FLSA 101: The Fair Labor Standards Act

Ross Brand FLSA 101: The Fair Labor Standards Act Twitter: @iRossBrand

September 2012 1

TABLE OF CONTENTS

Introduction……………………………………………………………………… 2

History………………………………………………………………………….... 2

Department of Labor…………………………………………………………... 3

Covered Businesses……………………………………………………..……. 3

Child Labor Provisions………………………………………………………… 4

Employee vs. Independent Contractor………………………………………. 5

Exempt vs. Non-exempt…………………………………………………..…... 7

Overtime………………………………………………………………………… 11

Equal Pay Act…………………………………………………………………… 12

Health Care Reform and FLSA………………………………………….……. 13

Rest Breaks………………………………………………………………...…… 14

Employee Records……………………………………………………….…….. 14

Conclusion…………………………………………………………………........ 16

End Notes………………………………………………………………….……. 17

Bibliography………………………………………………………………..…… 19

About the Author…………………………………………………………......... 21

Acknowledgements…................................................................................ 21

Disclaimer………………………………………………………………………. 21


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Introduction

The Fair Labor Standards Act (FLSA) is the seminal piece of federal legislation

addressing minimum wage, overtime pay, child labor law and record keeping related to

the previous subjects. Also known as the Wage and Hour Law, the FLSA is a

complicated and sometimes vague set of regulations that can cost an organization

greatly for failure to comply. The Equal Pay Act is an important amendment requiring

equal wages for men and women doing equal work. Further revisions in minimum

wage, overtime rules and variations in enforcement by different administrations, as well

as judgments by courts, have all added to the

demands on employers to stay up-to-date on

FLSA issues and consult with attorneys when

they have questions. FLSA standards most

recently underwent a significant revision in

2004.

In addition, many states have laws on

minimum wage, overtime pay and child labor

that differ from the FLSA. Whenever a

disparity exists between federal and state law,

the employer is obligated to provide the

amount of pay or abide by the terms most

favorable to the employee. Employers must

also factor into their scheduling and

compensation determinations both municipal laws and the terms of any collective

bargaining agreements, employee contracts or employment policies contained in their

employee handbook.

History

The FLSA was passed in 1938 to address severe abuses of employees who

were often forced to work long hours for low pay in hazardous conditions. Children from

poor families spent their youth working rather than in school, and frequently suffered

injuries toiling at round-the-clock shifts in sweat shop environments.

Because the courts had typically ruled that restrictions on employee hours and

minimum pay laws were unconstitutional, the United States Congress sought to enact a

major piece of legislation to address the aforementioned issues. Further impetus for

passing the FLSA was due to the large number of unemployed and impoverished

Americans during the Great Depression. President Franklin D. Roosevelt and Congress

Whenever a disparity exists between federal and state law, the employer is obligated to abide by the terms most favorable to the employee.


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believed that by limiting the hours of younger workers and requiring overtime pay for

hours worked by adult employees in excess of 40 in a week, the quality of life would not

only improve for America’s most vulnerable employees, but more jobs would open up

for the unemployed as owners would choose to hire new employees for evening and

overnight shifts rather than pay time and a half to their current employees. Setting a

minimum wage was also intended to “maintain the purchasing power of the public to lift

the country out of the economic depths of the Great Depression.”i

Department of Labor

As a federal statute, the Fair Labor Standards Act is administered and regulated

by the Department of Labor (DOL). Complaints regarding minimum wage and overtime

violations are investigated by the DOL’s Wage and Hour Division. Employees also have

the option of pursuing legal action in court, regardless of whether they first lodge a

complaint with the Wage and Hour Division.ii

In 2004, the DOL published new regulations updating and clarifying the

definitions of white-collar employees, including exemptions for outside sales and

computer employees, “whose duties, minimum salaries and basis of compensation

exclude them from the FLSA’s overtime pay requirements.”iii The five white-collar

exemptions will be discussed in more depth in the pages that follow. The salary level

test for exempt employees, which has been a part of the FLSA exemption criteria since

1938, had remained at $8,060 annually (or $155 per week) since 1975. iv The 2004

regulations raised the minimum annual salary for exempt employees to $23,600 (or

$455 per week). At the time, the DOL estimated that 6.7 million additional U.S. workers

would enjoy overtime protections based on the new minimum salary, including 5.4

million who were already non-exempt, but were gaining the guarantee of overtime pay

resulting from the new rules.v In 2009, the minimum wage was raised to its current level

of $7.25 per hour. The minimum wage can only be altered by Congressional legislation.

