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This section covers the key topics of Federal Wage & Hour Laws, including the Fair Labor Standards Act (FLSA), exempt and nonexempt employees, white collar exemption, minimum wage, overtime pay requirements, compensable time issues, child labor restrictions, enforcement and penalties, and public contracts laws.
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Section 2: Federal and State Wage-Hour Laws Originally Prepared by: Jennifer Harris, CPP June 2012 Updated by: Luanne Brown, CPP June 2014
Agenda • Questions from first week and distribution of books • Quiz on Section 1 and 2 • Overview of Section 2 • Break • Review of answers on Quiz • Small group practice problems
Topics To Be Covered • Fair Labor Standards Act (FLSA) • Exempt and Nonexempt Employees • White Collar Exemption • Minimum Wage • Overtime Pay Requirements • Compensable Time Issues • Child Labor Restrictions • Enforcement and Penalties • Public Contracts Laws
Fair Labor Standards Act: FLSA Regulates: *Does NOT Regulate: • Minimum wage and overtime rates • Recordkeeping by employer • Child labor restrictions • Equal pay for equal work • PTO, breaks, lunches • Frequency of pay, Termination Pay • Restrict hours for over age 16 *These areas are governed by other Fed or State laws
FLSA • Provides for: • Broad coverage of employers and employees to meet its stated goal of eliminating “conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers.”
Who’s Covered by FLSA? Two types of coverage: • Enterprise Coverage • Individual Employee Coverage Exempt & Non Exempt • Exempt: Not required to be paid minimum wage or O/T. Employer doesn’t have to keep certain records of work. • Non Exempt: Paid at least minimum wage for worked hours. Overtime for over 40 worked hours in a workweek. • Other Exempt Employees chart on page 2-34.
White Collar Exemption Bona fide administrative, executive, professional, and computer related professional employees as well as outside sales employees are exempt “white collar” employees. Determination is based on employees: • Primary duties • Level of discretionary authority • Minimum salary requirement
White Collar Exemption • Administrative • Executive • Professional • Computer Professional • Outside Sales *Chart on Page 2-6
Other FLSA Exemptions Highly Compensated Employee: Total annual compensation of at least $100,000 is an exempt “white collar” if the employee customarily and regularly performs the duties of: • Exempt Administrative • Executive • Professional *Section 2.4-2 through 2.4-4
Absences for Exempt Workers • Personal Reasons – deductions can be made of one or more full days but not partial days (does not include sickness or disability reasons). • Sickness or Disability Reasons – deductions for one or more full days if the employee is receiving pay under the employer’s sick/disability plan, state disability insurance law or worker’s compensation. • Jury duty – deductions cannot be made for jury, attendance as a witness or temp military leave. Employer can offset amounts received as fees however.
Absences for Exempt Workers • Safety Rule Infractions – deductions can be made for major violations. • Workplace Conduct Violation – can impose one or more unpaid full days if there is a written policy. (Suspension with written policy) • Initial & terminal weeks – employer is not required to pay full salary for first or last week of employment. Can pay a proportionate part of the full salary for time actually worked. • FMLA – exempt employee does not lose exemption for unpaid FMLA. Can be used in less than one day increments. • Furloughs – special considerations for private sector vs. public
Employers Comply • Review records of anyone making less than $23,600 annually. • Review records of anyone making more than $100,000 annually. • Use job analyses to revamp job descriptions. • Make status changes in payroll system. • Review and watch for union contract obligations • Communicate with Employees in advance.
Minimum Wage Must be paid for all hours worked or equivalent. Employees may be paid on piecework, salary, or commission basis so long as wages equal minimum hourly rate. • Federal minimum wage vs. state minimum wage $7.25 per hour as of 2009 for Federal. “Opportunity” wage for teenagers • Under age 20 • $4.25 per hour for the first 90 consecutive calendar days
Tips & Tip Credit Tipped Employees: • Paid minimum of $2.13 per hour. • Regularly receive $30.00 or more in tips. Employer: • Minimum of $2.13 plus tips >= $7.25 per hour. • Must pay the difference if not. • Allowed ‘Tip Credit’ $5.12 ($7.25 -$2.13).
Equal Pay for Equal Work Equal Pay Act: • Equal pay for men & women doing equal work under similar working conditions. • Enforced by the EEOC. (Equal Employment Opportunity Commission) Equal Work: • Jobs requiring equal skill, effort, and responsibility.
Overtime Pay Requirements Requirements: • 1 ½ times the ‘regular rate of pay’. • Pay for over 40 hours physically worked within a workweek. Not included: • Sick leave hours • Holidays hours • Vacation hours
Regular Rate of Pay An hourly pay rate determined by dividing the total regular pay actually earned for the workweek by the total number of hours worked. Special considerations in determining: • Employee works more than one pay rate • Salaried nonexempt employees • Workweeks < 40 hours • Piece workers • Tipped employees • Daylight savings What is not included in Regular Rate of Pay: • Gifts • Paid time off and reimbursed expenses. • Volunteer work counted toward group’s bonus. • Benefit Plan Contribution • Stock Options • Overtime Compensation *** see page 2-49 • Premium Pay for extra days worked like holiday or under a union contract. • Discretionary Bonuses Not paid pursuant to a promise made in advance, a contract, or some other agreement.
Compensable Time Issues Employees must be compensated for all hours worked & during which the employee is under the employer’s control. • Unauthorized overtime • Meal/rest periods • Travel time • On-call time • Waiting time • Meetings / training • Prelim / postlim (Portal to Portal Act) • Medical • Child labor restrictions • Comp Time – Public Sector only***
Child Labor Restrictions • Under age 18: no hazardous work as defined by Wage & Hour Division. • Age 14 & 15 • Non hazardous • Not during school hours • Limited to 3 hours per day, and 18 hours a week (between 7 am – 7 pm) when school is in session • Under age 14: generally prohibited unless minor is working for a parent. *Watch state laws, which may be more restrictive
Enforcement & Penalties FLSA is enforced by the Wage & Hour Division of the US Department of Labor’s Employment Standards Administration. • Investigate complaints • Sue to gain compliance • Seek damages • Employee’s can sue for back wages and overtime • Liquidated damages for willful violations • Employers can’t retaliate against an employee complainant Statute of limitations: 2 years (3 years if willful)
Public Contracts Several other federal laws regulate minimum wages and overtime pay for employers performing under contracts with the federal government. • Walsh-Healey Public Contracts Act • Davis-Bacon Act • Contract Work Hours & Safety Standards Act • McNamara-O’hara Service Contract Act • Copeland Anti-Kickback Act Pages 2-71 & 2-72
Small Groups • Discussion • Section 2 Calculations
Next Class Section 3: Taxable & Non-taxable Compensation Presented by Luanne Brown
