Gavel on books with FLSA blocks in front of a legal library. Gavel on books with FLSA blocks in front of a legal library.

The Impact Of The Fair Labor Standards Act

From delineating the times when employees are considered to be working “on the clock” to specifying which hours are not eligible for compensation, the Fair Labor Standards Act is a useful statute curated for the members of the workforce.

Not only the aforementioned, but the said statute establishes a comprehensive set of regulations that determines whether employees are exempt or non-exempt from the said statute’s overtime provisions.

Diving deeper, it has been put forth that according to this regulation, overtime must be compensated at one-and-a-half times the regular hourly wage, which is referred to as “time-and-a-half” for any hours worked beyond 40 hours in a seven-day workweek.

On the same lines of thought, from applying to employees who have an employer and are involved in interstate commerce or the production of goods for commerce to the employees working for businesses engaged in commerce or the production of goods for commerce, the Fair Labor Standards Act takes care of several such aforesaid aspects.

Not only that, but it also extends its coverage to domestic service workers that take under its umbrella individuals such as housekeepers, cooks, and full-time babysitters, and those employed in hospitals, schools serving mentally or physically disabled or gifted children, educational institutions at all levels from preschools to universities, and public agencies.

Fair Labor Standards Act (FLSA) on an office table.
From UnlimPhotos

It deems it essential to put ahead that independent contractors and volunteers are not subject to the provisions falling under the ambit of the aforesaid statute because such individuals are not categorized as employees.

Thus, they are not eligible to take the liberty of exploring the protections and benefits offered by the Fair Labor Standards Act.

1. The Initiation of the Fair Labor Standards Act 

To better understand the statute, diving into the past is essential. The Fair Labor Standards Act was enacted on June 25, 1938, and President Franklin D. Roosevelt officially brought the statute into force.

Though the legal statute was made applicable to industries that employed only a fraction of the workforce, the bill faced significant challenges in both the House of Representatives as well as the Senate before being signed into law along with 120 other pieces of legislation, which was nine days post the adjournment of Congress.

Running into the concept further, the said act, which was particularly curated by Secretary of Labor Frances Perkins, had gone through several revisions, the outcome of which put forth the following provisions under the Fair Labor Standards Act:

1.1. Prohibition of Child Labor:

The Fair Labor Standards Act put ahead prohibitions in all forms of employment for children under the age of 14. Not only this, but it also specified hazardous labor restrictions for those aged between 14 and 18.

1.2. Minimum Wage:

Establishing a minimum hourly wage of 25 cents was another feature brought into play by the aforementioned statute.

1.3. Maximum Workweek:

The act imposed a maximum workweek limit of 44 hours initially; however, a provision was attached to the same, which stated that it should be reduced to 40 hours by October 23, 1940.

1.4. Overtime Pay:

To guarantee “time-and-a-half” pay for certain job categories that made sure employees received higher compensation for working overtime hours was another development that was encompassed in the statute.

2023 FLSA Overtime Changes: What you need to know

Running along the same lines of thought is the fact that the Fair Labor Standards Act, being one of the most intricate workplace laws, has undergone numerous amendments since its initiation. Such aforementioned amendments have not only primarily aimed to broaden the law’s coverage but also adjust the minimum wage to account for inflation.

Elaborating on the aforementioned further, serving as one of the major developments is the fact that this Act clarified what constitutes “hours worked” under the frame of the Fair Labor Standards Act, particularly addressing certain employee activities.

From establishing that as long as an employee engages in activities that benefit the employer, regardless of when they occur, the employer is obligated to compensate the employee for that time to specifying that travel to and from the workplace should not be considered as paid working time, the said amendment was a major turning point for the employees.

Not only the aforementioned, but this amendment expanded the Fair Labor Standards Act’s coverage to include various job roles in schools, hospitals, nursing homes, and all government entities. Not to forget it also granted employees the right to sue for back wages when they were owed money.

On the same lines of thought, the development also led this legislation to make it unlawful to pay employees differently based on their gender.

With the idea of giving life to the concept of “equal pay for equal work,” this change was a significant step toward achieving financial equality between men and women in the workplace.

As what stands as the last of the major modifications, the Fair Labor Standards Act was also responsible for prohibiting discrimination against employees who are aged 40 and older.

Before the initiation of the said act, older workers were openly denied health benefits, promotions, or training opportunities solely due to their age.

FLSA Part 541 Regulations

2. The Exemptions under The Fair Labor Standards Act

The Fair Labor Standards Act though has a wide scope, it does not take under its umbrella all workers and workplaces, thus some exemptions apply to both employers and their employees.

