The Fair Labor Standards Act

(Note: Information comes from the U.S. Department of Labor)

Employers and Workers Covered Under the Fair Labor Standards Act

MINIMUM WAGE

The federal minimum wage provisions are contained in the Fair Labor Standards Act (FLSA). The federal minimum wage is $7.25 per hour, effective July 24, 2009. Many states also have minimum wage laws. Some state laws provide greater employee protections, and employers must comply with both. The FLSA does not provide wage payment collection procedures for an employee’s usual or promised wages or commissions in excess of those required by the FLSA. However, some states do have laws under which such claims (sometimes including fringe benefits) may be filed.

Covered Employers

Employees who work for certain businesses or organizations (or "enterprises") are covered by the FLSA. These enterprises, which must have at least two employees, are:

•  (1) those that have an annual dollar volume of sales or business done of at least $500,000, and

• (2) hospitals, businesses providing medical or nursing care for residents, schools and preschools, and government agencies

Covered Workers

Even when there is no enterprise coverage, employees are protected by the FLSA if their work regularly involves them in commerce between States ("interstate commerce"). The FLSA covers individual workers who are "engaged in commerce or in the production of goods for commerce."

Examples of employees who are involved in interstate commerce include those who: produce goods (such as a worker assembling components in a factory or a secretary typing letters in an office) that will be sent out of state, regularly make telephone calls to persons located in other States, handle records of interstate transactions, travel to other States on their jobs, and do janitorial work in buildings where goods are produced for shipment outside the State.

Also, domestic service workers (such as housekeepers, full-time babysitters, and cooks) are normally covered by the law.

Misclassification of Independent Contractors

Professional employees (including full-time, part-time, and seasonal employees) and independent contractors present different legal obligations to a business, particularly in instances involving payment of overtime. The issue of misclassification occurs when a worker is improperly classified as an independent contractor.

Independent contractors are not entitled to overtime compensation, whereas, non-exempt employees must be paid overtime compensation. Employers are not allowed to label an employee as an independent contractor in attempt to avoid paying overtime compensation. Employers cannot evade this obligation, even if the employer enters a contract with an employee stating otherwise.

If workers are properly classified as an independent contractor, the worker is typically eligible for only the specific compensation stated in a contract. 

Overtime Pay

Under the Fair Labor Standards Act (FLSA), covered, non-exempt employees are entitled to time and a half pay for any hours worked over 40 per week. Most hourly employees are entitled to overtime pay.

An employer who requires or permits an employee to work overtime is generally required to pay the employee premium pay for such overtime work. Unless specifically exempted, employees covered by the FLSA must receive overtime pay for hours worked in excess of 40 in a workweek at a rate not less than time and one-half their regular rates of pay. There is no limit in the FLSA on the number of hours employees aged 16 and older may work in any workweek. The FLSA does not require overtime pay for work on Saturdays, Sundays, holidays, or regular days of rest, as such.

The FLSA applies on a workweek basis. An employee's workweek is a fixed and regularly recurring period of 168 hours -- seven consecutive 24-hour periods. It need not coincide with the calendar week but may begin on any day and at any hour of the day. Different workweeks may be established for different employees or groups of employees. However, averaging of hours over two or more weeks is not permitted. Normally, overtime pay earned in a particular workweek must be paid on the regular pay day for the pay period in which the wages were earned.

The regular rate of pay cannot be less than the minimum wage. The regular rate includes all remuneration for employment except certain payments excluded by the FLSA itself. Payments which are not part of the regular rate include pay for expenses incurred on the employer's behalf, premium payments for overtime work or the true premiums paid for work on Saturdays, Sundays, and holidays, discretionary bonuses, gifts and payments in the nature of gifts on special occasions, and payments for occasional periods when no work is performed due to vacation, holidays, or illness.