The most important and most far-reaching law guaranteeing a worker’s right to be paid fairly is the federal Fair Labor Standards Act, or FLSA. (29 U.S.C. §§ 201 and following.) The FLSA:
efines the 40-hour workweek establishes the federal minimum wage sets requirements for overtime, and places restrictions on child labor.
Basically, the FLSA establishes minimums for fair pay and hours—and it is the single law most often violated by employers. An employer must also comply with other local, state, or federal workplace laws that set higher standards. So, in addition to determining whether you are being paid properly under the FLSA, you may need to check whether the other laws discussed in this chapter also apply to your situation.
The FLSA was passed in 1938 after the Depression, when many employers took advantage of the tight labor market to subject workers to horrible conditions and impossible hours. One of the most complex laws of the workplace, the FLSA has been amended many times. It is full of exceptions and exemptions—some of which seem to contradict one another. Most of the revisions and interpretations have expanded the law’s coverage by, for example:
requiring that male and female workers receive equal pay for work that requires equal skill, effort, and responsibility including in its protections state and local hospitals and educational institutions covering most federal employees and employees of states, political subdivisions, and interstate agencies setting out strict standards for determining, paying, and accruing compensatory or comp time—time given off work instead of cash payments, and establishing specific requirements for how and when employers must pay for overtime work.
1. Who Is Covered
The FLSA applies only to employers whose annual sales total $500,000 or more, or who are engaged in interstate commerce.
You might think that this would restrict the FLSA to covering only employees in large companies, but, in reality, the law covers nearly all workplaces. This is because the courts have interpreted the term interstate commerce very broadly. For example, courts have ruled that companies that regularly use the U.S. mail to send or receive letters to and from other states are engaged in interstate commerce. Even the fact that employees use company telephones or computers to place or accept interstate business calls or take orders has subjected an employer to the FLSA.
2. Who Is Exempt
A few employers, including small farms—those that use relatively little outside paid labor—are explicitly exempt from the FLSA.
In addition, some employees are exempt from FLSA requirements, such as pay for overtime and minimum wages, even though their employers are covered.
Exemption and partial exemption from the FLSA cuts both ways. For employees who are exempt, the often-surprising downside is that they are generally not entitled to wage extras such as overtime and compensatory time. The upside is that, at least theoretically, exempt employees are paid a salary that is handsome enough to compensate them for the extra duties and responsibilities they have taken on as part of their jobs. In addition, the paychecks of the exempt can be docked only for complete days of absence for vacation, personal business, illness, or partial initial or final weeks of employment.
Employers who attempt to have it both ways—for example, by denying workers overtime by claiming they’re exempt but docking them for tardiness or time away for an occasional errand—risk violating wage and hour laws.
a. Executive, Administrative, and Professional Workers
This is the most confusing and most often mistakenly applied broad category of exempt worker.
Above all, bear in mind that you are not automatically exempt from the FLSA solely because you receive a salary; the work you do must be of a certain type as well.
The Department of Labor, not renowned for issuing succinct or comprehensible regulations, attempts some additional guidance on what type of work these employees must perform to qualify as exempt.
Executive exemption. The requirements for an exempt executive worker are most rigorous. He or she must:
manage other workers as the primary job duty
direct the work of two or more full-time employees
have the authority to hire, fire, discipline, promote, and demote others or make recommendations about these decisions, and
earn a salary of at least $455 per week. Employees who own at least 20% of the business are exempt only if they are “actively engaged” in its management.
Administrative exemption. An administrative employee generally must:
primarily perform office or nonmanual work directly for company management or administration
primarily use their own discretion and judgment in work duties, and
earn a salary of at least $455 weekly.
Professional exemption. To qualify as an exempt professional, an employee must:
perform work requiring invention, imagination, originality, or talent in a recognized creative field—such as music, writing, acting, and the graphic arts, or
perform work requiring advanced knowledge—work that is predominantly intellectual, requires a prolonged course of instruction, and requires the consistent exercise of discretion and judgment, such as law; medicine; theology; accounting; actuarial computation; engineering; architecture; teaching; various types of physical, chemical, and biological sciences; and pharmacy, and
earn a salary of at least $455 per week—although doctors, lawyers, teachers, and many computer specialists need not meet this minimal earning requirement.
Highly compensated employees. Employees who perform office or nonmanual work and are paid total annual compensation of $100,000 or more—which must include at least $455 per week paid on a salary or fee basis—are exempt from the FLSA if they regularly perform at least one of the duties of an exempt executive, administrative, or professional employee as described earlier.
Common problems. The Department of Labor has tagged a number of problems that commonly come up relating to the exemption for executive, administrative, and professional workers. The top contenders include workplaces in which:
There is no formal sick leave policy, but salaried workers are docked for time missed due to illness.
Allegedly exempt workers are paid less than full salary each week.
Employees deemed exempt perform nearly exclusively routine work that has no bearing on setting management policies.
Exempt employees with scholastic degrees perform exclusively unprofessional, unrelated work.
Acquired job skills are confused with the need to use independent judgment and discretion.
Salaried employees are all labeled exempt, without regard to actual work duties or the percentage of time spent on them.
Note If you do not fit squarely within a particular definition of an exempt employee, following the nuances and semantic turns can be flummoxing. For more help, go to the Department of Labor’s website at www.dol.gov or seek guidance from the DOL’s toll-free helpline at 866-487-9243.
b. Outside Salespeople
An outside salesperson is exempt from FLSA coverage if he or she:
regularly works away from the employer’s place of business, and
makes sales or obtains orders or contracts for services or facilities.
Typically, an exempt salesperson will be paid primarily through commissions and will require little or no direct supervision in doing the job. And, under the law, outside sales do not include those made by mail, by telephone, or over the Internet.
c. Computer Specialists
This exemption applies to computer systems analysts, computer programmers, software engineers, and or other similarly skilled workers in the computer field who are compensated either on a salary or fee basis at a rate not less than $455 per week or not less than $27.63 an hour.
If you work in such circles, you may well know who you are. But the law specifically requires that an exempt computer specialist’s primary work duties must involve:
applying systems analysis techniques and procedures—including consulting with users to determine hardware, software, or system functional specifications
designing, developing, documenting, analyzing, creating, testing, or modifying computer systems or programs, including prototypes, based on and related to user or system design specifications
designing, documenting, testing, creating, or modifying computer programs related to machine operating systems, or
a combination of these duties.
d. Miscellaneous workers
Several other types of workers are exempt from the minimum wage and overtime pay provisions of the FLSA. The most common include:
employees of seasonal amusement or recreational businesses
employees of local newspapers having a circulation of less than 4,000
seamen on foreign vessels
newspaper delivery workers
workers on small farms, and
personal companions and casual babysitters. Officially, domestic workers—housekeepers, child care workers, chauffeurs, gardeners—are covered by the FLSA if they are paid at least $1,000 in wages from a single employer in a year, or if they work eight hours or more in a week for one or several employers. For example, if you are a teenager who babysits only an evening or two each month for the neighbors, you probably cannot claim coverage under the FLSA; a full-time au pair would be covered.
