The FMLA has undergone major change in the past 18 months. First, there was the National Defense Authorization Act (NDAA), an amendment to the FMLA, which took effect in January 2008. Then, in February, the U.S. Department of Labor (DOL), released its proposed regulations for public comment. The comments were collected and the FMLA’s final regulations were published in November. Then, on January 16, 2009, the final regulations took effect. And, since then, employers have been operating under this new–and substantially different–set of regulations. Whether or not they realize that there’s a new set of rules in town is a different question. Continue reading
The Fair Labor Standards Act (FLSA), requires employers to make, keep, and preserve records regarding employees and employee compensation. The FLSA provides a 15-item list of the types of information that the employer has the obligation to obtain. All primary sources of this information must be preserved for a period of three years for all current and former employees. All supplementary sources must be preserved for at least two years.
What Information Am I Required to Keep?
First, you must be familiar with the information for which you are responsible. The list includes:
- Name and SSN;
- Home address;
- Date of birth if under age 19;
- Sex and occupation
- Day and time on which the workweek begins;
- Hourly rate of pay;
- Basis of pay;
- Nature of any payment claimed as an exclusion from the regular rate;
- Total hours worked for each day and each week;
- Total straight (i.e., non-overtime or premium) pay;
- Total overtime pay;
- Additions and deductions made, including wage assignments;
- Total wages paid;
- Date of payment and pay period covered; and
- The company’s sales and purchase records for purposes of determining whether it is an enterprise with an annual business volume of $500,000.
What Are the Primary and Secondary Sources of this Information?
All records that constitute primary sources of the above-listed information must be preserved for a period of three years. Such records include:
- payroll records;
- work certificates;
- CBAs; and
- employment contracts.
Supplementary records are the documents that serve as the source documents for other payroll records. Supplementary records may include:
- time cards;
- production cards;
- wage rate tables;
- piece-rate schedules; and
- work-time schedules.
What Else Should I Keep and Where Should I Keep It?
Although not required by the FLSA, it is a good idea to retain job descriptions, performance reviews, internal memos, job postings, handbooks, and other materials relating to wage classifications and pay practices that you could use to justify your pay practices during an audit, for a period of at least three years.
The FLSA requires that all records be kept at the place or places of employment or at one or more established central record-keeping offices, where such records are customarily maintained. If kept outside the place of employment, they must be available within 72 hours of a request by the U.S. Department of Labor.
And, finally, don’t forget about your posting requirements. Employers must post notices in the workplace that state the requirements of the FLSA.
The Fair Labor Standards Act (FLSA), is a very challenging statute to apply correctly. For more information about legal compliance with the federal wage and hour laws, see the following posts:
The Family Medical Leave Act (FMLA), Americans With Disabilities Act (ADA), and state worker’s compensation laws are not mutually exclusive. By qualifying for one, an employee is not automatically disqualified from the others. Continue reading
The Fair Labor Standards Act (FLSA), mandates that covered, non-exempt employees must be paid at a rate equal to one and one-half the regular rate of pay for all hours worked over forty in any given workweek.
Compliance with the overtime laws is determined by workweek and each workweek stands by itself. A workweek is defined as 7 consecutive, 24-hour periods (168 hours), but which 7 consecutive days can be chosen by the employer.
The regular rate of pay is determined by dividing total earnings in the workweek by the total number of hours worked in the workweek. The regular rate can never be less than the applicable minimum wage. Not everything, though, is included in the calculation of the regular rate. Excluded from the calculation are:
- Sums paid as gifts;
- Payments for time not worked;
- Reimbursement for expenses;
- Discretionary bonuses;
- Profit-sharing plans;
- Retirement and insurance plans;
- Overtime premium payments; and
- Stock options.
To determine the regular rate (RR), take the total straight-time earnings (make sure to exclude any of the above) and divide it by the total hours worked. The overtime rate is calculated at a rate equal to the regular rate multiplied by .5. The overtime rate is then multiplied by the number of overtime hours worked. This amount is the total overtime premium due. Three examples follow, below.
Example 1: Hourly Rate and Production Bonus
Total Hours + 48 Hourly Rate = $9 Bonus $10
46 hours x $9 =432 + 10 = $442 / 48 = $9.21 (Regular Rate)
$9.21 x .5 = $4.61 x 8 hrs = $36.88 (Overtime Due)
Example 2: Different Hourly Rates
Lifeguard Rate $8.50 Lifeguard Hours 21 = $178.50
Cabana Attendee $9.00 Cabana Attendee Hours 26 = $234.00
Total straight-time earnings = $412.50 / 47 hours = $8.78 (Regular Rate)
$8.78 (Regular Rate) x .5 = $4.39 (Overtime Rate)
$4.39 (Overtime Rate) x 7 hours = $30.73 (Overtime Due)
Example 3: Tipped Employees
Rate Paid by Employer $2.13
Tip Credit Claimed $3.72
Regular Rate: $5.85
Additional Half-Time Rate $2.93
50 Hours $5.85 =$292.50
10 hours x $2.93 =$29.30
Total Due =$321.75 (less tip credit)
Tip Credit 50 x $3.72 =$186.00
Total Cash Wage Due = $135.75
For more about the basics of the FLSA, see:
Employees must be paid wages for all time worked. Period. That’s the law. It seems simple enough but the seeming simplicity of that statement can be deceptive. What constitutes “time worked” has remained an elusive concept for many employers. As a result, the issue of what should be included in a calculation of the total time worked for compensation purposes, has generated a great deal of case law on the issue–some making clearer and others making the issues even more complex.
