business of Medicine

toolkit

Employment Practices Toolkit

Fair Labor Standards Act Overview

Minimum wage and overtime

The Fair Labor Standards Act (FLSA) is a federal law that establishes minimum wage, overtime pay, recordkeeping, and other obligations for employers.  Nonexempt workers – commonly referred to as hourly employees – are entitled to a minimum wage of not less than $7.25 per hour.  Overtime pay at a rate not less than one and one-half times the regular rate of pay is also required after 40 hours of work in a workweek.

Minimum Wage: The federal minimum wage is $7.25 per hour.  However, many states also have minimum wage laws that may be higher than the federal minimum wage.  In cases where an employee is subject to both state and federal minimum wage laws, the employee is entitled to the higher minimum wage.

Overtime: Nonexempt employees must receive overtime pay for hours worked over 40 per workweek (any fixed and regularly recurring period of 168 hours - seven consecutive 24-hour periods) at a rate not less than one and one-half times the regular rate of pay. There is no limit on the number of hours employees may work in any workweek. The FLSA does not require overtime pay for work on weekends, holidays, or regular days of rest, unless overtime (hours over 40 per workweek) is actually worked on such days.

Exemptions:  Some employees may be “exempt” from the overtime requirement, meaning an employer does not have an obligation to pay those employees overtime.  Employers sometimes believe an employee is “exempt” from overtime simply because the employee is paid a salary or has a college degree.  Both are wrong.  There are specific rules for employees to be “exempt” from overtime.  Rules for some of the more common exemptions are listed below:

Executive, administrative and personal exemptions

Executive Exemption

To qualify for the executive employee exemption, all of the following tests must be met:

·       The employee must be compensated on a salary basis at a rate not less than $455 per week;

·       The employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;

·       The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and

·       The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.

Administrative Exemptions

To qualify for the administrative employee exemption, all of the following tests must be met:

·       The employee must be compensated on a salary or fee basis at a rate not less than $455 per week;

·       The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and

·       The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

Professional Exemption

To qualify for the learned professional employee exemption, all of the following tests must be met:

·       The employee must be compensated on a salary or fee basis at a rate not less than $455 per week;

·       The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment;

·       The advanced knowledge must be in a field of science or learning; and

·       The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.

Vacation/Sick Leave/ Holidays:  The FLSA does not require payment for time not worked, such as vacations, sick leave or holidays.  These benefits are a matter of agreement between an employer and an employee.

Breaks/Meal Periods: The FLSA does not require breaks or meal periods be given to workers.   However, when employers do offer short breaks (usually lasting about 5 to 20 minutes), federal law considers the breaks as compensable work hours that would be included in the sum of hours worked during the work week and considered in determining if overtime was worked. Bona fide meal periods (typically lasting at least 30 minutes and being completely uninterrupted by work), serve a different purpose than breaks and, thus, are not work time and are not compensable.

Record keeping and child labor

Record keeping: Employers must display an official poster outlining the requirements of the FLSA. Employers must also keep employee time and pay records.

Child Labor: There are some restrictions on child labor.  These provisions are designed to protect the educational opportunities of minors and prohibit their employment in jobs and under conditions detrimental to their health or well-being.

State Law:  Some states and cities have laws governing pay and breaks.  Employers must comply with those laws.

Article created by Jackson Lewis and republished here with permission.

Disclaimer

The information provided in this resource does not constitute legal, medical or any other professional advice, nor does it establish a standard of care. This resource has been created as an aid to you in your practice. The ultimate decision on how to use the information provided rests solely with you, the PolicyOwner.