Understanding the FLSA

Enforced by the Wage and Hour Division of the US Department of Labor, The Fair Labor Standards Act (FLSA), a federal law first passed by Congress in 1938, is the governing legislation regarding minimum wage and overtime pay standards, as well employee record keeping and child labor regulations. As such, it’s one of the most important pieces of legislation for employers to be familiar with, especially since the Wage and Hour Division has more than doubled the amount of hours spent enforcing and investigating wage and hour violations in the last five years.

Below are a few key points employers need to be aware of when it comes to the FLSA. Please keep in mind that this is not a complete list - additional tools and in-depth information can be found on the Department of Labor’s website.

Who’s Covered?

The first step in understanding FLSA is understanding who it covers: non-exempt employees, both part-time and full-time, of private and public sector employers. The FLSA applies to employees of companies who engage in interstate commerce, manufacture or produce goods for interstate commerce, or who sell, handle or work on materials moved in or produced for interstate commerce. Not all employees who fit this description are included, however: employees of enterprises with less than $500,000 in annual dollar volume of business are not covered. The FLSA does apply to the following enterprises regardless of annual dollar business volume: hospitals; institutions that primarily engage in providing care for the sick, elderly, mentally ill or disabled who live on the premises; schools for mentally or physically disabled or gifted children; preschools, elementary and secondary schools; institutions of higher learning; federal, state and local government agencies.

Exempt vs. Non-Exempt

Exempt employees are not covered by FLSA; non-exempt employees are covered under FLSA. So who’s exempt? The answer to that question is not clear cut. The distinction between exempt and non-exempt is determined largely by job duties and responsibilities. Generally speaking executive, administrative and professional employees paid on a salary basis are exempt from both overtime and minimum wage provisions. Some employees are exempt from the minimum wage regulations but not the overtime regulations, or vice versa. Most provisions are industry- or profession-specific, and a detailed list can be found on the Department of Labor website.

Minimum Wage and Overtime

As of July 24, 2009, employers are required to pay employees who are not exempt from minimum wage provisions an hourly wage of no less than $7.25 per hour, although this rate varies from state to state. Employers with tipped employees (employees who regularly receive more than $30 per month in tips), are still required to pay a direct wage of at least $2.13 per hour, and to make up the difference if an employee doesn’t earn at least the minimum wage after tips are factored in.

FLSA provisions allow certain classes of workers to be paid less than minimum wage:

• Student learners
• Full-time students working in retail, service, agriculture or higher education enterprises
• Individuals whose earnings potential or capacity is impaired by a physical or mental disability

There are no FLSA provisions that limit the amount of hours of an employee can be scheduled to work each week, or how much overtime an employee can work, so long as the employee is over the age of 16. However, non-exempt employees who work more than the standard workweek of 40 hours are required to be paid overtime at a rate of at least one-and-a-half in overtime pay.

Record Keeping

Each employer of non-exempt employees covered under FLSA regulations is required to keep and maintain a record of certain information about each employee, including:

• Name and Social Security Number (or other identifying number used in payroll records)
• Address
• Birth date
• Sex
• Occupation
• Days and hours worked and date each workweek starts
• Basis on which employees are paid (hourly, salary, contract, etc.)
• Regular pay rate
• Total daily/weekly straight-time earnings and overtime earnings
• Total wages paid during each pay period
• Any additions to/deductions from the employee’s earnings
• Date of each payment and pay period covered

Child Labor

FLSA regulations for child labor are divided between agricultural work and other labor. The minimum age for most non-agricultural work is 14 years old, with exceptions for jobs like babysitting, delivering newspapers and performing in radio, TV or theatrical productions. In addition, employees under the age of 20 may be paid a special minimum wage of $4.25 per hour for the first 90 days of employment. Employees between the ages of 14 and 15 also have special provisions regarding what kind of hours they can work.

Complying With The FLSA

The responsibility to maintain FLSA compliance is place squarely on the shoulders of the employers. Employees covered under the FLSA have the right to file a complaint or initiate legal action against an employer they feel has violated the regulations. If an employer is found to have willfully violated wage or compensation law, the employer might face criminal charges or monetary penalties. Employers found to have willfully or consistently violated minimum wage or overtime regulations may be subject to a fine of up to $1,100 per violation. In cases involving child labor laws, the fines are significantly higher.

But businesses don’t have to shoulder the burden of FLSA compliance alone; companies can hire a professional employment organization (PEO) to help ensure compliance with this and other legislation, as well as providing additional human resources outsourcing services.

G&A Partners, a leading national professional organization (PEO) and human resources outsourcing provider, employs a team of HR experts who understand the ins and outs of human resources and employer-related laws. Learn how G&A’s highly trained staff can help your business become compliant with FLSA, HIPAA, PPACA, FMLA, COBRA and all of the hundreds of other federal, state and local laws regulating employers by calling 1-800-253-8562 or schedule a free business consultation.