| Summary |
The Fair Labor Standards Act (FLSA) is a federal law that regulates the minimum wage, overtime pay, recordkeeping, and child labor standards among other labor standards in the United States. The U.S. Department of Labor's Wage and Hour Division (WHD) is responsible for enforcing the FLSA.
Under the FLSA, many employees are entitled to receive minimum wage and overtime pay for any hours worked in excess of 40 hours in a work week. This applies to the vast majority of employees, including those employed in private businesses, state, and local governments, hospitals and schools. The FLSA also requires employers to keep accurate records of the hours worked by their employees and any wages paid to them.
The FLSA does not, however, apply to every employee. Employees who are classified as exempt from the FLSA's minimum wage and overtime pay requirements are not eligible for these benefits. Generally speaking, employees that are classified as exempt from these regulations include salaried workers, independent contractors, certain agricultural employees, and certain interns. These exemptions, however, are subject to a number of criteria, and employers should always consult with their legal counsel to ensure that their classification of employees is compliant with the law.
Employers must also be aware of the FLSA's child labor regulations. These regulations impose restrictions on the types of jobs that minors aged 16 or under can perform, as well as the number of hours they can work in any given week. Failure to comply with these requirements can result in civil fines and other penalties being imposed against the employer, so it is important to understand and follow the law.
Finally, employers should also be aware that the WHD enforces the labor standards outlined in the FLSA. The WHD can and will investigate employers who are suspected of breaking the law, so it is important for employers to stay informed on their obligations under the FLSA and to ensure that they are compliant.
The Fair Labor Standards Act (FLSA) is a comprehensive federal law that regulates the minimum wage, overtime pay, recordkeeping, and child labor standards for most employees in the United States. The U.S. Department of Labor's Wage and Hour Division (WHD) is responsible for enforcing the FLSA and will investigate employers who violate the labor standards outlined in the Act. There are exemptions to the FLSA's regulations, such as salaried employees, independent contractors, certain agricultural employees, and certain interns, but employers should always consult with their legal counsel to make sure their classification of employees is compliant with the law. Additionally, employers must abide by the FLSA's child labor regulations and limit the types of jobs and hours minors under 16 years of age can work in a week. Knowing FLSA regulations, understanding classifications of employees, and being aware of WHD investigations are all important to ensure employers stay compliant and avoid fines and penalties.
Introduction to the Fair Labor Standards Act
The Fair Labor Standards Act is a federal law enacted in 1938. It establishes a minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments. The act covers employees working in certain industries, the majority of employees in the United States, and employees working in businesses with gross annual sales of at least $500,000.
What Does the FLSA Cover?
The Fair Labor Standards Act covers the majority of workers employed in the United States and its territories. It sets minimum wage and overtime pay rates as well as establishes rules for youth employment. It also regulates when an employee can be exempt from minimum wage and overtime pay, as well as recordkeeping requirements. The act applies to most private employers and to government employers at the State and local level. Additionally, the FLSA may apply to business operations with annual sales of at least $500,000.
Minimum Wage Under the FLSA
The Fair Labor Standards Act establishes a national minimum wage, which is currently set at $7.25 for most non-exempt workers. Some states and local governments may have higher minimum wages, in which case employers must pay the higher of the two minimum wages. Additionally, the FLSA also requires employers to pay workers for any overtime hours worked in excess of 40 hours in a single work week.
Youth Employment under the FLSA
The Fair Labor Standards Act also regulates when and where minors may work. Generally, minors may not work in certain hazardous jobs and minors under 16 may not work more than 3 hours a day or more than 18 hours during a school week. Additionally, minors under age eighteen may not work before 7 a.m. or after 7 p.m. and must have at least three consecutive hours off between working days.
Enforcement of the FLSA
The Department of Labor enforces the Fair Labor Standards Act. Employees can bring claims under the FLSA in court or file a complaint with the U.S. Department of Labor Wage and Hour Division for violations. Employers who violate the FLSA may be required to pay up to three years of back wages to affected employees, as well as be subject to civil and criminal penalties. Employers should ensure they are in compliance with the Fair Labor Standards Act to avoid possible liability.
