Filing a Complaint or Lawsuit (wages)

Enforcing Your Right to Be Paid Fairly
Your first step in enforcing your right to be paid fairly should be to decide whether your complaint involves a violation of a law or is simply a matter of disagreement or misunderstanding between you and your employer.

If, for example, your employer refused to pay you time and a half for five hours of overtime that you worked, then the issue would be covered by the FLSA. But if you had been working under the impression that you would get a raise every year—a matter not covered by the FLSA—and your employer will not give you one, then the issue is left for you to resolve with your employer, without the clout that a law can lend.

Once you have refined your complaint, try discussing it with your employer or former employer before filing any official action. Some companies have dispute resolution programs—usually outlined in their employee manuals—that can help you resolve a pay dispute without resorting to legal action.

Filing a Complaint or Lawsuit
If your complaint involves what you believe is a violation of the FLSA—for example, you have not been paid fairly or on time—contact your local office of the Wage and Hour Division of the U.S. Department of Labor, listed in the federal government section of the telephone directory and available on the agency’s website at www.dol.gov.

If you call, visit, or write to your local Wage and Hour Division office, workers there will take down the information you provide and transcribe it onto a complaint form. You can request one of these forms and fill it out yourself. But, since the staff members are familiar with which details are legally pertinent, they usually prefer to fill it out themselves. They will probably ask you to provide photocopies of documents relevant to your dispute, such as pay stubs.

Review the completed complaint form and attached documents to be sure they are correct and as complete as possible. If you are assigned to a staff person who seems particularly unsympathetic or unhelpful, calmly and politely ask to speak with someone else. Also, keep in mind that a huge dollop of patience is required. The process—from filing a complaint through investigation and the final outcome—typically takes from one to three years.

Once your complaint has been put together, U.S. Labor Department investigators will take over the job of gathering additional data that should either prove or disprove your complaint.

If the thought of reporting your employer to the authorities frightens you, take some comfort in knowing that Labor Department investigators must keep the identities of those who file such complaints confidential. Also, it is illegal for an employer to fire or otherwise discriminate against an employee for filing a complaint under the FLSA or for participating in a legal proceeding related to its enforcement. Many state laws also provide protection for employees who file state wage and hour complaints.

Where the federal investigators find violations of the FLSA, the action that they then take will depend upon the severity of the violations and whether or not the employer appears to have been violating the law willfully.

When the violations are severe and apparently willful, the Labor Department may ask the Justice Department to bring criminal charges against the employer. Government lawyers will handle the matter for you. If convicted, a first-time violator of the FLSA may be fined by the courts; subsequent convictions can result in both fines and imprisonment.

If the violations are not too severe, or if the Labor Department investigators feel the infractions were not willful, one of the following steps may be taken:

The Labor Department may set up and supervise a plan for your employer to pay back wages to you and anyone else injured by the violations.

The Secretary of Labor may file a lawsuit asking the court to order your employer to pay you the wages due, plus an equal amount as damages. The court may also issue an injunction or order preventing your employer from continuing the illegal behavior.

You may file your own lawsuit under the FLSA to recover the wages you’re owed, plus other damages, attorneys’ fees, and court costs. You will probably need to hire a lawyer to help with this type of lawsuit.

What Cannot Be Deducted or Withheld (Wages)

State laws generally control what may be deducted or withheld from an individual paycheck. Commonly, only a few things are off-limits for an employer to deduct:

the value of time taken for meal periods (see Section D3, above)

the cost of broken merchandise

tools and materials used on the job

required uniforms, and

cash register shortages and losses due to theft.

The History of Payroll Withholding
The Social Security Act of 1935, a part of President Franklin D. Roosevelt’s New Deal, was the first law to sink its teeth firmly into the typical paycheck. Intended only to save industrial and commercial hourly workers of the Depression era from poverty in old age, the original Social Security program required employers to withhold a mere 1% of workers’ pay.

Since then, the Social Security Act has been amended many times. The age of eligibility has been lowered from 65 to 62, and coverage has been extended to people unable to work because of physical disabilities, government employees, self-employed people, and a number of other groups not covered by the original Act. Consequently, the amount withheld from most wages to pay for Social Security programs now is more than 7%.