Applicable to employers whose annual sales reach $500,000 or more or who engage in interstate commerce, which can encompass activities like receiving letters, phone calls, or internet orders from another state, is the power of the Fair Labor Standards Act. Some employers who are engaged in small farms that rely on limited external paid labor are explicitly exempt from the scope of the said act.

On the same lines, it can be said that the Fair Labor Standards Act specifically covers individuals who are staff employees and does not extend its protections to freelancers or independent contractors. However, even within the category of staff employees, certain groups are considered “exempt” from the Fair Labor Standards Act regulations, which are put forth as follows:

2.1. Executive, Administrative, and Professional Workers:

These employees earn salaries of at least $684 per week, which is coupled with certain exceptions for particular professions.

The section of executives is responsible for managing others, typically at least two individuals, as a primary duty, and they possess the authority to make decisions regarding hiring, firing, and promotions.

On one hand, administrators primarily engage in office or nonmanual work directly for management, exercising discretion in their tasks; on the other, professionals primarily perform intellectual work that demands advanced knowledge, talent, creativity, or expertise.

2.2. Outside Salespeople:

Individuals who regularly work away from their employer’s place of business and are primarily compensated through commissions make up the entire core of this group.

2.3. Computer Workers:

From systems analysts, programmers, and software engineers to designers/developers, as well as others in similar roles, known as computer workers, are individuals who are either salaried or paid on a fee basis, but their compensation must not fall below $684 per week or $27.63 per hour.

2.4. Additional Exempted Groups

Not only the aforementioned, but there are additional groups of individuals who are also exempted from certain provisions falling under the ambit of the Fair Labor Standards Act, which are put forth as below:

2.4.1. Employees of Seasonal Amusement or Recreational Businesses:

Exempt from specific the Fair Labor Standards Act regulations are workers who are employed in seasonal amusement or recreational businesses.

2.4.2. Employees of Local Newspapers with Circulation Less Than 4,000:

Employees of local newspapers with a circulation of less than 4,000 may also fall under the ambit of exemptions under the Fair Labor Standards Act.

2.4.3. Seamen or Women on Foreign Vessels:

From seamen to women on foreign vessels, such aforesaid workers are also not covered by the Fair Labor Standards Act.

2.4.4. Newspaper Delivery Workers:

Workers engaged in newspaper delivery services can also be excused from specific provisions falling under the umbrella of the Fair Labor Standards Act.

2.4.5. Workers on Small Farms:

Employees working on small farms, particularly those with limited external paid labor, stay exempted from the provisions of the Fair Labor Standards Act.

2.4.6. Personal Companions, Caregivers to Seniors, and Casual Babysitters:

From personal companionship services and caregiving to seniors to engaging in casual babysitting, such individuals are not subjected to be covered by the Fair Labor Standards Act.

2.4.7. Apprentices:

Another set of groups that do not fall under the coverage view of the Fair Labor Standards Act are apprentices, who are those people enrolled in recognized apprenticeship programs.

Folder with HR compliance papers and manager.
From UnlimPhotos

3. The Fair Labor Standards Act and Its Violations

As it comes along with any new step, violations of the same lie are a part of it. Given the intricate nature of the Fair Labor Standards Act and the continually evolving landscape of work and employment, various kinds of issues can arise, the common of which are stated below:

3.1. To Misclassify Employees:

It’s crucial to note that the classification of exempt and non-exempt status is not merely determined by job titles but by the actual job duties performed as well as by salary levels.

3.2. To Confuse Salaried and Hourly-Based Employees:

Some employers mistakenly assume that staff members who receive a fixed weekly or monthly salary are automatically exempt from overtime pay, but it is otherwise. Those individuals who are paid on an hourly basis are non-exempt. However, this is not accurate, meaning that even salaried employees can be non-exempt and entitled to overtime pay, depending on their job duties and earnings.

3.3. To Not Pay for “Off-The-Clock” Work:

Any work-related tasks, training, or meetings that take place outside the ambit of regular working hours should be considered compensable work, regardless of whether the employer is aware of these activities or even has authorized them.

3.4. To Not Pay for Work During Breaks or While on A Call:

It is essential to note that if an employee is on a break or taking lunch but is still responding to work-related texts or emails, the said time is considered to fall under the ambit of work. Not only the aforesaid but the timeframe revolving around the aforementioned work should be compensated accordingly.

Along the same lines, the hours given to work, which revolve around waiting to be called in for work or tasks, should be compensated if the employee cannot use this on-call time for personal activities.

