The Fair Labor Standards Act: A Primer

The Fair Labor Standards Act (FLSA) is a federal law that governs minimum wage and overtime, record keeping, and youth employment laws.

Since July, 2009, the federal minimum wage for “covered,” “non-exempt” workers has been $7.25 per hour.  In addition, unless they are “exempt employees,” workers covered by the Act must receive overtime pay equal to at least time-and-a-half for hours worked in excess of 40 in a workweek.  Kids younger than 14 can only usually be employed by their parents, as actors or performers, as casual babysitters, or delivering newspapers.  Older kids have fewer restrictions, but are still usually restricted as to hours and prevented from working in certain hazardous occupations.  Employers of non-exempt workers are generally required to keep accurate (though not particularly extensive) records containing identifying information about the employee and data about the hours worked and the wages earned.

Sound simple?

If only it were.

Let’s start with a short quiz.

  • How many employees does a company have to have before it is required to offer health care under the Affordable Care Act?

If you said 50, you would be correct, for the time being anyway.

  • How many employees do you have to have to be liable for Title VII discrimination based on race, color, religion, sex (including pregnancy), national origin, age (40 or older), disability or genetic information?

Are you up on your anti-discrimination law?  If you said at least 15, you are probably right (though the Immigration Reform and Control Act of 1986 (IRCA) prohibits discrimination on the basis of national origin by smaller employers with 4 to 14 employees).

Ok, let’s get back to the FLSA.

  • How many employees do you have to have to be subject to the minimum wage and overtime, recordkeeping, and youth employment laws of the FLSA?

50?  No.

15?  No again.

Well, it’s a trick question, really.  The answer is that it really doesn’t matter how many employees you have.  All you have to be to be subject to the FLSA is to be engaged in a “covered enterprise.”

  • So, what’s a covered enterprise?

One that has at least 500,000k in annual revenue; OR one that runs a hospital, old-age home, home caring for the sick or mentally ill or a school; OR one that carries out the work of a public agency.

At this point you may be asking yourself why, under this definition of a covered enterprise, are minimum wage and the rest of the FLSA requirements are such a big deal?

Oh, yes… even if your business is not a “covered enterprise,” your employees will be likely still subject to the FLSA if they are (1) engaged in interstate commerce or in the production of goods for interstate commerce, or in any closely-related process or occupation directly essential to such production; (2) if they work in communications or transportation; regularly use the mails, telephones, or telegraph for interstate communication, or keep records of interstate transactions; handle, ship, or receive goods moving in interstate commerce; regularly cross State lines in the course of employment; or work for independent employers who contract to do clerical, custodial, maintenance, or other work for firms engaged in interstate commerce or in the production of goods for interstate commerce.

As you probably suspected, if that’s not quite everyone, it’s certainly a fairly large segment of the 155,613,000 or so members of the US workforce.

Of course there are a few wrinkles.

You may have heard that salaried employees are exempt from the FLSA, but just because an employee is paid a salary, this does not necessarily mean the employee is automatically exempt from the requirement to pay overtime, otherwise employers could simply pay all hourly employees an equivalent weekly salary and get around the law.

In fact, exemption from the wage and hour laws is only gained under one of these specific exemptions, each of which requires a salary of at least $455 per week :

  • Executive Exemption (requires that the employee be engaged primarily in managing the business or a business subdivision, directing at least two full-time employees and have authority to hire and fire or at least recommend hiring and firing).
  • Administrative Exemption  (requires that the employee be engaged in the performance of office or nonmanual work directly related to the business and the performance of tasks that include discretion and independent judgment in matters of significance).
  • Professional Exemption  (requires that the employee be required to use advanced knowledge,intellectual in character, requiring the consistent exercise of discretion and judgment–sometimes called the “learned professions” exemption).
  • Creative Professional Exemption  (requires that the employee be engaged in work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor).
  • Computer Employee Exemption  (requires that the employee be a computer systems analyst, computer programmer, software engineer or other similarly skilled worker making the equivalent of at least $27.63 an hour).
  • Outside Sales Exemption  (requires that the employee engaged in sales away from the employer’s place of business).
  • Highly Compensated Employees. (requires that the employee performs at least one other duty of an exempt employee).

So what sorts of jobs are typically non-exempt?

  • Blue collar workers, NO MATTER HOW HIGHLY PAID, in production, maintenance, construction and similar positions, trades such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, construction workers and laborers.
  • Public Safety, police, fire, first responders, paramedics, prison officers, park rangers, EMTs, ambulance personnel, hazmat workers, parole officers, probation officers… all regardless of rank or pay.

Other frequently asked questions:

What is Georgia’s minimum wage?

  • $5.15/hour.  In fact, only Minnesota, Arkansas, Georgia and Wyoming have minimums below the federal level at the moment.

If the Federal minimum wage is $7.25/hour, does it really matter if Georgia’s minimum is $5.15/hour?

  • Generall, no.  Federal law will trump state law in most if not all cases.

What about wait staff and bar tenders?  Do they have to earn minimum wage?  Are there any other exceptions?

  • The Georgia minimum wage for tipped employees is $2.13 per hour, the same as the federal minimum wage for tipped employees. The Georgia tipped wage applies to employees like waitresses, waiters, bartenders, valets, and other service employees who earn more than $30 in tips a month, BUT they must still earn at least minimum wage for the number of hours worked.
  • “Youth Minimum Wage Program” allows Kids under 20 to be paid a special minimum wage of $4.25 per hour for the first 90 days of employment with any employer. After the first 90 days have passed (or when the employee turns 20, whichever comes first) the employee must be given a raise to the full minimum wage.
  • There are certain exceptions for which employers have to obtain special certificates from the DOL (e.g., full time student program, student learner program, certain employees with disabilities).
  • Certain nonprofits apply for permission to hire at 85% of minimum wage.
  • There is also a range of special exceptions to minimum wage, overtime, and child labor laws that relate to specific jobs or professions, some of which are exempt from some parts of the law but not other parts, e.g., Airline employees (exempt from overtime requirements); Amusement/recreational employees in national parks/forests/Wildlife Refuge System (overtime); Babysitters on a casual basis (exempt from minimum wage and overtime requirements if employed on a casual basis); companions for the elderly; certain domestic employees who live-in; firefighters working in small (less than 5 firefighters) public fire departments; local delivery drivers and driver’s helpers; motion picture theater employees; newspaper delivery (minimum wage, overtime, and child labor laws); youth employed by their parents; and a range of others.

It is also important to note that minimum wage, overtime, and child labor laws apply equally to documented and undocumented workers alike.  Not only this, but the FLSA has specific record keeping requirements that are often violated by businesses who fail to keep proper records regarding undocumented workers, subjecting the business to greater penalties for violation when they are caught.

Penalties under the FLSA may include payment of all back wages or unpaid overtime, plus an equal amount as liquidated damages, plus, frequently, attorneys’ fees and court costs.  If the secretary of labor brings suit, willful violators can be assessed a fine of up to $10,000 plus imprisonment.  Additionally, employers who violate child labor provisions can be fined $11,000 per employee, increased to $50,000 per employee for death or serious injury, and doubled when violations are willful or repeated.  Moreover, not only the company itself, but owners, officers, even supervisors can be held personally responsible. 

The bottom line is that the FLSA applies to almost everyone, its complexity means that it is frequently misunderstood, and, unlike most federal laws governing employment relationships, it applies to both large and small businesses.

If you are in any doubt as to whether or not you, as an employer, are in compliance with the FLSA (which, it has to be said, involves far more than this brief summary could possibly suggest), speak to an employment lawyer at Briskin, Cross & Sanford, LLC.

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