Overview of the Fair Labor Standards Act
The Fair Labor Standards Act (FLSA) is administered by the Wage and Hour Division (WHD) of the Department of Labor. The FLSA establishes wage and hour standards for minimum wages, overtime pay, recordkeeping, and child labor. See Department-of-Labor-Wage-Hour-Division-FLSA-Reference
Employers Covered By The FLSA
The FLSA applies to enterprises with employees who engage in interstate commerce, produce goods for interstate commerce, or handle, sell, or work on goods or materials that have been moved in or been produced for interstate commerce.
The FLSA typically does not cover businesses with less than $500,000.00 in annual revenue. The dollar volume requirement does not apply to certain businesses, including hospitals; institutions primarily engaged in the care of the sick, aged, mentally ill, or disabled who reside on the premises; schools for children who are mentally or physically disabled or gifted; preschools, elementary and secondary schools, and institutions of higher education; and federal, state, and local government agencies. Employees of firms that do not meet the $500,000 annual dollar volume test may be covered in any workweek when they are individually engaged in interstate commerce, the production of goods for interstate commerce, or an activity that is closely related and directly essential to the production of such goods. In addition, the Act covers domestic service workers, such as day workers, housekeepers, chauffeurs, cooks, or full-time babysitters, if they receive at least $1,700 in 2009 in cash wages from one employer in a calendar year, or if they work a total of more than eight hours a week for one or more employers.
Employee Exemptions Under The FLSA
The Act exempts some employees from its overtime pay and minimum wage provisions, and it also exempts certain employees from the overtime pay provisions only. Because the exemptions are narrowly defined, employers should carefully review the exact requirements to meet each exemption, including contacting a lawyer, or the Department of Labor itself, before any assumptions are made about whether an employee is exempt. Many employers misclassify employees as exempt when they are not exempt. The following are examples of categories of employees exempt from both the minimum wage and overtime pay requirements:
- Executive, administrative, and professional employees (including teachers and academic administrative personnel in elementary and secondary schools), outside sales employees, and certain skilled computer professionals (as defined in the Department of Labor’s regulations)
- Employees of certain seasonal amusement or recreational establishments
- Employees of certain small newspapers and switchboard operators of small telephone companies
- Seamen employed on foreign vessels
- Employees engaged in fishing operations
- Employees engaged in newspaper delivery
- Farm workers employed on small farms (i.e., those that used less than 500 “man-days” of farm labor in any calendar quarter of the preceding calendar year)
- Casual babysitters and persons employed as companions to the elderly or infirm
The following are examples of employees exempt from the overtime pay requirements only:
- Certain commissioned employees of retail or service establishments
- Auto, truck, trailer, farm implement, boat, or aircraft salespersons employed by non-manufacturing establishments primarily engaged in selling these items to ultimate purchasers
- Auto, truck, or farm implement parts-clerks and mechanics employed by non-manufacturing establishments primarily engaged in selling these items to ultimate purchasers
- Railroad and air carrier employees, taxi drivers, certain employees of motor carriers, seamen on American vessels, and local delivery employees paid on approved trip rate plans
- Announcers, news editors, and chief engineers of certain non-metropolitan broadcasting stations
- Domestic service workers who reside in their employers’ residences
- Employees of motion picture theaters
Certain employees may be partially exempt from the overtime pay requirements. These include:
- Employees engaged in certain operations on agricultural commodities and employees of certain bulk petroleum distributors
- Employees of hospitals and residential care establishments that have agreements with the employees that they will work 14-day periods in lieu of 7-day workweeks (if the employees are paid overtime premium pay within the requirements of the Act for all hours worked over eight in a day or 80 in the 14-day work period, whichever is the greater number of overtime hours)
- Employees who lack a high school diploma, or who have not completed the eighth grade, who spend part of their workweeks in remedial reading or training in other basic skills that are not job specific. Employers may require such employees to engage in these activities up to 10 hours in a workweek. Employers must pay normal wages for the hours spent in such training but need not pay overtime premium pay for training hours.
You may obtain additional information regarding the “white collar” exemptions under the FLSA at the following link. White Collar Exemptions
Basic Provisions of the FLSA
The Act requires employers of covered employees who are not otherwise exempt to pay these employees a minimum wage of not less than $7.25 per hour effective July 24, 2009. Youths under 20 years of age may be paid a minimum wage of not less than $4.25 an hour during the first 90 consecutive calendar days of employment with an employer. Employers may not displace any employee to hire someone at the youth minimum wage.
Employers may pay employees on a piece-rate basis, as long as they receive at least the equivalent of the required minimum hourly wage rate and overtime for hours worked in excess of 40 hours in a workweek. Employers of tipped employees (i.e., those who customarily and regularly receive more than $30 a month in tips) may consider such tips as part of their wages, but employers must pay a direct wage of at least $2.13 per hour if they claim a tip credit, in addition to other requirements.
The FLSA also permits the employment of certain individuals at wage rates below the statutory minimum wage under certificates issued by the Department of Labor:
- Student learners (vocational education students);
- Full-time students in retail or service establishments, agriculture, or institutions of higher education; and
- Individuals whose earning or productive capacities for the work to be performed are impaired by physical or mental disabilities, including those related to age or injury.
