Chapter 12 Wages, Hours & Pay Equity

1. Chapter 12 Wages, Hours & Pay Equity

2. Statutory Basis: Wage & Hour • Fair Labor Standards Act of 1938, as amended, requires employers to pay his or her employees a minimum wage and requires overtime pay for work in excess of forty hours per week • Minimum wage is the least amount a covered employee must be paid in hourly wages • FLSA also prohibits pay differentials based solely on gender • Purpose is to ensure that all workers maintain a standard of living that keeps them from poverty

3. General Provisions • Administered by Department of Labor (DOL)’s Wage and Hour Division • Regulates child labor, wages, and hours • Requires recordkeeping by employers • Contains anti-retaliation provisions • Employees may receive back pay in cases of violations

4. Covered Employees • Individual coverage • Employees whose jobs directly involve interstate commerce • Enterprise coverage • All employees of businesses engaged in interstate commerce • Federal employees are covered • Covers most state and local government employees

5. Minimum Wage • On May 25, President Bush signed a spending bill that, among other things, amended the FLSA to increase the federal minimum wage in three steps: • to $5.85 per hour effective July 24, 2007; • to $6.55 per hour effective July 24, 2008; • and to $7.25 per hour effective July 24, 2009. • (up from $.25 per hour in 1938) • Overtime rate is one and one-half times the employee’s regular hourly rate • Exemptions exist for both the wage and overtime provisions

6. Minimum Wage • Minimum Wage Laws in the States http://www.dol.gov/whd/minwage/america.htm • Minimum Wage for Tipped Employees http://www.dol.gov/whd/state/tipped.htm

7. Minimum Wage – Special Rules • Tipped Employees: Employees who customarily and regularly receive at least $30/month in tips may be paid at the hourly wage of $2.13/hr, as long as hourly wage plus tips equals the minimum wage. • Opportunity Wage: A minimum wage of $4.25 an hour applies to workers under 20 during their 1st 90 consecutive calendar days of employment with the employer. • After receiving a certificate from the Wage & Hour Division, employers may pay special minimum wages to workers who have disabilities.

8. FLSA: Overtime Pay • Overtime pay is 1 ½ times the regular pay for each hour in excess of 40 hours in a workweek. • Except for minors, there is no limitation on the number of hours an employee may work in a workweek. • Overtime pay must be calculated based on compensable time (time spent principally for the employer). • Public employers only may provide “compensatory time” instead of overtime pay.

9. Chao v. Gotham Registry • Facts: An employment agency, Gotham placed nurses temporarily at hospitals. The nurses signed in and out on time sheets which were sent to Gotham for payment, and then billed to hospitals. Despite a rule forbidding overtime, nurses frequently worked overtime at the hospitals’ request, as Gotham knew. • Issue: Did Gotham “suffer or permit” the nurses to work overtime? If so, they are liable for overtime pay. • Held: Yes. If an employer knows that overtime is being performed, and permits it, the employer is liable for overtime pay.

10. FULL-TIME STUDENT PROGRAM • The Full-time Student Program is for students employed in retail or service stores, agriculture, or colleges. • The employer can obtain a certificate which allows the student to not be paid <85% of the minimum wage. • Students are limited to 8 hours a day and no more than 20 hours a week when school is in session, and 40 hours when school is out.

11. STUDENT LEARNERS • This is for high school students at least 16 years old who are enrolled in vocational education. • The employer can obtain a certificate from the DOL which allows student to not be paid less than 75% of the minimum wage.

12. Maximum Hours • FSLA does not limit the number of hours employees may work • Established 40 hours as a normal workweek • Comp time may be substituted for overtime pay in some situations

13. EXEMPTIONS • Some employees are exempt from both the minimum wage and overtime pay provisions. • A common example would be executives, administrators, or professionals who are paid on a salary basis.

14. EXEMPTIONS • Some employees are exempt from the minimum wage provisions or the overtime pay provisions. Some are exempt from the child labor laws. • Some examples would include: • Aircraft salespeople – OT • Workers with disabilities – MW • Federal criminal investigators – OT & MW • Newspaper delivery – OT, MW & CL • http://www.dol.gov/elaws/esa/flsa/screen75.asp

15. Primary Exemptions from FLSA • Executive • Management is primary duty; supervise others; highly compensated • Administrative • Primary duty is performing office work directly related to management; exercises discretion; highly compensated • Professional • Primary duty requires advanced knowledge and discretion and judgment • Outside salespeople • Computer programmers • Teachers

16. Two Primary Tests • Duties Test • To determine whether employee’s duties are genuinely executive, administrative, or professional • Not controlled by job title • Must be paid a salary • Salary Basis Test • Must be paid a pre-specified sum of at least $455/week • Pay cannot be docked for off time (pay docking rule)

17. In 2004 , the DOL issued new regulations that changed the classification of some employees. • For example, • If you earn less than $455 a week or $23,660 a year, you are entitled to overtime. • Workers in executive jobs are not entitled to overtime if they are primarily managers, oversee 2 or more workers, and have the power to hire or fire or recommend such action. • Administrative workers are exempt if their chief duties are directly related to the management of an operation and they have discretionary decision-making power.

