1.b. Fair Labor Standard Act (FLSA)

Mandate

1. Requires that minimum wage be paid to all covered employees 2. Requires overtime pay is paid for work in excess of 40 hours per week 3. Significantly restricts the employment of children

Non-exempt employees

employees who do not meet any of one of the FLSA exemption tests and are paid on an hourly basis and covered by wage and hour laws regarding minimum wage, overtime pay and hours worked.

Fair Labor Standard Act

is a federal law founded in 1938 which establishes minimum wage, overtime pay eligibility, recordkeeping, and child labor standards affecting full-time and part-time workers in the private sector and in federal, state, and local governments.

What companies do not conduct inter-state commerce?

very small local who do not udalize the internet (farmer and the farmer produces beets) The farmer grows her own beets and does not buy seeds or pesticides and only sells its beets at a roadside stand and does not accept credit cards.

The Portal to Portal Act of 1947

was an Act of Congress on United States labor law, passed to limit the remedies available in the Fair Labor Standards Act of 1938. Example "People wanted to be paid for travel time to work but this law made sure people couldn't request everything from employers.

Minimum Wage

Covered nonexempt workers are entitled to a minimum wage - "Regular range of pay" must be equal to minimum wage - "Tipped Employees": Get tips of more than $30 a month, can be paid minimum wage equal to $2.13 as long as they earn federal wage when tips are included

DOL Regulations

Department of Labor has issued regulations defining the scope of the Section 13(a)(1) exemptions. These regulations cannot be set aside unless the Secretary exceeds his authority, or if the regulations are "arbitrary, capricious, or an abuse of discretion"

Domestic Service Workers

Domestic service employment - services of a household nature by an employee in or about a private home of the person by whom they are employed

Examples of employees who are involved in interstate commerce include those who:

Examples of employees who are involved in interstate commerce include those who: produce goods (such as a worker assembling components in a factory or a secretary typing letters in an office) that will be sent out of state, regularly make telephone calls to persons located in other States, handle records of interstate transactions, travel to other States on their jobs, and do janitorial work in buildings where goods are produced for shipment outside the State.

Most Commons White Collar Exemptions

Executive Administrative Professional Outside Sales Highly Compensated

TRUE OR FALSE Car salesman are covered bc they are making sales on the business

FALSE Car salesman are not covered bc they are making sales on the business

Highly Compensated Exemption

Highly compensated employees performing office or non-manual work and paid total annual compensation of $100,000 or more (which must include at least $455 per week paid on a salary or fee basis) are exempt from the FLSA if they customarily and regularly perform at least one of the duties of an exempt executive, administrative or professional employee identified in the standard tests for exemption. You don't have to meet all requirement of exemptions you can just meet one.

Investigate Powers of the WHD

Inspect the facilities Review records Subpoena records Question employees

What the FLSA Requires

Minimum wage set at a federal standard for all hours worked Overtime pay at time and one-half for all hours worked over 40 in a single workweek the federal law says any person who works over 40 weeks gets time and a half for every hour over. California doesn't use a workweek standard they have a workday standard if they work more than 8 hours a day. Colorado has if you work 12 straight hours you get a daily overtime rate. Company gets to set the work week as long as it is 7 consecutive days and define it somehwere. Be Aware of Differences in State Law!!!

Interstate commerce

Trade, commerce, transportation, transmission, or communications among the several states or between any state and any place outside of it.

Enterprise Coverage

Employees who work for certain businesses or organizations (or "enterprises") are covered by the FLSA.

WHD Enforcements may include:

Supervising settlements in which the employer pays back wages to employees. Suing an employer on behalf of employees due back wages. Suing for civil penalties of up to 1,100 per violation. Suing for an injunction to prevent the sale and transportation of illegally produced goods.

TRUE OF FALSE The employee must be customarily and regularly engaged away from the employer's place or places of business.

TRUE BITASSSESSSSSS The employee must be customarily and regularly engaged away from the employer's place or places of business.

Who is Subject to the FLSA and does it cover most employees or no?

Most all with employees Profit or Not-for-Profit* Annual sales or business of $500K (does not apply to hospitals or schools) Conduct inter-state commerce

TRUE OR FALSE Pharmaceutical reps- would follow under this because they will be selling from their home office and go to hospitals

TRUE Pharmaceutical reps- would follow under this because they will be selling from their home office and go to hospitals

TRUE OR FALSE The employee must have the authority to hire or fire other employees, or the employee's suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.

TRUE The employee must have the authority to hire or fire other employees, or the employee's suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.

Coverage

- Is there an employee/employer relationship? - Is the employee covered or is employer an enterprise? - Do any exemptions apply?

Is there an employee/employer relationship?

-Use economic employee test - Trainees not considered employees if: - Training is similar to school, - Training is for benefit of trainee, - Do not displace regular workers, - No guarantee of job, and - No wages

These enterprises, which must have at least two employees, are:

1.those that have an annual dollar volume of sales or business done of at least $500,000 (goodwills of the world) 2.hospitals, businesses providing medical or nursing care for residents, schools and preschools, and government agencies (iu, Iu health) have to have at least 2 employees

Be Aware of Differences in State Law!!!

Be Aware of Differences in State Law!!! Both states and cities will set their own minimum wage and employees will get the benefit of the most. Cook county- gets $12 however illinois is $11 In Indiana federal government made a law that that cities can not make their own minimum wage.

Do any exemptions apply?