The Act does not limit either the number of hours in a day or the number of days in a week that an employer may require an employee to work, as long as the employee is at least 16 years old. Similarly, the Act does not limit the number of hours of overtime that may be scheduled. However, the Act requires employers to pay covered employees not less than one and one-half times their regular rate of pay for all hours worked in excess of 40 in a workweek, unless the employees are otherwise exempt.
Employee Rights Under The FLSA
Employees who believe that their employer has violated the FLSA may file a complaint with the Department of Labor. Employees may find out how to file a complaint by contacting their local Wage and Hour Division Office, or by calling the Department of Labor’s toll-free help line at 1-866-4USWAGE (1-866-487-9243). In addition, an employee may file a private suit, generally for the previous two years of back pay (three years in the case of a willful violation) and an equal amount as liquidated damages, plus attorney’s fees and court costs.
It is a violation of the Act to fire or in any other manner discriminate or retaliate against an employee for filing a complaint or for participating in a legal proceeding under the Act.
Record Keeping, Reporting, Notices and Posters Under the FLSA
Notices and Posters
Every employer of employees subject to the FLSA’s minimum wage provisions must post, and keep posted, a notice explaining the FLSA in a conspicuous place in all of their establishments. Although there is no size requirement for the poster, employees must be able to readily read it. The FLSA poster is available from the Department of Labor, and is available in several languages other than English: Spanish, Chinese, Russian, Thai, Hmong, Vietnamese and Korean. Depending on the workforce, employers may be required to post notices written in foreign languages.
Covered employers are required to post the general Fair Labor Standards Act poster; however, certain industries have posters designed specifically for them.
Every employer who employs workers with disabilities under special minimum wage certificates is also required to post the Employee Rights for Workers with Disabilities/Special Minimum Wage Poster.
Every employer covered by the FLSA must keep certain records for each covered, nonexempt worker. Employers must keep records on wages, hours, and other information as set forth in the Department of Labor’s regulations.
There is no required form for the records. However, the records must include accurate information about the employee and data about the hours worked and the wages earned. The following is a listing of the basic payroll records that an employer must maintain:
- Employee’s full name, as used for Social Security purposes, and on the same record, the employee’s identifying symbol or number if such is used in place of name on any time, work, or payroll records
- Address, including zip code
- Birth date, if younger than 19
- Sex and occupation
- Time and day of week when employee’s workweek begins
- Hours worked each day and total hours worked each workweek
- Basis on which employee’s wages are paid (e.g., “$9 per hour”, “$440 a week”, “piecework”)
- Regular hourly pay rate
- Total daily or weekly straight-time earnings
- Total overtime earnings for the workweek
- All additions to or deductions from the employee’s wages
- Total wages paid each pay period
- Date of payment and the pay period covered by the payment
Employers are required to preserve for at least three years payroll records, collective bargaining agreements, and sales and purchase records. Records on which wage computations are based should be retained for two years. These include time cards and piecework tickets, wage rate tables, work and time schedules, and records of additions to or deductions from wages.
The FLSA does not contain any specific reporting requirements; however, the above referenced records must be open for inspection by the Wage and Hour Division’s representatives, who may ask the employer to make extensions, computations, or transcriptions. The records may be kept at the place of employment or in a central records office.
The Department of Labor uses a variety of remedies to enforce compliance with the Act’s requirements. When Wage and Hour Division investigators encounter violations, they recommend changes in employment practices to bring the employer into compliance, and they request the payment of any back wages due to employees.
Willful violators may be prosecuted criminally and fined up to $10,000. A second conviction may result in imprisonment. Employers who willfully or repeatedly violate the minimum wage or overtime pay requirements are subject to civil money penalties of up to $1,100 per violation.
For child labor violations, employers are subject to a civil money penalty of up to $11,000 per worker for each violation of the child labor provisions. In addition, employers are subject to a civil money penalty of $50,000 for each violation occurring after May 21, 2008 that causes the death or serious injury of any minor employee – such penalty may be doubled, up to $100,000, when the violations are determined to be willful or repeated.
When the Department of Labor assesses a civil money penalty, the employer has the right to file an exception to the determination within 15 days of receipt of the notice. If an exception is filed, it is referred to an Administrative Law Judge for a hearing and determination as to whether the penalty is appropriate. If an exception is not filed, the penalty becomes final.
The Department of Labor may also bring suit for back pay and an equal amount in liquidated damages, and it may obtain injunctions to restrain persons from violating the Act.
The Act also prohibits the shipment of goods in interstate commerce that were produced in violation of the minimum wage, overtime pay, child labor, or special minimum wage provisions.
As noted above, the employee may also file direct civil actions and claim lost wages, overtime and penalities, as appropriate.
Most states have their own wage and hour laws, including Colorado. State laws vary at times from the requirements of the FLSA and must be independently followed. More detailed information about various state laws are usually available from the State’s department of labor or the attorneys at Baird Quinn LLC.
Compliance And Litigation Assistance Available
More detailed information about the FLSA, including copies of explanatory brochures and regulatory and interpretative materials, is available from the Department of Labor or the Colorado labor and employment attorneys at Baird Quinn LLC. Baird Quinn LLC’s FLSA Lawyers are also available to assist clients in evaluating wage and hour issues, and litigation. You may obtain additional information about Baird Quinn’s Denver wage and hour lawyers at the following link. Contact Us