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Overview of the Fair Labor Standards Act (FLSA)


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Title: Overview of the Fair Labor Standards Act (FLSA)

Overview of the Fair Labor Standards Act (FLSA)
Depression Era Legislation
  • Enacted by Congress in 1938
  • Means of economic recovery from depression

Purpose of FLSA
  • Prevent wage exploitation of vulnerable workers
    by establishing minimum wage
  • Promote fair competition in interstate commerce
  • Generate jobs

Basic Requirements
  • FLSA sets
  • minimum wage
  • overtime requirement
  • equal pay
  • recordkeeping
  • child labor standards
  • For covered employees who are not exempt from
    specific provisions

Basic Requirements
  • The FLSA does not, however, require severance
    pay, sick leave, vacations, or holidays
  • Governed by Civil Service law

Application of FLSA to Government Employers
  • Initially FLSA applied only to private employers
    directly engaged in commerce
  • Government employees added by amendments adopted
    in 1966 1974
  • 1966 school, hospital, nursing home, local
    transit employees added
  • 1974 coverage expanded to include most state
    and local government employees

Record Keeping Requirements
  • Mandatory records for non-exempt employees (29
    C.F.R. 516.2)
  • Name
  • Home address, including zip code
  • Date of birth, if under 19
  • Sex
  • Occupation or position
  • Time of day and day of week in which employees
    work week begins

Record Keeping, cont.
  • Regular hourly rate of pay for any work week in
    which overtime is due, plus the basis for the
    regular rate and any exclusions
  • Hours worked each work day and total hours worked
    each work week
  • Total premium pay for overtime hours

Record Keeping, cont.
  • Total additions to, or deductions from, wages
    each pay period
  • Total wages paid each pay period
  • Date of payment and pay period covered by payment

Minimum Wage
  • Washington minimum wage for 2009 is 8.55 per
  • Increases each January 1, based on CPI
  • Federal minimum wage is 6.55 per hour
  • Will increase to 7.25 per hour on July 24, 2009
  • Employers must comply with higher

Who must be paid minimum wage?
  • Department of Labor Industries Rules
  • With certain exceptions, most workers must be
    paid the minimum wage for all "hours worked"
  • Full time students at least 14 years old employed
    in retail or service establishments may be paid
    85 of the adult minimum wage

  • Overtime eligible employees are entitled to be
    paid 1.5 times their regular rate of pay for
    any time worked over 40 hours in a seven-day
  • An employer who requires, suffers, or
    permits an employee to work over 40 hours is
    generally required to pay the employee overtime
  • Suffers means not required or permitted but has
    reason to know employee working anyway

  • A workweek is seven consecutive 24 hour periods
  • Sunday 1201 a.m. through Saturday midnight
  • Wednesday 1201 a.m. through Tuesday midnight
  • Friday 100 p.m. through Friday noon (where
    employee works four 9 hour days, an 8 hour day,
    four 9 hour days, and gets every other Friday
  • The employer designates the workweek
  • Workweek need not correspond to pay period

Calculating Overtime
  • Determine regular rate of pay
  • Cannot be less than minimum wage

Regular Rate of Pay
  • Average hourly rate derived from earnings
  • Earnings may be determined on an hourly, salary,
    commission, or some other basis
  • Unless paid hourly rate, generally calculated by
    dividing the total pay for employment in any
    workweek by the total number of hours worked
  • Washington uses semi-monthly salary divided by
    total hours in a pay period

Regular Rate of Pay
  • Includes, e.g.,
  • Commissions
  • Shift differentials
  • Premiums for weekend or holidays worked
  • Payments for achieving certain levels of
  • Education incentives
  • Longevity pay
  • Hazardous duty pay
  • Special assignment or acting pay
  • On-call pay

Regular Rate of Pay
  • Excludes, e.g.,
  • Vacation pay
  • Sick leave
  • Sick leave cash outs or bonuses for nonuse
  • Bereavement pay
  • Jury duty leave
  • Discretionary bonuses
  • Holiday pay, if equal to regular earnings
  • Premium pay time
  • Idle time beyond control of the employer
  • Severance pay

