nonexempt employees who work a minimum period of time in a workday.

If an employee is on duty for less than 24 hours, sleeping time is not compensable. If he or she is on duty for 24 hours or more, then the employer and employee may agree to exclude a sleeping period of not more than 8 hours, provided adequate sleeping facilities are furnished and the employee can usually enjoy a reasonable period of sleep.

Employees exempt from overtime pay provisions, from both the minimum wage and overtime pay provisions, or from the child labor provisions of the FLSA.

A worker entitled to the minimum wage and/ or overtime pay protections of the FLSA

FLSA exemption from overtime pay covering employees whose duties and responsibilities involve managing an enterprise, who customarily and regularly direct two or more employees, who have authority to hire and fire or whose recommendations as to staffing are given particular weight, and who customarily and regularly exercise discretionary powers.

Under this FLSA exemption, overtime wages need not be paid to a worker who is compensated at a salary basis of not less than $ 455 per week, whose primary duty is the performance of office or non-manual work directly related to management or the general business operations of the employer or its customers, and whose work includes exercise of discretion and independent judgment.

Highly Compensated Employee The Department of Labor's regulations identify highly compensated employees performing office or non-manual work who are paid a total annual compensation of $ 100,000 or more on a salary or fee basis (which must include at least $ 455 per week paid on a salary basis) as exempt from overtime if they customarily and regularly perform at least one of the duties or responsibilities of an exempt executive, administrative, or professional employee identified in the tests for exemption.

An FLSA exemption from overtime pay for workers who are compensated on a salary basis at a rate not less than $ 455 per week and whose primary work requires advanced knowledge in a field of science or learning mastery of which is acquired through specialized instruction.

This exemption relates to workers whose primary duty is the application of systems analysis techniques and procedures, including consulting with users to determine hardware, software, or system specifications and the design, development, documentation, analysis, creation, testing, or modification of computer systems or programs or software.

Overtime wages need not be paid to a worker whose primary duty is to make sales or obtain orders or contracts and who is customarily and regularly engaged in work away from the employer's place of business.

Federal law specifying the types of work-related time spent that is compensable. Generally, such time includes all activity of benefit to the employer; time for travel to and from the workplace is not compensable.

Under the Department of Labor regulations, training time is not compensable if:

• (1) attendance is outside the employee's regular working hours,
• (2) the employee does not perform productive work during the program,
• (3) attendance is voluntary, and
• (4) the program is not directly related to the employee's job.

Preliminary and Postwork Activities Employees may be entitled to compensation for time spent involving preparatory and concluding activities related to "integral and indispensable"

"principal activity" for which they are hired

If the work is de minimis, the employee is not compensated (measured by degree and time of the activity). In all cases, the claimant must show that the employer had actual or constructive knowledge of the overtime work.

Compensatory Time Off (CTO) Federal law does not authorize the use of compensatory time off in lieu of wages. CTO refers to employees being given time off in lieu of extra compensation or overtime pay.

The employee may also seek liquidated damages in an amount equal to the damages, plus attorneys' fees and court costs. A two year statute of limitations applies to the recovery of back pay, but a three year statute will apply in cases of willful employer violations of the FLSA. Any person who willfully commits a violation of the FLSA is subject to criminal prosecution.

Seniority and performance are two of the most common methods used by employers to determine whose employment will be terminated in the event of a layoff or reduction in force (RIF). When an employer uses a length of service or seniority system to determine who must be terminated from employment, the employer is well advised to define the procedure very carefully.

In the 1980s, as American industrial plants began to rapidly close and institute mass layoffs, many employees, their families, and their surrounding communities found they were unprepared because they received no prior notice. In response, Congress enacted the Worker Adjustment and Retraining Notification (WARN) Act in 1989. The act prohibits employers from:
ordering a plant closing or mass layoff until the end of a 60-day period after the employer serves written notice of such an order:
(1) to each representative of the affected employees as of the time of the notice or, if there is no such representative at that time, to each affected employee; and
(2) to the State or entity designated by the State to carry out rapid response activities [the State dislocated worker unit]... and the chief elected official of the unit of local government within which such closing or layoff is to occur.

It also applies to a mass layoff that will affect 100 or more full-time workers. Under this act, a written notice must be given to employee representatives, such as a union, or to the affected employees if not represented by a union, and to the state unemployment office.

Both employers and employees must pay the Social Security and Medicare Tax required by the Federal Insurance Contributions Act (FICA). To determine employee status, Social Security and Medicare apply the common law tests of the right to control the result and the details by which the result is accomplished.

In 1935, Congress enacted the Federal Unemployment Tax Act (FUTA), which imposes a tax on employers to fund state work assistance agencies. Employers, not employees, pay the FUTA tax. The employer contributes to the federal government, and a credit is allowed for the amounts paid by the employer to state unemployment agencies.

The "safe harbor" test applies only to employment taxes. The worker may be treated as an employee for all other purposes.

In response to the Internal Revenue Service (IRS) aggressively seeking to collect employment taxes, Congress passed Section 530 of the Revenue Act of 1978. Congress intended it to restrain the collection of those taxes from employers who classified their workers as independent contractors even though the workers might not fit the criteria of the 20-factor test.

coverage

volunteers

50

minors

independent

meal

compensable

overtime

100

FLSA