Fair Labor Standards Act (FLSA)

Scope

Today, the FLSA covers more than 80 million American workers. It is enforced by the Wage and Hour Division of the U.S. Department of Labor and its coverage extends to:

Regulatory citations

• None

Key definitions

• None

Summary of requirements

The FLSA covers employees through either:

• Businesses (including hospitals, schools, and government agencies) that:
  • Have two or more employees, and
  • Do at least $500,000 per year in revenue.
• Individual coverage:
  • Work tasks involve interstate commerce, and
  • Domestic service workers (housekeepers, cooks).

Enforcement. Enforcement under the FLSA includes recovery of back wages for underpaid employees and the prohibition to discriminate against whistleblowers. The Wage and Hour Division can assess fines of $10,000 per violation of child labor provisions and $1,000 per violation of minimum wage and overtime pay provisions.

The FLSA does not require employers to provide the following:

• Vacation, holiday, severance, or sick pay;
• Meal or rest periods, holidays off, or vacation days;
• Premium pay for weekend or holiday work;
• Pay raises or fringe benefits;
• A discharge notice, reason for discharge, or immediate payment of final wages to terminated employees; or
• Pay stubs or “W-2” forms.

NOTE: State laws may cover some or all of these topics.

FLSA sets the requirements for:

• Minimum wage;
• Overtime pay;
• Child labor; and
• Wage, hour, and employment recordkeeping.

Litigation. In recent years, there has been a tremendous increase in litigation brought by individual employees, groups of employees (“class actions”), and by the Department of Labor under the FLSA. More class action suits have been brought against employers under FLSA than under the federal discrimination laws.

Some of the issues raised by that litigation are highlighted under the following topics:

• Exemptions
• Hours Worked
• Minimum Wages
• Overtime

Minimum wage and overtime pay. As of July 2009, FLSA-covered workers are entitled to a minimum wage of $7.25/hour and overtime pay at no less than 1½ times their regular rate of pay after 40 hours of work in a workweek. If a state has a higher minimum wage, a higher rate applies.

Exceptions to minimum wage requirements apply to disabled workers, youths in their first 90 days of employment, tipped employees, student learners, and to state and local government employees involved with fire protection and law enforcement.

The following are exempt from FLSA minimum wage and overtime pay requirements if the detailed and rigorous standards for exemption are satisfied:

• Executives
• Administrative employees
• Professionals
• Outside sales personnel
• Some computer-related positions
• Highly compensated employees

Child labor provisions. The Fair Labor Standards Act’s child labor provisions set the:

• Number of hours worked (14 and 15 year-olds can work no more than 3 hrs. on a school day);
• Job duties based on age (14 and 15 year-olds can work at non-manufacturing, non-hazardous jobs); and
• Restrictions for hazardous job (no one under age 18 can work on jobs involving power-driven equipment).

Where states have more restrictive requirements, the employer must comply with the state laws. Fines up to $10,000 per violation can be levied for violations of child labor provisions.

Recordkeeping. FLSA requires employers to keep records for non-exempt workers on:

• Hours worked,
• Wages paid,
• Overtime wages, and
• Deductions.

There is no standard form required for keeping these records, nor is there a particular time-keeping method. Employers may use time clocks, written time sheets, or any other method they choose. Payroll records must be kept for three years and the following supplementary records have to be retained for two years:

• Basic employment and earning records,
• Wage rate tables,
• Work-time schedules, and
• Order, shipping, and billing records.

Postings. FLSA requires that employers prominently display a poster about the FLSA (the minimum wage poster). States may have additional posting requirements.

Portal-to-Portal Act. The Portal-to-Portal Act further defines what is considered a “workday” for paying overtime. The Act defines a “workday” as the period between:

• The time when the employee begins the principal activities of the job, and
• The time at which the employee stops performing those activities.

To help employers determine what constitutes hours of work which must be covered in determining overtime liability, the FLSA regulations deal with many specific situations, including:

• Waiting time
• On-call/standby
• Meals and breaks
• Training time
• Sleeping time
• Travel time

Some activities done prior to beginning a job and at its conclusion are considered part of the “workday” while others are not. Classification depends on whether the activities are viewed as an integral and indispensable part of the job.