Regular Rate of Pay - Exclusions, cont.
  • Pension, profit sharing, thrift and savings plan
  • Call-back premium pay
  • Travel expense, if business trip other than
  • Show up or reporting pay to the extent pay
    exceeds hours worked
  • Weekly overtime pay
  • Health and welfare fund benefits received by
  • Death benefits

Regular Rate of Pay - Exclusions, cont.
  • Employer paid disability benefits,
    hospitalization, medical care, retirement
    benefits, workers compensation, or other employer
    paid health and welfare contribution, including
    all insurance premiums

Dual Employment
  • Employee in a single workweek works at two or
    more different types of work for which different
    straight-time rates have been established
  • Regular rate for that week is the weighted
    average of such rates
  • Earnings from all such rates are added together
    and this total is then divided by the total
    number of hours worked at all jobs
  • Alternative trace the OT to the job that caused
  • Requires tracking hours at each job

Compensatory Time Off
  • Public employers allowed to provide compensatory
    time off in lieu of paid overtime
  • Compensatory time off need not be used in same
    pay period
  • Accrued at 1 ½ hours for every hour of overtime
  • Most employees allowed to accumulate 240 hours of
    comp time (160 hours of OT)
  • Employees in public safety activities allowed to
    accumulate 480 hours of comp time (320 hours of

Compensatory Time Off
  • Agreement or understanding required prior to
    performance of overtime work
  • Agreement can be part of collective bargaining
    agreement, memorandum of understanding or any
    other agreement between employer and employee

Compensatory Time Off
  • Employer may limit amount of comp time that can
    be accrued
  • Employees do not have right to demand that they
    be allowed to accrue statutory maximum
  • Comp time left after employee leaves employment
    must be cashed out using hourly rate in effect at
    time leave employment
  • Employer may cash out comp time periodically
  • Use of comp time can be at employees request or
    at employers direction

Hours Worked
  • Broader concept under MWA than FLSA
  • Defined in WAC 296-126-002(8)
  • All hours during which the employee is authorized
    or required to be on duty on the employers
    premises or at a prescribed work place
  • "Hours worked" includes
  • Preparation time
  • Opening and closing the business
  • Required meetings
  • Training
  • Any time spent by an employee in the performance
    of these duties must be recorded and paid

Hours Worked
  • Use of Blackberries and cell phones after hours
    is compensable work time
  • Remote computer access is compensable work time

Paid Leave and Holidays WAC 357-28-265
  • For purposes of computing eligibility for
    overtime compensation, paid holidays during the
    employee's regular work schedule are considered
    time worked.
  • Leave with pay during the employee's regular work
    schedule is not considered time worked.

Rest Periods WAC 296-126-092
  • Employees must be given a rest period of not less
    than ten minutes, on the employer's time, for
    each four hours of working time.
  • Rest periods must be scheduled as near as
    possible to the midpoint of the work period.
  • No employee allowed to work more than three
    hours without a rest period.
  • Intermittent rest periods allowed.

Meal Periods WAC 296-126-092
  • Between second and fifth hour of work day
  • Paid time when the employee is required by the
    employer to remain on duty on the premises or at
    a prescribed work site in the interest of the
  • Employees not allowed to work more than five
    consecutive hours without a meal break.
  • If meal period interrupted, employee must be
    allowed to resume and complete total meal period
    or be compensated

Hours Worked
  • Commute time generally not compensable
  • Stevens v. Brinks Home Security
  • Decided by State Supreme Court in 2007
  • Under WAC definition of hours worked, employees
    who drove company trucks from home to first job
    site of the day and from last job site of the day
    to home were on duty at a prescribed work
    place during this drive time and entitled to
    compensation under MWA

Travel Time
  • Travel on business to a location other than the
    regular workplace, within a single workday
  • Ordinarily, an employee who travels from home
    before the regular workday and returns home at
    the end of the workday is engaged in ordinary
    home-to-work travel, whether the employee works
    at a fixed location or at different work sites.
  • Normal travel from home to the work site is not
    work time and does not require compensation, even
    if the work site varies.

