Overtime and Wage & Hour Laws
One of the most common ways in which employees may be mistreated by their employers involves compensation. Both federal and state wage and hour laws, as well as local ordinances, protect employees from employer misconduct related to compensation. The most well-known law in this area is the federal Fair Labor Standards Act (FLSA), which was enacted during the Great Depression.
The FLSA generally applies to companies with two or more employees whose volume of sales or business is $500,000 or more a year, hospitals, businesses that provide medical or nursing care for residents, schools and preschools, and government agencies. It also applies if an employee’s work regularly involves interstate commerce, such as workers who travel to other states for their job or produce goods to be sent to another state, or whose work is closely related or essential to such interstate activities, like maintenance workers or guards. Finally, domestic service workers, such as housekeepers and full-time babysitters, are usually covered by the FLSA. The law exempts certain employees, discussed more below.
Workers who are not covered by the FLSA may still be protected by relevant state and local wage and hour laws.
Minimum Wage Laws
Employers are required to pay most employees a minimum wage under both the FLSA and state laws. The current federal minimum wage is $7.25 per hour, but some states have instituted a higher minimum wage. Employer deductions from wages for things such as uniforms or cash shortages generally may not reduce an employee’s wages below minimum wage. An employer’s failure to pay minimum wage or overtime, or failure to abide by other provisions of wage and hour laws, may give rise to a wage and hour dispute.
Employers may pay tipped employees $2.13 an hour so long as that amount plus the employee’s tips is equal to or greater than the federal minimum wage. These employees must customarily and regularly receive at least $30 in tips a month and retain all of their tips (except to the extent that their tips are validly shared or pooled). The employer must make up any difference between the employee’s wages plus tips and the federal minimum wage. State laws may provide greater benefits for tipped employees.
New workers under 20 years old, students, and certain other workers may be entitled to a lesser minimum wage.
Compensable Time
The FLSA also provides guidance on what constitutes work hours for which employees must be paid. In addition to the more obvious times that a person spends working, employees may be entitled to payment for things such as travel time, waiting time, and time spent attending training and lectures.
Only certain travel time is compensable under the FLSA. Travel between home and work is usually not compensable time, but an employee who regularly works in one location and is asked to work in a different city on one particular day should be paid for extra time spent traveling there and back. Travel that occurs as a part of an employee’s principal activity, like moving from one job site to another throughout the day, should be compensated.
Employees who are “engaged to wait,” such as a secretary who knits while waiting for phone calls, or employees required to remain “on call” should generally be paid for that time. In some cases, an employee may be entitled to compensation for time when they are allowed to sleep or do other personal activities if they are required to be on duty during that time. If employees are on duty for 24 hours or more, they may agree with their employer to exclude regular sleeping periods of up to eight hours so long as the employer provides a place to sleep and the employee’s sleeping periods are usually uninterrupted. Only actual sleep time is deductible. An employer cannot deduct sleeping time if the employee cannot take at least five hours of sleep.
State laws or individual company policies govern whether employees must be given meal breaks and rest breaks, but the FLSA provides some general rules regarding whether those periods should be paid if they are provided. Rest periods of 20 minutes or less are compensable time, but meal periods of about 30 minutes or more when an employee is relieved of their duties are usually not compensable.
The FLSA also generally requires employers to provide reasonable unpaid break periods for non-exempt employees to express breast milk for one year after a child’s birth, as well as a place to take these breaks that is private and not a bathroom. Employers with fewer than 50 employees are not required to provide such breaks under the FLSA if it would be an undue hardship. State laws may provide greater protections.
Time spent attending meetings, lectures, and training programs should be compensated under the FLSA unless it occurs outside normal hours, is voluntary, and is not related to the employee’s job, and no other work is performed while attending.
Employees who voluntarily work beyond their assigned shift, such as when they want to finish an assigned task, are entitled to compensation for that time so long as their employer permitted them to work past their shift time.
Overtime Laws
The FLSA and state laws also define overtime wage requirements. Non-exempt employees are entitled to time and a half wages for every hour worked over 40 in a single workweek. A workweek is a fixed and regularly recurring 168-hour period occurring over seven consecutive days. It does not necessarily need to begin on a certain day of the week or at a certain time. It is possible that different employees or groups of employees have different workweeks.
In general, employees cannot be forced by their employer to waive or reduce their right to overtime, but the FLSA does not protect employees who over-report overtime or work overtime in contravention of an employer’s conspicuously posted rule or policy that prohibits overtime work. The FLSA does not require employers to pay overtime for weekends or holidays unless overtime is actually worked on those days.
Non-exempt employees who are not paid overtime or minimum wage may be entitled to recover compensation and an equal amount of liquidated damages, as well as attorneys’ fees and costs. A claim may be valid even if the employer did not intentionally violate the law, although whether they acted intentionally affects total damages and the time period to sue. Most claims are subject to a two-year statute of limitations, but the period extends to three years if the violation was willful. The Department of Labor may pursue a claim and may assess civil monetary penalties for repeat or willful violations. In some instances, employers who willfully violate the law may also be subject to criminal prosecution.
Exempt Employees
Certain salaried employees are “exempt” from minimum wage and overtime rules under the FLSA. To be exempt, an employee generally must be paid at least $684 per week, paid on a salary basis, and perform exempt job duties. The salary requirements do not apply to people who practice law or medicine, teachers, or outside sales employees. Exempt administrative or professional employees may alternatively be paid on a fee basis, meaning an agreed amount for one unique job that is not dependent on hours worked. Exempt computer employees can be paid either at least $684 per week on a salary or fee basis or $27.63 per hour.
Generally, an employee is paid on a salary basis when they regularly receive a predetermined amount of money each pay period for a workweek during which they perform any work. “Exempt job duties” are high-level and can be categorized as “executive,” “administrative,” or “professional” work. Certain other types of employees, such as computer and outside sales employees, are also exempt. Whether an employee’s title includes certain words, like “executive,” is not determinative in deciding whether that employee is exempt. Exempt employees are identified based on what they do in their roles.
Exempt executive employees regularly direct the work of two or more full-time employees; manage the enterprise, a department, or a subdivision as their primary duty; and have genuine input into other employees’ job status, such that they may hire and fire employees or that their recommendations about an employee’s job status are given particular weight.
Exempt professional employees may be employees in the “learned professions” or employees in creative professions. The “learned professions” include employees such as lawyers, doctors, dentists, accountants, clergy, architects, teachers, and certain other professionals whose primary duty involves advanced knowledge in a field of science or learning. Employees may fall under the creative professional exemption if their primary duty is the performance of work that requires invention, imagination, originality, or talent in a recognized creative field.
Typically, exempt administrative employees perform office or non-manual work directly related to the management or business operations of the employer or its customers. Their primary job duties involve the exercise of independent judgment and discretion about matters of significance. A secretary may hold the job title “administrative assistant,” but they will probably not be considered an administrative employee for the purpose of determining exempt status.
Notably, independent contractors are exempt from these FLSA provisions because they are not employees. Employers may be tempted to misclassify employees as independent contractors in order to avoid complying with the FLSA and other related laws, but they may face severe consequences if they do so.
Highly compensated employees who are paid $107,432 or more annually for office or non-manual work in which they regularly and customarily perform at least one of the exempt duties of an exempt executive, administrative, or professional employee are also exempt from the minimum wage and overtime provisions of the FLSA.
