Fair Labor Standards Act; What You Need to Know
The Fair Labor Standards Act is a very long and detailed document that sets a standard for wages, labor restrictions, overtime, and a variety of other rules that affect how your company can operate. In this blog we will go over a few of the main points that small to midsize companies need to know about.
Basic Wage Standards
As of July 24, 2009, all non exempt workers are entitled to a minimum wage of $7.25. Under the FLSA, wages are due to be paid on regular pay days at the end of each pay period. Employers paying their employees the minimum wage are not allowed to deduct pay for for items such as uniforms, tools, or cash shortages as it will take the employees pay below the minimum wage required under the FLSA.
It should also be noted that individual states have the right to set their own minimum wage, and all employers in that state need to pay their employees that rate. For example, the minimum rate in Ohio is $8.80 per hour. If you have employees in Ohio, you must pay them at least the state’s minimum since it is greater than the federal minimum wage of $7.25.
There are also a few items that employers are not required to pay for. Under the FLSA, companies are not required to do the following:
- vacation, holiday, severance, or sick pay;
- meal or rest periods, holidays off, or vacations;
- premium pay for weekend or holiday work;
- pay raises or fringe benefits; or
- a discharge notice, reason for discharge, or immediate payment of final wages to terminated employees.
Many states have laws regulating these conditions and the basic wages standards should be in accordance with state law.
Employees who receive at least $30 in tips each month qualify for a reduced wage of $2.13 per hour of base pay from their employer. As an employer, you are required to make sure that your tipped employees are making at least $7.25 per hour between their tips and the $2.13 base hourly pay. If your employees tips are not bringing them to at least the minimum wage it is your responsibility to make up the difference.
There are certain situations where employers are not required to pay overtime wages to workers in very specific circumstances. These situations are mostly for salary employees who make at least $684 per week. This also includes commission based employees, and domestic service works who live in the residence in which they are employed. For a more in depth explanation of these exemptions, you can read more about it here: FLSA Exemptions
The FLSA requires employers to keep detailed record of wages, hours worked, and employment dates. This information is typically already recorded by the business to run payroll and for other business purposes anyway. To be completely complaint with the rules, the following information must be kept for all employees:
- personal information, including employee’s name, home address, occupation, sex, and birth date if under 19 years of age;
- hour and day when workweek begins;
- total hours worked each workday and each workweek;
- total daily or weekly straight-time earnings;
- regular hourly pay rate for any week when overtime is worked;
- total overtime pay for the workweek;
- deductions from or additions to wages;
- total wages paid each pay period; and
- date of payment and pay period covered.
Calculating Overtime Pay
The FLSA states that overtime wages must be at least one-half times the employees standard rate of pay. Here are some examples of what this could look like for various types of employees:
- Hourly rate – If more than 40 hours are worked, at least one and one-half times the regular rate for each hour over 40 is due.
- Piece rate – The regular rate of pay for an employee paid on a piecework basis is obtained by dividing the total weekly earnings by the total number of hours worked in that week. The employee is entitled to an additional one-half times this regular rate for each hour over 40, plus the full piecework earnings.
- Salary – The regular rate for an employee paid a salary for a regular or specified number of hours a week is obtained by dividing the salary by the number of hours for which the salary is intended to compensate. The employee is entitled to an additional one-half times this regular rate for each hour over 40, plus the salary.
Equal Pay Provisions
The Fair Labor Standards Act prohibits employers from paying men and women differently if they are doing the same job. This applies to any roles that require the same skill, effort, and responsibility and are performed under similar working conditions.
This article covers a very small portion of the information outlined in the FLSA. If you would like to learn more about this act, you can do so here: Fair Labor Standards Act
We at Doyle HCM can also work with you to ensure that you are meeting all the requirements and keep you compliant with all FLSA points that are relevant to your business. If you would like to chat more about this please do not hesitate to reach out!