Mastering the Fair Labor Standards Act (FLSA)

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FLSA picIt is hard to believe that a bill that became effective nearly 80 years ago still has such a resounding effect on the present workforce in America. The Fair Labor Standards Act, or FLSA, was signed by President Franklin D. Roosevelt on June 25th, 1938. There was hope of providing a fair minimum wage for all “non-exempt”, or hourly, employees and placing a reasonable maximum number of hours worked each week. Since then, we have referred to this bill many times in the world of employment. Even so, we are still altering it to fit current society’s expectations and needs. It is important to understand how this bill affects your company and the future of your employment.

Most companies are aware of the FLSA and its existence, but may struggle to fully comprehend its integral role. We have broken down important elements here:

  • The Federal minimum wage is currently $7.25. This is the lowest amount that workers can be compensated hourly, commissions and bonuses aside. Each state in America also has a minimum wage that they have set, and it varies across the country. But no matter what, you cannot pay a non-exempt employee below $7.25 for any reason.
  • For non-exempt employees, the FLSA requires overtime pay at a rate of not less than one and one-half times an employee’s regular rate of pay after 40 hours of work in a workweek. It is important to recognize that this does not limit the number of hours per day or per week that employees (that are 16 years or older) can work, it simply lays out the requirements of employees to be compensated once they work over 40 hours in a single work week.
  • Full-time employment and Part-time employment are not defined in this act. That is up to an employer to determine. To reiterate: 40 hours is the maximum amount a week that a non-exempt employee can work without being paid overtime. Employers usually formulate their own definitions from this point.
  • The act has child labor provisions as well, including a limit on hours worked each. If this applies to you, it is important to research this topic thoroughly before committing to employment with a minor. Visit: https://www.dol.gov/general/topic/youthlabor/agerequirements to learn more about the wages and hours that are set for minors.
  • One thing that employers may struggle with is recording hours and wages accurately. It is not only valuable for your employees to have record of their hours and wages, but as an employer you are obligated to maintain these records correctly in some way. This does not mean you must supply pay stubs. Rather, the amount of hours worked by each non-exempt employee and their subsequent wages must be recorded accurately, no matter what.
  • In order to qualify for “Exempt” status, an employee must meet certain requirements.  In order to remain compliant with the Department of Labor, you must be able to prove the following:
    • Regularly supervises two or more other employees.
    • Has management as the primary duty of the position.
    • Has genuine input into the job status of other employees (promotions, assignments, hiring, firing, etc).
      • If your employee does not meet these requirements, they cannot be legally classified as an “exempt” worker, and so they must instead follow guidelines of a “non-exempt” worker, which again includes potential overtime pay and a minimum hourly wage.

The FLSA is an intriguing set of regulations. It is still being altered to fit the needs of our present employees, and there is a new rule coming into effect on December 1st, 2016. It is important to stay up-to-date with all regulations and requirements in order to remain successfully compliant with the Department of Labor moving forward with your business. To learn more about this impactful act, visit https://www.dol.gov and search for “FLSA”.

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