3.5. To Waive Off Overtime Pay Agreements:

Any attempt that is made to waive an employee’s right to overtime pay via an agreement is invalid under the Fair Labor Standards Act, even if it has been signed by the employee.

3.6. To Average Work Weeks:

To set a coming standard that is 30 hours one week with 50 hours the next to reach 40 hours each week is known as an attempt to average an employee’s work hours over multiple weeks to avoid paying overtime, which simply stands to invalid and non-permissible under the Fair Labor Standards Act.

The Fair Labor Standards Act ( FLSA)

4. The Idea of Minimum Wage Rates under The Fair Labor Standards Act

Under Section 6 of the Fair Labor Standards Act, all employers are instructed to not only provide covered and non-exempt employees with a minimum wage of at least $7.25 per hour but also incorporate various subminimum wage rates for specific categories of workers.

Not only the statute of the Fair Labor Standards Act but there are other federal laws and regulations which have been curated to establish minimum wage requirements for workers. The aforementioned rates stand typically higher but are made sure that it does not fall below the applicable federal or state minimum wage.

Taking as an illustration is the fact that revolves around the Davis-Bacon Act. The aforesaid legislation not only makes it a point that employers pay employees at least the locally prevailing wage but also ensures bestowing upon fringe benefits on construction contracts that exceed $2,000, which involves the federal government.

Running similarly on the same lines of thought is the idea about the Service Contract Act, which stipulates that companies must compensate their workers with at least the locally dominant wage rates as well as provide advantages to them when they are working on any service contract which stands at a value of more than $2,500 with the federal government.

Unlike the lowest wage rates, which are very categorically put forth in the Fair Labor Standards Act, the prevailing wages as specified by the Davis-Bacon Act and the Service Contract Act are not curated or determined by Congress but by wage surveys which are conducted by or for the United States Department of Labor.

Not only the aforementioned but the fact that the said minimum wage criteria apply to foreign workers who are entering the United States under specific permanent employment-based visas as well as temporary non-immigrant visas, as mandated by the Immigration and Nationality Act, makes it not only beneficial but also interesting to witness.

It becomes essential to emphasize that the aforementioned prerequisite stands relevant to various visa categories, which is inclusive of the H-1B visa for temporary professional workers, the H-2A visa for temporary agricultural workers, as well as the H-2B visa for temporary non-agricultural workers.

4.1. The Basic Minimum Wage

The basic minimum wage, which stands at the federal level, is known to be periodically increased by Congress. Set at $7.25 per hour, the current federal minimum wage, became effective on July 24, 2009.

It has been speculated that by the end of 2023, approximately 30 states, as well as the District of Columbia, are scheduled to exceed their minimum wage rates when standing in comparison with the set federal wage. Ranging from $1.50 to $9.75 per hour, the minimum wage in the aforesaid states is typically more than the federal rate.

What marks it essential to pinpoint is the fact that the majority of employees earn wages that stand at a higher aspect than the prescribed rate given at the federal level. According to the Bureau of Labor Statistics, in 2021, approximately 98.6% of hourly-paid employees received an hourly wage that crossed the limit of $7.25, which was the federal minimum wage rate.

Hence, based on the aforesaid, it was highlighted that most workers in the United States are compensated at rates above the rates given at the federal level.

the fair labor standards act
Photo by designer491 from unlimphotos

4.2. Tipped Workers

Subject to a unique compensation, the tipped employees have a structure, where their base wage may be lower than the basic minimum wage, but the combination of their cash wage as well as tips must add up to at least the aforesaid minimum wage.

As per the definition curated under Section 3(m) of the Fair Labor Standards Act, a “tipped employee” is an individual serving as a worker who regularly receives more than $30 per month as tips.

It has been said very categorically that employers must allow tipped employees to retain all the tips they earn, and on the same lines, the Fair Labor Standards Act also permits the pooling and sharing of tips among the said employees.

Not only the aforementioned, but the fact that under the Fair Labor Standards Act, employers are authorized to pay tipped employees a minimum cash wage of $2.13 per hour, with the provision of the idea that the employee earns at least $5.12 per hour in tips, bringing their total hourly wage to meet the federal minimum wage of $7.25, serves highly essential.

Along the same lines of thought, it has also been suggested that organizations can claim up to $5.12 per hour in tips as a tip credit so that they can meet the minimum wage requirement.

However, it deems it crucial to mention that if a tipped employee earns less than $5.12 per hour in tips, then the employer is responsible for making up the difference by bestowing upon a higher cash wage to ensure that the employee’s aggregate earnings lie in sync with the set federal minimum wage limit.