Work “suffered” is time worked. Work that was not requested by the employer but that was “suffered” or “permitted” is considered time worked. Then, of course, the question becomes when has an employee “suffered work.”
Waiting time is counted as time worked when the employee is unable to use the time effectively for his own purposes and the time is controlled by the employer. Waiting time is not counted as hours worked when the employee is completely relieved from duty; and the time is long enough to enable the employee to use it effectively for his own purpose.
On-call time is time worked when the employee has to stay on the employer’s premises or the employee has to stay so close to the employer’s premises that he cannot use that time effectively for his own purposes. But, simply being required to wear a pager or to leave word at home or with the employer about where the employee can be reached, is not considered “on-call” time that constitutes “work suffered.”
Meal periods are not hours worked when the employee is relieved of duties for the purposes of eating a meal. But rest periods (include smoking breaks, if permitted), lasting 5 to 20 minutes are counted as time worked and must be paid accordingly.
When traveling between work and home, employees are not considered to be working and the time spent traveling is not working time. Travel during the normal working day between job sites is considered working time.
Time employees spend in meetings, lectures, or training, is considered hours worked and must be paid unless:
- attendance is outside regular working hours;
- attendance is voluntary;
- the course, lecture, or meeting is not job-related; and
- the employee does not perform any productive work while attending.
For more about the basics of the FLSA, see:
The Fair Labor Standards Act (“FLSA”), provides that covered employees must be paid no less than the current state or federal minimum wage, whichever is greater, for all hours worked. The Delaware minimum wage is $7.15 trumps the current federal minimum wage of $6.55.
Although the concept of minimum wage is not a complicated one, there are some issues that can blur the obviousness of the hourly wage amount. One such issue is what exactly should be included as compensation when determining whether minimum wage has been paid for all time worked. Included in the definition of compensation are:
- Wages (salary, hourly, piece rate);
- Certain bonuses;
- Tips received by eligible tipped employees (up to $4.42 per hour); and
- Reasonable cost of room, board , and other “facilities” provided by the employer for the employee’s benefit.
The fifth type of compensation, “board and lodging,” presents some nuances of its own. For example, it cannot exceed the actual cost of the facilities provided and cannot include a profit for the employer. The employer must follow good accounting practices when determining the reasonable cost. And, if no cost is incurred, the employer may not take a credit.
Deductions from pay can present major problems when they bring an employee’s hourly wage below the minimum wage. Deductions are illegal if:
- Made for an item considered primarily for the benefit or convenience of the employer; and
- Reduce the employee’s earnings below the required minimum wage.
Some of the most common examples of illegal deductions include:
- Tools used for work;
- Required uniforms;
- Damages to employer’s property;
- Cash-register shortages.
Tipped employees are not as problematic as illegal deductions but can be complex. To be considered a “tipped employee” under the FLSA, the employee must work in an occupation in which he customarily and regularly receives more than $30 per month in tips. Tipped employees must be paid at least $2.13 per hour in cash by the employer, who may claim a “tip credit” for the rest of the minimum wage. The employer may claim the “tip credit” only if:
- The employer informs each tipped employee about the tip-credit allowance, including the amount to be credited before the credit is utilized;
- The employer can document that the employee received at least enough tips to bring the total wage paid up to minimum wage or more;
- All tips are retained by the employee and are not shared with the employer or other employees, unless through a valid tip-pooling arrangement.
An example of the FLSA’s minimum-wage requirements in action:
Employee receives $9 per hour for 40 hours plus $5 in commission and $20 in reasonable cost of room and board.
Total earnings = $360 + $5 + $20 = $385
Total earnings / total hours = $385 / 40 = $9.63
The Fair Labor Standards Act (FLSA) protects more than 130 million workers in more than 7 million workplaces.
There are two types of coverage under the FLSA:
- Enterprise coverage: If an enterprise is covered, all of the enterprise’s employees are entitled to FLSA protection.
- Individual coverage: Even if the enterprise is not covered, individual employees may be covered and entitled to FLSA protections.
To qualify for enterprise coverage, the “enterprise” must have at least two employees and must generate at lease $500,000 per year in business. For the purposes of the FLSA, enterprises include:
- Businesses providing medical or nursing care for residents;
- Preschools; and
- Federal, state, and local government agencies.
To qualify for individual coverage, the employee must be engaged in:
- Interstate commerce;
- Production of goods for commerce;
- Closely-related process or occupation directly essential such production; or
- Domestic service.
Don’t underestimate the first possible qualification: employees engaged in interstate commerce. This may include even the most minimal activity across state lines, such as:
- Making telephone calls to other states;
- Typing letters to other states;
- Processing credit-card transactions;
- Traveling to other states.
As a general rule, almost every employee in the U.S. is covered by the FLSA. Some examples of employees who may not be covered include:
- Employees working for small construction companies;
- Employees working for small independently owned retail or service businesses.