A Guide to the Fair Labor Standards Act
In 1938, the Fair Labor Standards Act (FLSA) was created to establish regulations for minimum wage, overtime pay, recordkeeping and the employment of minors.
In 1938, the Fair Labor Standards Act (FLSA) was created to establish regulations for minimum wage, overtime pay, recordkeeping and the employment of minors. The intent of the law was to penalize employers working employees more than 40 hours per week and to encourage the hiring of additional employees. The FLSA affects full-time and part-time workers employed with private or public companies and in federal, state or local government employment, and is enforced by the Wage and Hour Division of the U.S. Department of Labor.
Enterprises and Individuals Covered by the FLSA
According to the U.S. Department of Labor, employees working for business enterprises with operations run through unified efforts or common leadership of a person or group of individuals for a common purpose are covered under the FLSA. The enterprise must also meet one or both of the following criteria:
- have at least two employees and annual gross sales volume of $500,000 or more; or
is operating a hospital, institution for primary care of the sick, aged, or mentally ill who reside onsite; a school for children with a mental or physical disability or a school for gifted children; a preschool, elementary, secondary school, or institution of higher education.
Even if the company is not an enterprise covered by the FLSA, the entity may still be obligated to meet the FLSA requirements of minimum wage, overtime, recordkeeping and child labor regulations. Individuals covered include workers engaged in :
- interstate commerce, production of goods for such purpose; or
- related process or employment essential to the production of commerce; or
- domestic services
However, some jobs may be excluded from some or all coverage under the FLSA overtime rules. There are two general types of exclusions: those for jobs specifically excluded in the statute such as farmworkers, newspaper delivery persons and commissioned employees; and jobs that are covered under another federal labor law such as the Migrant and Seasonal Agricultural Workers Protection Act or the Motor Carriers Act.
Classification of Covered Employees: Exempt Versus Nonexempt
For the purpose of compliance with the minimum wage and overtime rules of the FLSA, jobs are classified as either exempt or nonexempt. Employees that are considered exempt are not entitled to the benefits and protections of the FLSA, and therefore do not have to be paid in accordance with minimum wage and overtime requirements set forth by the FLSA. The most common examples of employees considered exempt under the FLSA are:
- Executive employees
- Administrative employees
- Professional employees
- Outside sales employees
- Computer technology employees
Nonexempt employees are covered under the FLSA rules and are entitled to a minimum wage equal to or greater than the federal minimum wage. However, employers are required to follow the state mandated minimum wage rate if it exceeds the federal rate of pay. Nonexempt workers must also be paid overtime for hours worked beyond 40 hours per work week at a rate of no less than one and one-half times their regular rate of pay.
It is important to note that classification of employees as exempt or nonexempt is not necessarily an exact science, but should be taken seriously. Decisions regarding employee classification should be made on job duties associated with the position, salary level, and salary basis of the position. Misclassification of employees can result in fines and penalties as well as requiring the employer to pay unpaid back wages to employees whose status was classified incorrectly.
Items Not Required by the FLSA
The FLSA does not require employers to provide the following:
- Vacation, holiday, severance, sick pay, pay raises or fringe benefits; or
- Meal or rest periods, holidays, vacation, premium pay for weekend or holiday work; or
- Reason for termination or immediate payment of last wages to terminated employees; or
- Restriction of hours of work for employees age 16 or older.
Please note that although the FLSA does not require the above items, some states may.
Child Labor Laws
The FLSA sets 14 as the minimum age for most non-agricultural work. However, at any age youth may deliver newspapers; perform in radio, television, movie or theatrical productions; work in businesses owned by their parents (except in mining, manufacturing or hazardous jobs); and perform babysitting or minor chores around a private home. Different age requirements apply to the employment of youth in agriculture.
Hours worked by 14 and 15 year olds are limited to:
- Non-school hours
- 3 hours in a school day
- 18 hours in a school week
- 8 hours on a non-school day
- 40 hours on a non-school week
- Hours between 7a.m. and 7p.m.
Equal Pay for Equal Work
FLSA also mandates equal pay for equal work, ensuring that men and women doing the same type of work receive equal pay under similar work conditions. However, the law exempts earnings measured under a seniority system, merit system, a system using quantity or quality of production to determine wages or any factor other than gender.
The recently passed Patient Protection and Affordable Care Act included an amendment to the FLSA which requires employers to provide break time and a place other than a bathroom for nursing mothers to express milk as needed for one year following the birth of a child. Employers with fewer than 50 employees may be excluded if these accommodations would cause undue hardship.
The FLSA was passed into law to ensure fair labor standards. It is important that employers keep these laws in mind as they run their business and that they stay in compliance as the Department of Labor may audit them at any time. Employers who violate these laws unknowingly may be issued fines or penalties by the Department of Labor. Willful violations of these laws may result in prosecution or more costly fines, and second convictions can result in incarceration.
For additional information please contact the Wage and Hour Division at www.wagehour.dol.gov or toll-free at (866) 4US-WAGE. The Department of Labor's interactive advisor system, www.dol.gov/elaws, is an excellent resource on FLSA labor regulations.
This document is intended to provide a general overview of the FLSA. It is imperative that employers are aware that there are many rules, regulations, exemptions, and exceptions regarding coverage, classification of employees, and wages and overtime, in addition to the information provided in this document. Also, as many states have their own labor regulations to consider, employers should be sure to check their states' specific laws to ensure compliance.
"Coverage Under the FLSA." www.flsa.com. Chamberlain, Kaufman and Jones. n.d. Web. 19 August 2010.
"Compliance Assistance - Fair Labor Standards Act (FLSA)." www.dol.gov. U.S. Department of Labor. n.d. Web. 19 August 2010.
Smith, Charmayne. "FLSA Regulations." www.eHow.com. eHow, Inc. 21 September 2009. Web. 20 August 2010.
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