The DOL requires employers to display an official poster outlining the provisions of the

FLSA, which is available for free download at the DOL website or can be obtained at no

cost by phone or in person at the local offices of the Wage and Hour Division.vi

Covered Businesses

The employees of most private-sector businesses are covered under the FLSA.

Private-sector employers engaged in interstate commerce and retail service firms with

two or more employees and more than $500,000 in annual business fall under the

provisions of the FLSA, as do state and local hospitals and educational institutions.


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FLSA also covers individual employees engaged in interstate commerce, regardless of

whether their employer’s volume of business reaches the $500,000 level.vii The

interstate commerce clause is so broadly defined as to cover employees who make

phone calls or send emails to a person in another state.viii

Even if employers or employees are not covered under the FLSA, it is very likely

that they will fall under the jurisdiction of state laws similar to the FLSA. In 1974, state

and local government employees, most federal government employees (excluding

members of the military) and private household domestic employees received coverage

under FLSA.ix An ensuing Congressional

amendment to the FLSA enabled state and

municipal employers to compensate overtime

work with “comp time” instead of overtime pay.x

Comp time is not a legal option for private

sector businesses when it comes to

compensating their non-exempt employees for

overtime work.

While most jobs are governed by the

FLSA, there are some exceptions. For

example, employees of movie theaters and

many agricultural workers are not covered by

the FLSA. Employees who work in jobs

governed by some other federal labor law, such

as railroad workers covered by the Railway Labor Act or truck drivers covered by the

Motor Carrier Act, are not governed by the FLSA. Very small family-owned and

operated business and family farms are also excluded from the FLSA.xi

Child Labor Provisions

A major success of the FLSA has been to reduce drastically the number of

minors working in exploitative conditions since it was enacted 74 years ago. The FLSA

set the age limit for employment in most cases to 14 years and older, with strict

limitations on the amount of hours children ages 14-15 can work, protecting the

educational opportunities for young Americans and prohibiting their employment in jobs

that posed a significant threat to their health and safety.xii The Wage and Hour Division

of the Department of Labor has approved proof-of-age certificates for minors, which are

available at the appropriate state agency. SHRM strongly recommends that any

organization interested in employing a minor obtain a proof-of-age certificate prior to

hiring the minor.xiii

Comp time is not a legal option for private sector businesses when it comes to compensating their non-exempt employees for overtime work.


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According to the FLSA regulations, children under 14 are prohibited from most

farm work. They may be employed by parents, except in hazardous industries,

manufacturing and mining. Certain other jobs,

such as actors and newspaper carriers, are

permitted for children younger than 14.xiv

The rules for 14 and 15 year olds

restrict work hours during the school year to no

more than 3 hours a day and 18 hours a week.

During school vacations, 14 and 15 year olds

can work up to 8 hours a day and 40 hours a

week. That work must be performed between

7 A.M. and 7 P.M., except from June 1 through

Labor Day, when 14 and 15 year olds can

work until 9 P.M.xv Teens ages 16 and 17

have no special restrictions placed upon the

hours that they may work on a given day or week. However, all workers 17 and

younger are banned from hazardous occupations.xvi

Employee vs. Independent Contractor

The first determination that an employer must make in deciding how to

compensate a worker is to figure out whether that individual is legally an employee or

an independent contractor. As the Society of Human Resource Management succinctly

sums it up, “an employer has no ongoing obligations under the FLSA to self-employed

independent contractors.”xvii The Internal Revenue Service previously supplied a “20

factor” test to distinguish independent contractors from employees.xviii

Today the IRS organizes its criteria into three groups: behavioral control,

financial control and relationship of the parties. If the employer has a “right to direct and

control how the worker does his or her tasks,” that worker is almost certainly an

employee.xix Behavioral control can take place through employer instruction, including

the mandate that the worker follow organizational rules about how, when and where to

work. It can also include training the worker to perform services in a particular manner.