Travel Time
  • Where an employee regularly works at a fixed
    location and is given a special assignment to
    another location, the time spent in traveling to
    and returning from the other location is work
  • Employer may deduct time the employee would
    normally spend commuting to the regular work
  • For example, an employees normal commute to her
    workplace is 20 minutes. The employee drives 60
    minutes from home for a particular assignment in
    another city. The employees compensable travel
    time is 40 minutes.

Travel Time
  • Overnight travel
  • Travel away from home is work time when it occurs
    during the employee's normal working hours. The
    employee has merely substituted travel for other
  • Time spent in traveling on days other than normal
    workdays, such as Saturday or Sunday, is also
    work time if it occurs during the employees
    normal working hours.

Travel Time
  • If an employee regularly works from 8 a.m. to 5
    p.m. from Monday through Friday, the travel time
    is work time if it occurs between 8 a.m. and 5
    p.m. on Saturday and Sunday as well.
  • Time spent in travel outside the normal working
    hours on any of the seven days of the workweek,
    i.e., before 8 a.m. and after 5 p.m., is not
    regarded as working time provided the employee
    performs no work.

Meal Periods During Travel Time
  • Employer need not count as hours worked meal
    periods while employee is in travel status
  • Meal period must be bona fide
  • Employee is completely relieved from duty for the
    meal period.

Overtime Exemptions
White Collar Exemptions
  • Federal Overtime Regulations
  • April 23, 2004, U.S. Department of Labor (DOL)
    published final regulations
  • Effective August 23, 2004

Statutory Provision
  • FLSA Section 13(a)(1) provides an exemption from
    both minimum wage and overtime pay requirements
    for employees who are employed in a bona fide
  • executive
  • administrative or
  • professional capacity

Computer Professionals
  • Certain computer employees may be exempt
    professionals under Section 13(a)(1) or exempt
    under Section 13(a)(17)

Minimum Salary Level 455
  • For most employees, the minimum salary level
    required for exemption is 455 per week
  • Must be paid free and clear
  • The 455 per week may be paid in equivalent
    amounts for periods longer than one week
  • Biweekly 910.00
  • Semimonthly 985.83
  • Monthly 1,971.66
  • Annually 23,660.00
  • The 455 per week is not pro rated for part time

Salary Basis Test
  • Regularly receives a predetermined amount of
    compensation each pay period (on a weekly or less
    frequent basis)
  • The compensation cannot be reduced because of
    variations in the quality or quantity of the work
  • Must be paid the full salary for any week in
    which the employee performs any work
  • Need not be paid for any workweek when no work is

Deductions From Salary
  • An employee is not paid on a salary basis if
    deductions from the predetermined salary are made
    for absences occasioned by the employer or by the
    operating requirements of the business
  • If the employee is ready, willing and able to
    work, deductions may not be made for time when
    work is not available

Permitted Deductions
  • Seven exceptions from the no pay-docking rule
  • Absence from work for one or more full days for
    personal reasons, other than sickness or
  • Absence from work for one or more full days due
    to sickness or disability if deductions made
    under a bona fide plan, policy or practice of
    providing wage replacement benefits for these
    types of absences

Permitted Deductions, cont.
  • To offset any amounts received as payment for
    jury fees, witness fees, or military pay
  • Penalties imposed in good faith for violating
    safety rules of major significance
  • Unpaid disciplinary suspension of one or more
    full days imposed in good faith for violations of
    workplace conduct rules

Permitted Deductions, cont.
  • Proportionate part of an employees full salary
    may be paid for time actually worked in the first
    and last weeks of employment
  • Unpaid leave taken pursuant to the Family and
    Medical Leave Act

