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Employment Newsletter

Wage and Hour Laws

Wage and hour standards for employees are governed by the federal Fair Labor Standards Act (FLSA), which was originally enacted in the 1930s. FLSA applies to any enterprise, which has two or more employees, engages in business with other states, creates products destined for other states or handles goods or materials which have come from other states, and which has a gross annual sales volume of $500,000 or more. FLSA also applies to companies involved in construction, home repair or landscaping, laundry and dry-cleaning operations, hospitals and facilities that care for people who are disabled or old, and schools, without regard to how much money they make.

FLSA sets the national minimum wage (this has been $5.15 per hour since September 1, 1997) and decrees that men and women must receive equal pay for equal work. FLSA also prohibits the employment of children under the age of 14, and sets limits on the length of time children between the ages of 14 and 16, and between the ages of 16 and 18, may work, and the duties they may perform. For example, children between 14 and 16 years of age may not work more than 18 hours during any week or three hours in any day when school is in session, and may not work more than eight hours in a day or 40 hours in a week when school is not in session. Children under 16 may not work in manufacturing or use equipment commonly believed to be dangerous, nor may they operate motor vehicles. Children who are over 16 years of age but under 18 may work full hours, but may not use woodworking equipment or saws, or operate machinery used in construction, roofing, demolition, excavation, metalworking, or baking.

Perhaps the best-known function of FLSA is its role in setting overtime standards. FLSA does not require that an employee be paid extra compensation for working over eight hours in a day, more than five days in a week, or on weekends or holidays. However, FLSA does, mandate that any employee who is not exempt from the law’s requirements must be paid one and one-half times the employee’s regular rate of pay for any hours the employee works over 40 hours in a seven-day workweek.

There are several exemptions to the overtime requirement. For example, hospitals and care centers may calculate overtime on a 14-day, instead of seven-day, basis, paying overtime wages only to employees who work more than 80 hours in a two-week period. In addition, public employers may award their employees compensatory time in lieu of paying overtime, meaning that an employee who, for example, works 42 hours in a week may then take three hours off (one and one-half times the two hours over 40) in a coming week.

This major exemption to the overtime requirement, however, is for various white collar employees. FLSA states that an employee who is paid at least $455 per week as a set salary (that is, whose pay does not vary based on how many hours are worked in a given week), and whose work is directly related to the management or business operations of the employer; is in the field of computers; or is employed in sales away from the employer’s place of business need not be paid overtime compensation.

An employee who is engaged in artistic or creative endeavors or work that requires specialized professional training (such as employment as a lawyer or a doctor) will be exempt from the overtime regulations, without the minimum salary requirement.

An hourly computer employee may be exempt from the overtime regulations as well, if that employee is paid an hourly rate of at least $27.63.

In order to maintain an employee’s exempt status, the employer may not deduct from an employee’s pay for missed work, unless the employee is gone for more than a week. Even an employee who is suspended for disciplinary reasons must still be paid, if the suspension lasts less than one week. Only if the employee misses work due to Family and Medical Leave Act leave, or is suspended due to the violation of a major workplace safety rule, may the employer deduct from the employee’s pay. Under certain circumstances, public employers may adjust an employee’s pay for absences of less than one week.

As many of the overtime regulations were substantially changed in 2004, employees who believe they are entitled to overtime wages should seek legal advice.

Many states have enacted their own wage and hour standards, which frequently are more stringent than federal standards.

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