If the employer has a “right to control the business aspects of the worker’s job,”

that worker should be classified as an employee.xx An independent contractor is more

likely to have unreimbursed expenses, have a significant investment in his or her

business, is free to pursue other business opportunities simultaneously, is paid a flat

SHRM strongly recommends that any organization interested in employing a minor obtain a proof-of-age certificate.


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rate rather than a regular wage amount and can make a profit or suffer a loss from his

or her efforts.xxi Regarding the relationship between the parties, an independent

contractor will typically have a written contract, finance his or her own benefits, have a

short-term relationship (usually a year or less) with the company (as opposed to the

expectation for an ongoing long-term relationship) and not perform services which cover

a key aspect of the organization’s business.xxii

It is critical that employers who wish to classify a worker as an independent

contractor stay within the boundaries set by the IRS in dealing with that worker.

Otherwise, that worker can be considered an

employee and the organization can be deemed

responsible for compensating that worker for

time spent on tasks related to the business.

For example, many businesses use

independent sales representatives to cover

territories outside their home region. Those

representatives are typically given annual

contracts and are paid on a straight commission

basis. The company does not reimburse the

independent sales representative for expenses

related to travel, office supplies or cell phone

service incurred in pursuit of selling the

organization’s products. Nor does the organization pay for the representative’s benefits

or limit the ability of the representative to take on other business opportunities. Simply

put, the representative is an independent contractor who makes his or her own

investment in time and money toward selling the product, and thus either profits or loses

money from the relationship without reimbursement for expenses or regular wages from

the company for time worked.

However, the company must be careful not to direct how the representative

spends his or her time. For example, should the company demand sales call reports

from the representative or tell the representative that he or she must visit specific

customers at certain days and times, the company is in danger of treating that

representative as an employee by “directing and controlling how the worker does his or

her tasks.”xxiii Once a worker is legally considered an employee, the organization is

responsible for paying Social Security, unemployment and workers’ compensation

costs.

It is critical that employers who wish to classify a worker as an independent contractor stay within the boundaries set by the IRS.


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Exempt vs. Non-Exempt

All individuals categorized as employees and governed by the FLSA will fall into

one of two categories: exempt or non-exempt for the purposes of minimum wage and

overtime pay. An employer does not have to pay an exempt employee the minimum

wage or overtime. To qualify as an exempt employee, the worker must be paid on a

salary basis at a minimum of $23,600 per year or $455 per week, without improper

deductions, and perform exempt job duties. It is important that employers focus on job

tasks, including how those tasks fit into the

employer’s overall operations, rather than

utilizing job titles in determining which

employees are exempt.xxiv

The Society for Human Resource

Management recommends identifying an

employee’s “primary duty” in evaluating whether

or not their position should be classified as

exempt. “Although no particular percentage of

exempt duties is required under the FLSA, the

lower the percentage, the greater the legal risk if

challenged.”xxv All non-exempt employees must

be paid a minimum wage of $7.25 per hour (or

more if state or municipal law has a higher

minimum wage) and overtime for hours worked

over 40 in a workweek. Blue-collar workers and

first responders are always classified as non-exempt, regardless of their income or job

title, meaning that they must receive at least the minimum wage for all time worked and

overtime pay at a rate of time-and-a-half for any hours worked in excess of 40 in a

workweek.xxvi

An exempt employee holds a job that falls into one of the following categories:

executive, administrative, professional (learned or creative), highly-compensated,

computer employees and outside sales employees.xxvii Individuals performing jobs in

the aforementioned categories must also meet other criteria, some of which is quite

specific and others that are rather vague. Attorneys Amy DelPo and Lisa Guerin,

authors of The Manager’s Legal Handbook, warn employers that job duties are more

important for FLSA classification purposes than job titles. “When it comes to eligibility

for overtime and compliance with equal pay and other wage discrimination laws, job

An exempt employee must be paid on a salary basis at a minimum of $23,600 per year or $455 per week, without improper deductions, and perform exempt job duties.