Public Employees
  • A public employee who otherwise meets the
    requirements will not be disqualified from the
    white collar exemptions on the basis that such
    public employee is paid according to a pay system
  • Is established by statute, ordinance, or
    regulation, or by a policy or practice
    established according to principles of public
    accountability, under which the public employee
    accrues sick or personal leave and

Public Employees, cont.
  • Permits the public employee's pay to be reduced
    or the public employee to be placed on leave
    without pay for absences for personal reasons or
    because of illness or injury of less than one
    work day when accrued leave is not used by a
    public employee

Public Employees, cont.
  • Deductions may be made from a public employee's
    accrued leave banks in any increment in
    accordance with any statute, ordinance, or
    regulation, or by a policy or practice
    established according to principles of public

Effect of Improper Deductions
  • An actual practice of making improper deductions
    from salary will result in the loss of the
  • During the time period in which improper
    deductions were made
  • For employees in the same job classifications
  • Working for the same managers responsible for the
    actual improper deductions
  • Isolated or inadvertent improper deductions,
    however, will not result in the loss of exempt
    status if the employer reimburses the employee

Payroll Practices That Do Not Violate the Salary
Basis Test
  • Taking deductions from exempt employees accrued
    leave accounts
  • Requiring exempt employees to keep track of and
    record their hours worked
  • Requiring exempt employees to work a specified
  • Implementing bona fide, across-the-board schedule

Additional Compensation
  • An employer may provide compensation in addition
    to the 455 minimum guaranteed weekly salary,
    such as
  • Commissions
  • Bonuses
  • Additional pay based on hours worked beyond the
    normal workweek
  • Exchange time

Executive Duties
  • Primary duty is management of the enterprise or
    of a customarily recognized department or
  • Customarily and regularly directs the work of two
    or more other employees and
  • Authority to hire or fire other employees or
    whose suggestions and recommendations as to
    hiring, firing, advancement, promotion or other
    change of status of other employees are given
    particular weight

Primary Duty
  • The principal, main, major or most important duty
    that the employee performs
  • Factors to consider include, but are not limited
  • Relative importance of the exempt duties
  • Amount of time spent performing exempt work
  • Relative freedom from direct supervision and
  • Relationship between the employees salary and
    the wages paid to other employees for the same
    kind of nonexempt work

Primary Duty
  • Employees who spend more than 50 of their time
    performing exempt work will generally satisfy the
    primary duty requirement
  • However, the regulations do not require that
    exempt employees spend more than 50 of time
    performing exempt work

  • Interviewing, selecting, and training employees
  • Setting and adjusting pay and work hours
  • Maintaining production or sales records
  • Appraising employee productivity and efficiency
  • Handling employee complaints and grievances
  • Disciplining employees

  • Planning and apportioning work among employees
  • Determining the techniques to be used the type
    of materials, supplies, machinery, equipment or
    tools to be used or the merchandise to be
    bought, stocked and sold
  • Providing for the safety and security of
    employees or property
  • Planning and controlling the budget
  • Monitoring or implementing legal compliance

Department or Subdivision
  • A customarily recognized department or
    subdivision must have a permanent status and
    continuing function
  • Need not be physically within the employers
    establishment, and may move from place to place
  • Continuity of the same subordinate personnel is
    not essential to the existence of a recognized
  • The employee in charge of each branch
    establishment is in charge of a recognized
  • Does not include a mere collection of employees
    assigned from time to time to a specific job

Customarily and Regularly
  • A frequency that must be greater than occasional
    but which, of course, may be less than constant
  • Includes work normally and recurrently performed
    every workweek
  • Does not include isolated or one-time tasks

Two or More
  • The phrase two or more other employees means
    two full-time employees or the equivalent
  • Full-time generally means 40 hours per week
  • The supervision of the same employees can be
    distributed among two or more exempt executives,
    but the hours worked by an employee cannot be
    credited more than once

