Business Organization & Transactions Newsletter
Wage and Hour Laws
The Fair Labor Standards Act of 1938 (FLSA), as amended, governs the method and rate of pay to be given to virtually all employees in the workforce, including those who are members of unions. An employer is required to comply with FLSA if it is covered by the act on either an enterprise or individual basis.
Under FLSA, a covered employer is required to pay a minimum wage regardless of whether the employee is paid hourly, by the job, by piece, by incentive or by any other basis. The mere fact that an employee is paid a salary, or holds an impressive title, does not bar application of FLSA. State law may require a higher minimum wage than the FLSA wage.
FLSA also requires that all covered employees, unless categorized as exempt, receive overtime pay for hours worked in excess of forty hours per workweek at a rate at least one-and-a-half times their regular rate of pay. The regular rate of pay for an employee under FLSA is defined as all remuneration, including production bonuses, shift differentials, and attendance bonuses, divided by the total hours of work in the workweek.
The following employees are categorized as exempt from the overtime pay requirement, assuming their salaries meet the statutory minimum:
- Professionals who have specialized training for their job
- Employees whose work directly relates to the business, management or operations of the employer
- Employees who work with computers (if their hourly rate meets the statutory minimum amount)
- Employees who work in outside sales
- Employees who are engaged in creative or artistic endeavors
FLSA requires employers to keep records on wages, hours and other information as set forth by the Department of Labor’s regulations. Usually, the following records must be kept:
- Personal information such as the employee’s name, home address, occupation, sex and birth date (if under 19 years of age)
- Information regarding hour and day when workweek begins
- Data on the total hours worked each workday and each workweek
- The employee’s total daily or weekly straight-time earnings
- The regular hourly pay rate for any week when overtime is worked
- The total overtime pay for the workweek
- Information regarding deductions from or additions to wages
- The total wages paid each pay period
- The date of payment and pay period covered
FLSA does not provide a broad protection for employees. It does not cover, regulate or require vacation, holiday, severance or sick pay, rest periods, premium pay for weekend and holiday work, pay raises or fringe benefits, discharge notices, pay stubs or income tax W-2 forms. But state laws or employment contracts may cover these areas.
FLSA also does not limit the number of hours in a day, or days in a week, that an employee may be required or scheduled to work, provided the employee is at least sixteen years old. For employees under eighteen years old, child labor laws under FLSA may apply to limit the nature of work that the employee can be required or requested to perform. State laws may limit the hours that employees older than sixteen years of age can be required to perform.
The Wage and Hour Division of the Department of Labor enforces FLSA. Investigators have the authority to gather data on wages and other employment conditions to monitor FLSA compliance. Where violations are found, they also may recommend changes in employment practices to comply with FLSA.
Employees adversely affected by an employer’s FLSA violation may recover back wages for underpaid work or unpaid overtime wages through their own suit or a suit by the Secretary of Labor. An employer who violates FLSA may be subject to criminal penalties. FLSA also prohibits the shipment of goods in interstate commerce that were produced in violation of the act.
FLSA also contains equal-pay provisions that prohibit gender-based wage differences between men and women employed by the same employer and performing jobs that require equal skill, effort and responsibility under similar working conditions. The Equal Employment Opportunity Commission enforces this portion of FLSA and other equal-pay provisions. A knowledgeable wage and hours attorney can assist you to develop proper procedures for employee payroll and scheduling.
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