Burden falls on employer - Domestic Service Workers - White Collar - Highly Compensated Individuals - Outside Sales - Computer Professionals

Gross of Volume of Sales

Business must have an annual gross volume (AAGV) of sales not less than 500,000. Same Employers such as the government or hospitals are not subjected to this test.

Exemptions

Certain employees are exempt from the minimum wage and overtime requirements. ex: lobster fisherman If you are dealing with any type of unique industry you should check to make sure there is no random exemption

Individual Coverage

Even when there is no enterprise coverage, employees are protected by the FLSA if their work regularly involves them in commerce between States ("interstate commerce"). The FLSA covers individual workers who are "engaged in commerce or in the production of goods for commerce."

White Collar

Exempts individuals in a bon fide executive, administrative, or professional capacity from minimum wage and overtime requirements - Salary Test: $455 per week, cannot be reduced - Duty Test: Primary duty - Principal, main, major or most important duty performed

Outside Sales

Primary duty of making sales outside the employers principle place of business

Child Labor Restrictions

Prohibits use of "oppressive child labor" • 18 or older are not subject to restrictions • 16 and 17 may perform any job not declared hazardous, and have no restrictions on hours • 14 and 15 may work outside school hours in various nonmanufacturing, non-mining, nonhazardous jobs under some restrictions

Individual Coverage (FLSA)

Protections offered to employees if their work regularly involves them in interstate commerce and domestic service workers, such as housekeepers, babysitters, and cooks.

Enterprise Coverage (FLSA)

Protections offered to employees under the FLSA who work for certain businesses or organizations that have at least two employees and do at least $500,000 a year in business OR involved in industries such as hospitals, nursing homes, schools and preschools, and government agencies.

Exempt Employees (FLSA)

Salaried employee (Not paid according to hours worked) Do not get overtime. So comp time is fine.

White Collar Exemptions

Section 13(a)(1) of the Fair Labor Standards Act provides an exemption from both minimum wage and overtime for "any employee employed in a bona fide executive, administrative, or professional capacity...or in the capacity of an outside salesman (as such terms are defined and delimited from time to time by regulations of the Secretary...)"

Steps in the audit process

Step 1- Determine FLSA Coverage Step 2- Review technical compliance. Step 3- Interview employees Step 4- Present Findings

The advanced knowledge must be in a field of science or learning; and...........

The advanced knowledge must be in a field of science or learning; and The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.

The employee must be compensated on a salary basis (as defined in the regulations) at a rate not less than .............

The employee must be compensated on a salary basis (as defined in the regulations) at a rate not less than $455 per week;

Administrative Exemption The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than ........

The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;

The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than ..............

The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;

The employee must customarily and regularly direct the work of at least _________ or more other full-time employees or their equivalent; and

The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent;

The employee's primary duty includes ..........

The employee's primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

The employee's primary duty must be making sales but they have to make the sales ........... from the persons business.(as defined in the FLSA), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and

The employee's primary duty must be making sales but they have to make the sales AWAY from the persons business.(as defined in the FLSA), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and

The employee's primary duty must be the ...........

The employee's primary duty must be the 1.performance of work requiring advanced knowledge, 2. defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment; Ex: dr, laweyers, teachers, example of professional exemption:

The employee's primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers;

performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers;

Is the employee covered or is employer an enterprise?

- Individual: Employee must be "engaged in commerce or in the production of goods for commerce" - Employees of an enterprise will be covered if the enterprise is engaged in commerce, has two or more employees regularly engaged in commerce, and makes at least $500,000

Computer Professional

- Job duties must require 'the theoretical and practical application of highly-specialized knowledge - Not available to job that merely requires "highly specialized knowledge of computers and software."

Highly Compensated Individual

- Must make at least $100k - Regularly performs at least one of the exempt duties or responsibilities of a white collar employee

Executive Duty Test

1. Primary duty is related to management of the enterprise or of a recognized department, 2. Employee regularly directs the work of two or more, and 3. Has the authority to hire or fire other employees, or who can impact decision to

Administrative Duty Test

1. Primary duty is the performance of office/non-manual work directly related to the management or general operations of the employer and 2. includes the exercise of discretion and independent judgment with significant matters

Professional Duty Test

1. Work requiring knowledge of in a field of science or learning customarily acquired by a prolonged intellectual instruction or 2. Requires invention, imagination, originality, or talent in a recognized art

Overtime Pay

FLSA does not restrict total number of hours but requires additional pay after 40 - Rate not to be less than 1 & 1/2 normal wage - Overtime hours are calculated within a single week - Employer cannot average over multiple weeks

employees primary duty?

The employee's primary duty must be1. managing the enterprise, or 2.managing a customarily recognized department or 3.subdivision of the enterprise;

Three Basic Tests to Qualify for White Collar Exemptions

The exempt employee must receive a certain minimum salary (must receive a certain minimum salary $455/week to $917 a week) The exempt employee must be paid on a salary basis The exempt employee must meet certain tests regarding their job duties

Wage and Hour Division of the Department of Labor

enforces the requirements of the FLSA. Is authorized under the act to investigate possible violations, inspect an employer's premises, review pertinent records and question employees to if determine any violations of the act has occurred.

The McNamara O' Hara Service Contract Act

requires contractors and subcontractors performing services on prime contracts in excess of $2,500 to pay service employees in various classes no less than the wage rates and fringe benefits found prevailing in the locality, or the rates (including prospective increases) contained in a predecessor contractor's collective bargaining agreement.

The Davis Bacon Act

requires contractors and subcontractors working on federal government construction projects to pay "prevailing wages" to their employees.