Particular Weight
  • Factors include, but are not limited to
  • Whether it is part of the employees job duties
    to make suggestions and recommendations
  • The frequency with which suggestions and
    recommendations are made or requested
  • The frequency with which the employees
    suggestions and recommendations are relied upon

Particular Weight
  • Suggestions and recommendations may be reviewed
    by a higher level manager
  • The exempt executive need not have authority to
    make the ultimate decision
  • Making an occasional suggestion regarding a
    change in status of a co-worker does not meet the
    particular weight standard

Concurrent Duties
  • Concurrent performance of exempt and nonexempt
    work does not automatically disqualify an
    employee from exemption
  • Exempt executives generally decide when to
    perform nonexempt duties and remain responsible
    for the success or failure of business operations
  • Nonexempt employees generally are directed by a
    supervisor to perform the exempt work or perform
    the exempt work for defined time periods

Administrative Duties
  • Primary duty is the performance of office or
    non-manual work directly related to the
    management or general business operations of the
    employer or the employers customers and
  • Primary duty includes the exercise of discretion
    and independent judgment with respect to matters
    of significance

Management or General Business Operations
  • Refers to the type of work performed by the
  • Work must be directly related to assisting with
    the running or servicing of the business
  • Does not include working on a manufacturing
    production line or selling a product in a retail
    or service establishment

Management or General Business Operations
  • Examples Tax, Finance, Accounting, Budgeting,
    Auditing, Insurance, Quality control, Purchasing,
    Procurement, Advertising, Marketing, Research,
    Safety and Health, Human Resources, Employee
    Benefits, Labor Relations, Public and Government
    Relations, Legal and Regulatory Compliance,
    Computer Network, Internet and Database

Employers Customers
  • Employees acting as advisors or consultants to
    clients or customers
  • Examples
  • Tax expert advises a client on tax laws for a
    start-up enterprise and another client on tax
    consequences of corporate merger
  • Financial consultant advises a client on
    investment options and another client on
    obtaining financing for building new
    manufacturing facility

Discretion and Independent Judgment
  • The comparison and evaluation of possible courses
    of conduct, and acting or making a decision after
    the various possibilities have been considered
  • Must be exercised with respect to matters of
    significance, which refers to the level of
    importance or consequence of the work performed
  • Decisions and recommendations may be reviewed at
    a higher level and, upon occasion, revised or

Discretion and Independent Judgment
  • Factors include, but are not limited to
  • Whether the employee has authority to formulate,
    affect, interpret, or implement management
    policies or operating practices
  • Whether the employee carries out major
    assignments in conducting the operations of the
  • Whether the employee has authority to waive or
    deviate from established policies and procedures
    without prior approval

Discretion and Independent Judgment
  • Whether the employee performs work that affects
    business operations to a substantial degree, even
    if the employees assignments are related to
    operation of a particular segment of the business
  • Whether the employee has authority to commit the
    employer in matters that have significant
    financial impact
  • Whether the employee has authority to negotiate
    and bind the company on significant matters

Discretion and Independent Judgment
  • Whether the employee provides consultation or
    expert advice to management
  • Whether the employee is involved in planning
    long- or short-term business objectives
  • Whether the employee investigates and resolves
    matters of significance on behalf of management
  • Whether the employee represents the company in
    handling complaints, arbitrating disputes or
    resolving grievances

Discretion and Independent Judgment
  • Discretion and independent judgment does not
  • Applying well-established techniques, procedures
    or specific standards described in manuals or
    other sources
  • Clerical or secretarial work
  • Recording or tabulating data
  • Performing mechanical, repetitive, recurrent or
    routine work

Use of Manuals
  • Exempt employees may use manuals, guidelines or
    other established procedures if they
  • Contain or relate to highly technical,
    scientific, legal, financial or other similarly
    complex matters
  • That can be understood or interpreted only by
    those with advanced or specialized knowledge or
  • Employees are not exempt if they use manuals to
    apply well-established techniques or procedures
    within closely prescribed limits

