The Fair Labor Standards Act: An Ultimate Guide

All companies must establish strong workplace policies regardless of size or industry. While protocols and procedures may vary on a case-by-case basis, all organizations must have fair labor practices. From exercising inclusivity, respect, and teamwork to following codes of ethics, employees and employers must comply and co-exist harmoniously.

In addition to a safe workplace, all employees should be appropriately compensated for their work. Ensuring wages are fair is why the federal government placed various regulations, such as The Fair Labor Standards Act (FLSA).

To improve your understanding of the FLSA, our guide will provide a complete overview of this policy.

What is The Fair Labor Standards Act?

The Fair Labor Standards Act specifies minimum wage, overtime compensation, recordkeeping, and youth employment guidelines for workers in the private sector and federal, state, and municipal governments.

Since July 24, 2009, the Department of Labor (DOL) has used this act to cover nonexempt workers entitled to a minimum wage of $7.25 per hour. After 40 hours of labor in a week, overtime pay at a rate of at least one and a half times the ordinary pay rate is necessary.

The FLSA includes concerns about compensation, record keeping, and child labor. Throughout the years, the DOL has updated the regulations involving tipped employees and those with dual jobs.

What Does the FLSA Cover?

The FLSA has imposed employers to follow standards and policies to guarantee that all workers are given fair salaries.

1. Minimum Wage

Many workers suffered from unfair compensation, and the FLSA was made to protect employees from experiencing it. The policy imposed an hourly rate of $7.25 that employers must abide by. States that have their own minimum wage regulations and workplace practices must still follow FLSA rules.

The FLSA does not cover policies involving holiday or sick pay, meal or rest periods, vacations, pay raises, premium pay for holiday work, or final compensation for terminated employees. But it does require employers to pay their workers regularly on paydays. It also defends employees from wage deductions due to expenses like uniforms, tools, etc.

2. Overtime

A regular work week consists of 40 hours; any working hours beyond this limit must be compensated with overtime pay. The Fair Labor Standards Act overtime rate should be at least one and one-half times the regular pay rate.

Unless overtime is rendered on the following days, the FLSA does not mandate overtime pay for work performed on weekends, holidays, or scheduled rest days. The law also states that employees 16 years old and older may work unlimited hours per week. In most cases, overtime compensation must be given on a regular payday within the period earned.

3. Hours Worked

The hours or times employees are required to be on the employer’s premises performing their duties or at a designated workplace are typically counted as work time. Some conditions apply, including traveling to and working in another city for a day and being on call.

Unfortunately, some employers fail to acknowledge certain hours that must be paid. To mitigate these issues, the employer and employee must review their company’s policies and find a middle ground. The bottom line is that any time spent where the employee is not completely relieved from duty must be considered and paid as compensable hours.

4. Record Keeping

To ensure transparency in the workplace, the employer must display an official poster showing the FLSA’s standards. They must also maintain accurate records of employees’ time and pay, full names, addresses, birth dates, Social Security numbers, etc.

Payroll, sales and purchase records, and collective bargaining agreements must be stored for a minimum of three years, while other documents like timecards, work schedules, and wage rate tables are to be kept for two years.

When it comes to timekeeping, employers may utilize any method as long as it is accurate and can log in complete hours of every employee.

5. Child Labor

FLSA regulations safeguard minors’ educational opportunities, well-being, and good health. The policy ensures that children are safe and protected if they get a job. The specific rules differ for the type of job, such as working in an amusement park, the agricultural sector, or the healthcare industry. Employers must comply with standards to protect minors at work.

Common Violations of the FLSA

1. Working off the clock

A violation can occur when an employer does not pay an employee working off the clock. Any employee who begins work early, ends late, or does job-related activities outside regular work hours must be compensated under the FLSA.

However, the employer should know or should have known about these “pre-work” and “post-work” times to consider them as paid working hours.

2. Assuming that overtime work is voluntary

The FLSA does not acknowledge voluntary overtime. Any job-related tasks done outside an employee’s shift, during rest periods, or taken home are considered compensable.

3. Failure to keep track of records

The FLSA requires records and timekeeping from employers. These must be accurate and have all details needed, such as an employee’s hours and compensation, daily and weekly earnings, wage deductions and additions, payment dates, total paid overtime, and other details. Negligence in proper documentation counts as an FLSA violation.

4. Misclassifying employees

One of the common FLSA violations is misclassifying employees as exempt or nonexempt. Some employers intentionally do this to avoid overtime pay and further expenses under compensation. However, remember that an employee’s classification is based on duties and salary amount, not the job title.

There are differences between regular employees and independent contractors or self-employed individuals. The former is part of the payroll and has a stable income, while the latter is paid per project and may not be required to be in the office regularly.

5. Waiving overtime pay agreements

If an employer has an employee sign a waiver to give up overtime pay, that agreement is invalid and violates the FLSA.

Frequently Asked Questions About the FLSA

1. Who is exempted from this law?

The FLSA exempts bona fide executives, administrative, and professionals. The exemptions also include seasonal amusement or recreational business employees, apprentices, computer and outside sales employees, personal companions, caregivers, babysitters, small farm employees, freelancers, and those working on foreign vessels.

2. How does the FLSA validate overtime?

For non-represented employees, paid leaves are not counted. Otherwise, employers and employees must check collective bargaining agreements to see if overtime pay is applicable.

3. What benefits or payments are not covered by the FLSA?

Meal or rest periods, pay raises or fringe benefits, weekend or holiday work’s premium pay, and vacation, severance, holiday, or sick pay are not covered by the FLSA. Transportation to and from the workplace and final wages are also not covered.

4. Who decides if an employee is eligible for overtime?

The Human Resource Office verifies which employees are eligible for overtime. If an employee needs to change from overtime-eligible to overtime-exempt, State HR must request approval.

5. What is the difference between exempt and nonexempt employees under the FLSA?

Exempt employees are compensated on a salary basis and execute duties defined by federal law, while nonexempt employees have an hourly rate. An employee’s job title or position does not determine whether they are exempt or nonexempt.

Know Your Rights Under the FLSA

The Fair Labor Standards Act is an important law that employers must observe. It is also crucial for both employers and employees to be knowledgeable about it to know and practice their rights. The FLSA protects and justifies wages for workers.

If you have any looming concerns in your workplace, don’t hesitate to consult with an employment lawyer from Shegerian and Associates. Our experts are willing to answer any questions you may have!

Manuela Varela

Relations Manager

Manuela Varela has been with Shegerian & Associates since August 2022. She is responsible for outreach and marketing on behalf of the firm and manages relationships between firms and referring attorneys. She is also responsible for developing business opportunities and affiliations. Manuela graduated from Loyola Marymount University with a degree in Economics and Political Science.