Elaborating on the concept of tips, to emphasize the calculation of the same stands important. The computation of the minimum cash pay for tipped employees is solely based on the average hourly tip amount earned by them over their work hours.

Taking as an illustration is the fact that if a tipped worker has worked for 40 hours in a workweek, then they would need to earn a minimum of $204.80, which is 40 hours x $5.12 per hour, in tips for their employer so that they can fulfil the requirement of not having to pay more than the $2.13 per hour in terms of cash wage.

4.3. Student Learners 

 Another aspect that falls under the ambit of minimum wages is the payment provided to student learners. It has been very specially put forth under Section 14(a) of the Fair Labor Standards Act, the fact that employers are allowed to pay “student learners” a subminimum wage, which is 75% of the standard basic minimum wage rate.

To permit the individuals as Student learners, not only do they have to be high school students, but also must fulfill the following criteria:

  • Age: The individuals must be at least 16 years old or 18 if they are employed in a profession that the Secretary of Labor has declared hazardous for the employment of youth.
  • Enrolled in Education: They should have an educational degree from an accredited school, college, or university.
  • Part of a Vocational Training Program: Coupled with the aforesaid, they must also be employed as a part-time employee by an employer as part of a vocational training program.

Salaried LTs and the FLSA

5. The Concept Of Overtime and The Fair Labor Standards Act

When speaking of the Fair Labor Standards Act, it is highly crucial to mention the aspect of overtime to understand the statute in a nutshell. As stated under Section 7 of the said act, employers are expected to compensate covered workers at a rate of at least one-and-a-half times more than their fixed hourly wage for any hours worked beyond 40 hours in a single week of work at a given job.

It’s important to note that under the Fair Labor Standards Act, overtime pay is calculated based on hours worked that extend the fixed hours, which is 40, in a workweek. However, the act does not put forth the specific requirements that define how the work hours are scheduled.

Taking as an illustration, is the idea that, employers have the authority to schedule four 10-hour workdays in a week of work without initiating the essence of overtime pay. Along the same lines, an employee who works five days a workweek could have flexible working hours which could be four hours on one day and nine hours on the other four days, without exceeding the limit set for overtime pay.

5.1. Comp Time Instead of Overtime Pay for State and Local Employees

Diving into the concept further, curated under Section 7(o) of the Fair Labor Standards Act, is the idea that covered, non-exempt state and local government employees are bestowed with the option to receive compensatory time off, which is known as “comp time,” in place of receiving overtime pay for the hours worked beyond 40 in a week of work.

The essence of comp time lies in the fact that it allows the employees to take time off with pay as compensation for their overtime work.

The creation of a comp time structure lies in the hands of both the employer and employees to have a mutual agreement for the same. Be it through a collective bargaining agreement or, in the absence of such an agreement, such an agreement can be made amicably between the employer and individual employees. In terms of the computation, Comp time is determined at a rate of at least one-and-a-half times more than the number of overtime hours worked.

Then again, an employer, instead of bestowing upon comp time, may choose to pay an employee for any unused comp time as well. What deems it essential to pinpoint is the fact that the employees are allowed to use their accrued comp time on the requested date unless doing so would unduly disrupt the operations of the organization.

As a matter of importance, Section 7(o) of the Fair Labor Standards Act does not apply to state and local government employees who fall under the ambit of being exempted from the overtime pay provisions of the said statute.

Unlawful Workplace Violations: How Employers Violate The Laws

5.2. Break Time for Nursing Employees

Ensuring employers provide reasonable break time for covered, non-exempt employees to allow them to feed their nursing child for up to one year after the child’s birth, whenever the employee needs to do so, is the entire essence of Section 18D of the Fair Labor Standards Act.

The said provision is solely curated to support nursing mothers in their ability to continue breastfeeding their children when resuming their work.

Not only the aforesaid but the mandate enforces the employers to offer a private space for the said purpose, which must not be a bathroom, and it must be shielded from the intrusion of co-workers and the public.

On the same lines, with the advantages come certain exceptions, which are as follows:

  • Employer Size: Employers with fewer than 50 employees are not obligated to comply with the said requirement if they can put it across that doing so would not only create an undue hardship for the company but also huge chaos.
  • Compensation: In terms of compensation, employers are not required to pay employees for the time spent on breaks taken for feeding milk, as long as the employee is fully free of responsibilities of the workplace during the entirety of the break.

Conclusion

Fair Labor Standards Act

From providing minimum wage rates to providing overtime pay, the development of the Fair Labor Standards Act, also known as FLSA, has been immense and impactful. The citizens of the United States who are in the working sector have been hugely benefitted by the initiation of the said statute.

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