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FLSA: How to Avoid Costly Hour and Wage Problems

This quick reference guide discusses how to distinguish between exempt and non-exempt employees under FMLA.

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FLSA: How to Avoid Costly Hour and Wage Problems

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  1. FLSA: How to Avoid Costly Hour and Wage Problems

  2. What is FLSA? Fair Labor Standards Act (FLSA) : • Sets standards for minimum wage and overtime pay. • Establishes record keeping standards. • Prescribes child labor standards. FLSA does not regulate: • vacation, holiday, severance, or sick pay. • meal or rest periods, holidays off, or vacations. • premium pay for weekend or holiday work. • pay raises or fringe benefits. • discharge, termination, or final payment procedures.

  3. Scope of FLSA • Every employee working in the US is covered by FLSA. • Two Types of Coverage: • Enterprise Coverage: If an enterprise is covered, all employees of the enterprise are entitled to FLSA protections. • Individual Coverage: Even if the enterprise is not covered, individual employees may be covered and entitled to FLSA protections.

  4. Minimum Wage and Overtime Pay Requirements • Covered, non exempt employees must be paid not less than federal minimum wage for all hours worked. • Federal minimum wage is $7.25 per hour effective July 24, 2009. • Minimum wage includes : • Wages • Commissions • Certain bonuses • Tips received by eligible employees • Reasonable cost of room, board and other “facilities” provided by the employer for the employee’s benefit • Covered non- exempt employees must receive one and one-half times the regular rate of pay for all hours worked over forty in a workweek.

  5. Hours Worked and its Components • Hours worked include all the time during which an employee is required to be on the employer’s premises, on duty, or at a prescribed workplace. • The main components of hours worked include: • Suffer or permit to work • Waiting time • Travel time • On-call time • Training time • Sleep time

  6. FLSA Minimum Wage and Overtime Exemptions The most common FLSA minimum wage and overtime exemptions, often called “white collar” exemptions, applies to certain: • Executive Employees • Administrative Employees • Professional Employees • Outside Sales Employees • Computer Employees To qualify for exemption, employees must meet certain tests regarding their salary level and job duties.

  7. FLSA Pitfalls to Avoid • Improperly applying an exemption. • Failing to pay for all the hours an employee is suffered or permitted to work. • Limiting the number of hours employees are allowed to record. • Failing to include all pay required to be included in calculating the regular rate for overtime. • Making improper deductions from wages that cut into required minimum wage or overtime. • Treating an employee as an independent contractor.

  8. Want to learn more about FLSA, its requirements and best practices to comply with them? ComplianceOnline webinars and seminars are a great training resource. Check out the following links: • Fair Labor Standards Act: Are Your Employees Classified Correctly? • The In's and Out's of FLSA • How to Conduct FLSA Classification Self-Audit • Avoiding Costly Wage and Hour Problems • How to Pay Overtime Correctly under FLSA • Handling Supplemental Pay Under the FLSA

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