Employers in 2019 spent $322 million resolving employee back wages claims brought by the U.S. Department of Labor, Wage and Hour Division (WHD). In the last five years, the WHD recovered more than $1.4 billion in back wages for employees. With numbers like those, it is easy to see why compliance with the Fair Labor Standards Act is vital for employers.
The Fair Labor Standards Act (FLSA) was enacted in 1938. The FLSA establishes the federal wage and hours laws that apply to nonexempt workers in the United States and its territories. The purpose of the FLSA is to create a set of rules regarding minimum wage, overtime pay, recordkeeping, and child labor standards affecting full-time and part-time workers in the private sector and federal, state, and local governments.
The Fair Labor Standards Act is a federal law. Make sure you also know and follow your state’s laws and company’s policy concerning minimum wage, overtime pay, recordkeeping, and child labor standards.
By partnering with a Professional Employer Organization (PEO), such as Resourcing Edge, HR professionals can assist you with the federal and state wage and hour laws for each of your employees worksites.
Nonexempt vs. Exempt Workers
Nonexempt workers are covered by FLSA’s minimum wage and overtime provisions. Nonexempt workers are usually considered as those who are paid on an hourly basis, regardless of the hourly rate paid. However, there are some exceptions, such as highly skilled workers in the computer field.
Exempt workers are not covered by the FLSA’s overtime provisions. FLSA exemptions are based on job duties and responsibilities as well as minimum salary. Exempt workers are usually considered as those who are paid the same amount weekly without regard to the number of hours worked. This group includes executive, administrative, and professional employees. FLSA also provides exemptions for some other employees, including certain specialized computer personnel and outside sales personnel.
Basic Minimum Wage and Overtime Standards
Currently, covered, nonexempt workers are entitled to a minimum wage of $7.25 per hour. There are special provisions for workers in American Samoa and the Commonwealth of the Northern Mariana Islands.
The overtime pay rate of not less than one and one-half times their regular rates of pay after 40 hours of work in a workweek. Overtime must be paid to nonexempt workers. Generally, the regular rate includes all payments made by the employer to the employee. These payments usually include the hourly rate, piece work rate, non-discretionary bonus. This list is not intended to be all-inclusive.
A “workweek” is defined as the consecutive seven-day period, the fixed and regularly recurring period of 168 hours used to calculate overtime pay. This is established by the employer and may begin on any day of the week and at any hour of the day.
Deductions made from wages for such items as cash or merchandise shortages, unearned, used vacation/PTO, employer-required uniforms, tools of the trade, etc., are not legal to the extent that they reduce the wages of employees below the minimum rate required by the FLSA or reduce the amount of overtime pay due under the FLSA.
Some workers are exempt from overtime pay requirements or both the minimum wage and overtime pay requirements. These requirements are narrowly defined; therefore, it is highly recommended that an employer confirm the exact terms and conditions of each.
- Recordkeeping – The Fair Labor Standards Act requires employers to keep extensive wage and hour records for each employee that includes personal information, wages, hours, and other items as required by the Department of Labor (DOL). Each of the employee records must be kept for minimum periods.
- Nursing Mothers – Employers are required to provide reasonable break time for a worker to express breast milk for her nursing child. The employer is required to provide a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public, which may be used by an employee to express breast milk.
- Child Labor Standards – The purpose of child labor restrictions is to protect children from working in dangerous occupations, for excessive hours, and at unsuitable times. These laws apply to all employees under 18. Typically all employees, including minors, must be paid at least the federal minimum wage per the FLSA. Minors who work overtime must be paid at time-and-a-half for all hours over 40 in a given week just like any other employee.
It is imperative to note that the above information is an introduction to the Fair Labor Standards Act. Wage and hour laws are very complex, and the FLSA requirements do not preempt state laws that provide greater protections to employees. You don’t need to do this on your own. With Resourcing Edge, companies can depend on our HR expertise to steer you through the intricacies of wage and hour laws.
If you’d like to learn more about how Resourcing Edge can help you with HR, payroll, benefits, and more so you can concentrate on your bottom line, contact us.
Jackie Clausnitzer, HR Services Partner at Resourcing Edge, has more than 25 years of HR experience gained at manufacturing and service companies. She is certified as a Professional in Human Resources (PHR) and a SHRM Certified Professional (SHRM-CP).