18. Just the Facts • Store managers at a gasoline station/convenience store chain earn a base salary of $522/wk and are eligible for a bonus that could bring their pay to a maximum of $2500/month. Managers work at least 50 hours per week and are on-call 24/7. They spend about 60 percent of their time performing non-managerial tasks, such as stocking shelves, operating registers, and cleaning bathrooms. Store managers also perform managerial tasks, including supervising employees, hiring, training, scheduling, and disciplining employees. Store managers recommend pay increases and terminations to district managers, but do not decide these matters unilaterally. District managers typically visit stores once or twice a week and communicate frequently with store managers via phone and e-mail. Are the store managers exempt executives? • Thomas v. Speedway SuperAmerica, 506 F.3d 496 (6th Cir. 2007)

19. Child Labor Laws • Most children cannot work before age 16 • Age 18 is the minimum age for hazardous work • Children between the ages of 14 and 16 may work at certain job types • State laws may be more strict and, if so, override federal law

20. Child Labor in Georgia • No minor under 12 may be employed. • Minors under 16 who have not graduated must have a work certificate from school. • Minors under 16 may not be employed between the hours of 9:00 p.m. and 6:00 a.m., more than 4 hours a day during the school year, more than 8 hours a day during vacations and not more than 40 hours a week. (May be different rules for agricultural industries.) • Minors under 16 may not be employed in a “dangerous occupation.”

21. Federal Law Does Not Cover: Lunch requirements • An employer does not have to provide lunch or coffee breaks. Also, an employer does not have to pay employees for lunch breaks that they are given. • Some states have mandatory meal breaks. These states require meal periods: California, Colorado, Connecticut, Delaware, Illinois, Kentucky, Maine, Massachusetts, Minnesota, Nebraska, Nevada, New Hampshire, New York, North Dakota, Oregon, Rhode Island, Tennessee, Washington, and West Virginia. • To find your state’s requirements, consult the Department of Labor’s chart on meal periods.

22. Federal Law Does Not Cover: Coffee Breaks • The federal government does not require coffee breaks. However, any short breaks (usually 5-20 minutes) that you are given must be paid. • A few states require breaks. In these states, you generally get a 10-minute break for every 4-hour shift. These states include: California, Colorado, Illinois, Kentucky, Minnesota, Nevada, Oregon, and Washington. • For your state’s requirements, the Department of Labor has a rest period chart.

23. Management Considerations • Do not make exceptions to child labor laws • Excessive overtime may indicate the need for more employees • Know which employees are exempt from wage and hour laws • Conduct periodic workplace audits to ensure efficiency

24. Equal Pay Act • Men and women doing substantially equal work at the same employer must be paid the same wage. • Defenses: • A seniority system • A merit pay system • A payment system based on quality or quantity of production • Some factor other than sex

25. Equal Pay and Comparable Worth • Despite the Equal Pay Act, women earn on average 77 cents for every dollar earned by men. • Women’s salaries may be equal by the year 2050. • The EPA overlaps with Title VII’s general prohibition against discrimination in employment on the basis of gender. • EPA is concerned with the content of the job

26. Comparable worth • A Title VII action for pay discrimination based on gender, in which jobs held mostly by women are compared with comparable jobs held mostly by men who are paid more than the women, to determine if there is gender discrimination.

27. Just the Facts • A female human resource manager announced that she would be retiring. Her replacement, a male, was brought in before she left and the two overlapped for a period of five months. The replacement was paid $7000 per year more than the woman. The company said that it had re-designed the position to make it more professional and include more supervisory and managerial functions. The added recruiting and hiring tasks were relatively simple ones that the woman also had a role in although less extensively, during her employment. The managerial duties were limited to ensuring that the other staff in a three person office were at work on time. The duties did not include “instructing, evaluating, or training them.” Can the female establish a prima facie case of pay discrimination under the Equal Pay Act? • Burkett v. De Wafelbakkers, Inc., 2007 U.S. Dist. LEXIS 4875 (E.D. Ark.)

28. What Would You Do? • You have just been hired to replace the outgoing HR Manager, who has been with the firm for more than 40 years. He comes from an era when it was routine for women to be paid less than men and you discover that, indeed, the few saleswomen hired by the firm are paid less than the salesmen for doing exactly the same job. What would you do?