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, a national labor and employment law firm. "Employers constantly run afoul of the law more often than not without any appreciation or recognition that certain pay practices are violative of the law and have been violative for 50 years."According to the Society for Human Resource Management (SHRM), "The overall confusion of the rules has resulted in a 229% increase in the number of FLSA class-action lawsuits since 1997."
Penalties
Duvall also notes that there has been heightened public awareness about the FLSA white-collar regulations, because the changes that were originally proposed by the Bush administration became part of the presidential campaign. What this widespread media coverage can mean for employers is more employees who may question whether their jobs really should be exempt or not. Employers who are not classifying jobs correctly could face substantial penalties.
First, they may face an administrative investigation by the Wage and Hour Division of the DOL, based either on a complaint by an employee or through the department's random inspection program. And when they come, Duvall observes, they generally do a wall-to-wall audit of all positions that are suspect. If it is determined that the employer is violating the overtime requirements of the act, the DOL may impose civil penalties for repeat violations, in addition to collecting back wages for employees who have been improperly classified. Willful violations may be criminally prosecuted, with violators fined up to $10,000. A second conviction may result in imprisonment. Employers can also be subject to civil money penalties of up to $1,000 per violation.
Duvall cautions that the more significant and serious problem, however, is a private civil action brought by a former or present employee challenging their classification. "The act allows for private causes of action," he says, "and for the award of attorney fees and liquidated damages or penalty damages if the employer is found to have committed willful violations of the FLSA. In addition, the act also allows for class-action lawsuits with a variation that is unique to FLSA. Whereas in most traditional class-action suits, people have to opt in or elect to participate, with class-action suits under the FLSA, if a class is certified, all employees are a part of the suit unless they opt out."
So what should you be telling your clients, including perhaps your own law firm, to make certain they are complying with all the regulations, old and new? Duvall puts it succinctly: "Exemptions are very narrowly construed by the courts and the Labor Department. If there is any doubt as to whether the exemptions apply, the employee is not exempt. The playing field is not level; the scale is always tipped in favor of a particular individual not to be exempt."
If you begin with that premise, you are well on your way to understanding the FLSA regulations, but, of course, it is not that simple. First are the typical trouble areas.
Trouble areas
There are three main areas with regard to white-collar FLSA regulations where employers have had problems: 1) Exemptions based on independent discretion and control, 2) employees in the professional fields, especially computer specialists, and 3) one of the subsets of the learned professional exemption.
The basic question you should ask yourself about white-collar exemptions is the same as it always has been, mainly how much independent discretion and control does the employee have? A white-collar exemption for managers and heads of organizational units is one of the areas that is ripe for misinterpretation, says Duvall. He gives the example of fast-food managers, who spend most of their time cooking food and filling orders. They also, from time to time, have to call people in to work to fill the schedule or tell workers to quit goofing off, but they are not real managers under the FLSA regulations. Your company may not have fast-food managers, but there are probably many equivalent examples in your workplace. "If you have employees who are really working as lead workers, rather than managers, they are not exempt," Duvall warns. "We see it happen a lot. Employers will provide someone in the workforce additional compensation to be responsible, the lead worker if you will, and in exchange, employers think they are entitled to this overtime exemption. That is just not the case."
Another area that has historically run into trouble when it comes to FLSA classification is the professional fields, in particular computer specialists. Many of them are not really doing sophisticated computer programming and technological development but rather are doing jobs such as running a help desk or installing computer equipment. According to Duvall, these employees do not meet the definition of professional exemptions under the white-collar exemption, because they are not engaged in the intellectual development of technology.
Finally, there are the learned professionals. It is pretty easy to determine that a registered nurse is typically exempt, as may be a physician's assistant who has four years of professional study and is certified. But there is a subcategory that has caused all kinds of problems. Chefs, trainers, artists, actors, and journalists fall into this subset, and classifying them may be difficult. For example, chefs with advanced culinary degrees certainly could fall into the exempt category, but someone who has no advanced degree probably would not. What it really comes down to is whether someone has an advanced degree, usually clarified as a four-year degree from an accredited university. Someone who has a two-year college degree or who has a certificate from a private training program usually will not qualify for exemption, says Duvall.