Other Exempt Positions
  • An employee who leads a team of other employees
    assigned to complete major projects
  • Executive assistant or administrative assistant
    to a business owner or senior executive of a
    large business who has been delegated authority
    regarding matters of significance
  • Management consultants who study the operations
    of a business and propose changes in organization

Non-exempt Positions
  • Ordinary inspection work involving
    well-established techniques and procedures
  • Examiners and graders who perform work involving
    comparison of products with established standards
  • Comparison shoppers who merely report the prices
    at a competitors store
  • Public sector inspectors or investigators

Learned Professional
  • The employees primary duty must be the
    performance of work requiring advanced knowledge
  • In a field of science or learning
  • Customarily acquired by a prolonged course of
    specialized intellectual instruction

Advanced Knowledge
  • Predominately intellectual in character
  • Includes work requiring the consistent exercise
    of discretion and judgment
  • The advanced knowledge is generally used to
    analyze, interpret or make deductions from
    varying facts or circumstances
  • Not work involving routine mental, manual,
    mechanical, or physical work
  • Cannot be attained at the high school level

Field of Science or Learning
  • Occupations with recognized professional status,
    as distinguished from the mechanical arts or
    skilled trades
  • Examples Law, Accounting, Actuarial Computation,
    Theology, Teaching, Physical Sciences, Medicine,
    Architecture, Chemical Sciences, Pharmacy,
    Engineering, Biological Sciences, Culinary

Prolonged Course of Specialized Intellectual
  • Specialized academic training is a prerequisite
    for entering the profession
  • Best evidence that an employee meets this
    requirement is possession of the appropriate
    academic degree
  • The learned professional exemption is not
    available for occupations that may be performed
  • Only the general knowledge acquired by an
    academic degree in any field

Prolonged Course of Specialized Intellectual
  • Knowledge acquired through an apprenticeship
  • Training in the performance of routine mental,
    manual, mechanical or physical processes
  • The exemption also does not apply to occupations
    in which most employees acquire skill by

  • Exemption is also available to employees in
    learned professions who
  • Have substantially the same knowledge level and
  • Perform substantially the same work as the
    degreed professionals,
  • But attained the advanced knowledge through a
    combination of work experience and intellectual

  • Examples
  • Lawyer who did not attend law school
  • Chemist who does not have a chemistry degree

Nonexempt Professions
  • Accounting clerks and bookkeepers who normally
    perform a great deal of routine work
  • Cooks who perform predominantly routine mental,
    manual, mechanical or physical work
  • Paralegals and legal assistants
  • Engineering technicians

Computer-Related Occupations
  • Paid either on salary or fee basis at no less
    than 455 per week or compensated hourly at no
    less than 27.63 per hour
  • Employed as a computer systems analyst, computer
    programmer, software engineer, or other similarly
    skilled worker in the computer field

Computer-Related Occupations
  • Primary duty
  • Application of systems analysis techniques and
  • Design, development, documentation, analysis,
    creation, testing or modification of systems or
  • Design, documentation, testing, creation or
    modification of computer programs related to
    machine operating systems
  • Combination of the above

Computer-Related Occupations
  • Does not include
  • Employees engaged in manufacture or repair of
    hardware or related equipment
  • Employees whose work is highly dependent upon, or
    facilitated by, the use of computers and software
    programs, but who are not primarily engaged in
    systems analysis and programming or other
    similarly skilled occupations

Comparison State and Federal Laws
  • When state laws differ from FLSA, an employer
    must comply with the standard most protective of

Disciplinary Suspensions
  • The new federal rule allows an employer to impose
    unpaid disciplinary suspensions of one or more
    full days for workplace-conduct rule infractions.
  • Washington State allows an unpaid disciplinary
    suspension in increments of less than one week
    only for violations of safety rules of major
    significance. Unpaid disciplinary suspensions for
    non-major safety violations cannot be in less
    than full-week increments.
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