Fair Labor Standards Act

What is the Fair Labor Standards Act?

The Fair Labor Standards Act (FLSA) was enacted as part of FDR’s New Deal.  One goal of the Act was to force employers to spread work among more employees in order to help relieve unemployment.   The FLSA regulates wages and hours.  Specifically, the law regulates:

  • The minimum wage
  • Hours worked
  • Overtime
  • Child Labor

Who is covered by the FLSA?

Almost all employers must comply with the FLSA.  The FLSA applies to the government, businesses with more than $500,000 revenue and businesses that engage in interstate commerce. 

Are there any employees who are not covered by the FLSA?

Yes.  There are certain employees who are not subject to the minimum wage and overtime requirements of the FLSA.  The following kinds of workers are the main exemptions from the FLSA’s minimum wage and overtime rules:

  • Executive, administrative, and professional employees who are paid a salary – Also known as the “white collar workers” exemption.
  • Independent contractors
  • Volunteer workers
  • Outside salespeople
  • Employees of seasonal recreational businesses

What is the definition of a White Collar Worker?

There are two tests that an employee must meet before this exemption applies:

  • Salary Test:  First, an employee must earn at least $455 a week and be paid on a salary basis.  Additionally, an employer must pay an employee unless the worker takes less than a week off for one of the following reasons, including:  handling personal affairs; family or medical leave; disability or illness; to serve on a jury; as a penalty imposed in good faith for violation of safety or disciplinary conduct. 
    • If an employer does, in fact, improperly deduct money from a salaried employee’s pay check the employer must pay overtimes to workers who were improperly deducted from.  However, if the deductions were isolated or inadvertent and the employer reimburses the employee they will fall into a “Safe Harbor” provision. 
    • Second, an employer falls into the “Safe Harbor” provision if they have a clearly communicated policy prohibiting improper deductions, reimburse employees for the money improperly withheld and make a good effort to comply. 
  • Job Duties Test:  In addition to the Salary Test, an employee must satisfy the Job Duties Test in order to be exempt from the FLSA. 
    • Administrative Employees:  An employee’s primary duty must be to perform nonmanual work.  The work must include the exercise of discretion and independent judgment regarding matters of significance. 
    • Executive Employees:  An executive employee must meet three requirements:
      • Primary Duty must be to manage the company or subdivision of a department. 
      • Must regularly supervise at least two full-time employees
      • Must have authority to hire or fire, or the employee’s opinion about hiring and firing must be give substantial weight. 
      • Professional Employees:  There are two types of professional employees – learned professionals and creative professionals. 
        • Learned Professional must: 1) perform work that requires advanced knowledge, is predominantly intellectual in nature, and requires the consistent exercise of discretion and judgment; 2)  The Advanced knowledge is in a field of science or learning; and, 3) the advanced knowledge is customarily acquired through a prolonged course of instruction. 
        • Creative Professional must: have the primary duty of performing work that requires invention, imagination, originality in a recognized artistic or creative field. 

What are the major provisions of the FLSA?

Minimum Wage: The federal minimum wage is $7.25. However, on January 1, 2013, the Rhode Island minimum wage will increase from $7.40 to $7.75.  The tipped employee minimum wage is $2.89.  In order to qualify, the amount of tips must bring the hourly wage at least up to the minimum wage. 

  • Deductions:  The FLSA allows employers to withhold money from a worker’s paycheck to satisfy a debt as long as it does not cause the employee’s earnings to fall below the minimum wage. 
  • Breaks:  The FLSA does not require an employer to provide break time.  However, in Rhode Island, employers with five or more employees are required to give an employee 20 minutes of break time after six hours of work or 30 minutes of break time after eight hours of work. 
    • Employers do not have to pay employees for their break time as long as the employee is completely relieved of work duties.

Overtime:  Certain employees are entitled to overtime pay (time and a half) for each hour worked if they worked more than 40 hours per week.   Rhode Island also requires to employer’s to provide overtime on Sundays. 

  • There are some additional workers who are not covered, they include:
    • Rail, air and motor carrier employees
    • Employees who sell cars, airplanes and boats
    • Taxi drivers
    • Movie theatre employees
    • Delivery drivers

What are the penalties for not complying with FLSA?

Back Wages:  An employer can be liable for two years of back pay.  However, if it is found that the employer committed a willful violation of the statute, the employer can be liable for three years of back wages.

Liquidated Damages:  An additional penalty equal to the back wages, if the employer willfully violated the statute. 

Other Resources:

Fair Labor Standards Act:  Employee / Employer Advisor

www.dol.gov/elaws/flsa.htm

Overtime Pay Requirements of the Fair Labor Standards Act

www.dol.gov/esa/whd/regs/compliance/whdfs23.pdf

Fair Pay Fact Sheet by Exemption Under the Fair Labor Standards Act

www.dol.gov/esa/whd/regs/compliance/whdfs21.pdf