Public debate is again abuzz with talk of the Social Security Act, prompted by statistics of aging and survival and what it means for the changing workforce. Baby boomers will begin retiring in less than a decade, and life expectancy is rising. By 2025, the number of people age 65 and older will grow by an estimated 74%. In contrast, the number of workers supporting the system in its current incarnation would grow by 14%, which some see as a threat to deplete its coffers completely. Sharply divided politicians are urging a potpourri of reforms, offering everything from restoring solvency with minimal changes to scrapping the system entirely.

The federal income tax, the other major cause of paycheck shrinkage, was created when the 16th Amendment to the U.S. Constitution was passed in 1913. The original federal income tax rates ranged from 1% to 7% of annual income above $3,000—a lot of money back then.

To pay for World War II, however, the government raised the income tax rates so dramatically that the tax on the top income level bracket hit a record of 94% in 1944 and 1945. The minimum income subject to taxation was lowered so that most working people were for the first time subject to some income tax.

Politicians, hoping to assuage the public angst over paying a large yearly lump sum, decided to lessen the trauma by making employers withhold the income tax, little by little, from workers’ pay each week.

By the 1970s, employees had become so accustomed to having large sums of money withheld from their pay that most states and cities—as well as nongovernment groups such as health insurance companies and pension fund managers—instituted additional with-holding programs.

Today, it is common for employees to have more than a third of their pay withheld by their employers on behalf of government, with still more withheld to finance private benefit plans.

Rights Under the FLSA : Minimum Wage

The FLSA guarantees a number of rights, primarily aimed at ensuring that workers get paid fairly for the time they work. (See Sections G and H, below, for an explanation of how to take action for FLSA violations.)

Minimum Wage

Employers must pay all covered employees not less than the minimum wage—currently set at $5.15 an hour.

Some states have established a minimum wage that is higher than the federal one—and you are entitled to the higher rate if your state allows for one. Employers not covered by the FLSA, such as small farm owners, are required to pay all workers the state minimum wage rate. (See “State Minimum Wage Laws for Regular and Tipped Employees” in Section E, below.)

The FLSA does not require any specific system of paying the minimum wage, so employers may base pay on time at work, on piece rates, or according to some other measurement. In all cases, however, an employee’s pay divided by the hours worked during the pay period must equal or exceed the minimum wage.

Many employers either become confused by the nuances and exceptions in the wage and hour law—or they bend the rules to suit their own pocketbooks. Whatever the situation, you would do well to double check your employer’s math. A few simple rules distilled from the law may help.

Hourly. Hourly employees must be paid minimum wage for all hours worked. Your employer cannot take an average—or pay you less than minimum wage for some hours worked and more for others.

Fixed rate or salary. Employees paid at a fixed rate can check their wages by dividing the amount they are paid in a pay period by the number of hours worked. The resulting average must be at least minimum wage.

Commissions and piece rates. Your total pay divided by the number of hours you worked must average at least the minimum hourly wage rate.

a. Form of Pay
Under the FLSA, the pay you receive must be in the form of cash or something that can be readily converted into cash or other legal forms of compensation, such as food and lodging. Your employer cannot, for example, pay you with a coupon or token that can be spent only at a store run by the employer. Employee discounts granted by employers do not count toward the minimum wage requirement.

b. Pay for Time Off
Neither the minimum wage section nor any other part of the FLSA requires employers to pay employees for time off, such as vacation, holidays, or sick days. Although most employers provide full-time workers some paid time off each year, the FLSA covers payment only for time on the job.

However, some state laws mandate that employees get paid time off for jury duty (see Section E2, below), for voting (see Section E3, below) and for family and medical leave. And most state laws provide that, if employers offer paid vacation days off, employees are entitled to be paid for the portion they have already earned when they quit or are fired.

c. Tips
When employees routinely receive a minimum amount in tips as part of their jobs—commonly, $20 to $30 per month as set out in state law—their employers are allowed to pay less than the minimum wage and credit the tips received against the minimum wage requirement. However, the employee’s hourly wage plus the tips the employee actually earns must add up to at least the minimum wage—or the employer has to make up the difference. (Under federal law, an employer can pay as little as $2.13 an hour, as long as the employee earns at least $30 in tips per month; some states have different rules, summarized in the chart in Section E1, below. (See Section B3b, below, for more on tips as wages.) Also, the employee must be allowed to keep all of the tips he or she receives.

d. Commissions
When people are paid commissions for sales, those commissions may take the place of wages. However, if the commissions do not equal the minimum wage, the FLSA requires the employer to make up the difference.

The Fair Labor Standards Act (Wages and Hours)

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.