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titles don’t matter. It’s what employees actually do on the job that determines your

company’s obligations.”xxviii

To qualify as an exempt executive, the employee must manage the business or

one of its subdivisions or recognized departments, regularly direct the work of two or

more full-time employees (two half-time employees count as a full-time employee) and

have the authority to hire and fire employees or provide input regarding employees’

change of status that carries significant weight. The law firm of Chamberlain, Kaufman

and Jones advises that “‘Mere supervision’ is not sufficient. In addition, the supervisory

employee must have ‘management’ as the ‘primary duty’ of the job.”xxix

A list of typical management duties contained in the FLSA regulations includes

interviewing, selecting and training employees; setting rates of pay and hours of work;

maintaining production or sales records (beyond the merely clerical); appraising

productivity; handling employee grievances or complaints, or disciplining employees;

determining work techniques; planning the work; apportioning the work among

employees; determining the types of equipment to be used in performing work or

materials needed; planning budgets for work; monitoring work for legal or regulatory

compliance; and providing for safety and security of the workplace. “Determining

whether an employee has management as the primary duty of the position requires

case-by-case evaluation,” according to Chamberlain, Kaufman and Jones. “A ‘rule of

thumb’ is to determine if the employee is ‘in charge’ of a department or subdivision of

the enterprise (such as a shift). One handy clue might be to ask who a telephone

inquiry would be directed to if the caller asked for ‘the boss.’ Typically only one

employee is ‘in charge’ at any particular time.”xxx

An administrative employee’s duties will be primarily office or non-manual in

nature “directly related to the management or general business operations of the

employer or the employer’s customers” and involve the “exercise of discretion” or

“independent judgment” on “matters of significance” as a primary component of the

position. Chamberlain, Kaufman and Jones call the administrative exemption “the most

elusive and imprecise of the definitions of exempt job duties.”xxxi It is intended for

“relatively high-level employees” whose main job is to “keep the business running.” The

lawyers at Chamberlain, Kaufman and Jones suggest, “Questions to ask might include

whether the employee has the authority to formulate or interpret company policies; how

major the employee’s assignments are in relation to the overall business operations of

the enterprise (buying paper clips versus buying a fleet of delivery vehicles, for

example); whether the employee has the authority to commit the employer in matters

which have significant financial impact; whether the employee has the authority to

deviate from company policy without prior approval.”xxxii


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Chamberlain, Kaufman and Jones advise distinguishing administrative

employees from “operational” or “production” employees. “Employees who make what

the business sells are not administrative employees.”xxxiii Chamberlain, Kaufman and

Jones list as administrative functions the following: “labor relations and personnel

(human resource employees), payroll and finance (including budgeting and benefits

management), record maintenance, accounting and tax, marketing and advertising (as

differentiated from direct sales), quality control, public relations (including shareholder or

investment relations, and government relations), legal and regulatory compliance, and

some computer-related jobs (such as network,

internet and database administration).”xxxiv

A learned professional performs work

that requires advanced education, is intellectual

in nature and requires independent decisions or

judgment. Examples of learned professionals

include lawyers, accountants, doctors, dentists,

engineers, teachers, scientists, architects and

pharmacists, “if their jobs involve using their

own judgment and discretion,” according to

attorney Fred S. Steingold, author of The Employer’s Legal Handbook, who adds that

“the same is true for certain health care professionals, such as certified medical

technologists, registered nurses, dental hygienists and physician’s assistants.”xxxv

Steingold offers some rather blunt advice for employers: “For anyone else who seems

like a professional but doesn’t fall into one of these clear-cut cases, consult an

lawyer.”xxxvi

Another category of exempt employees is creative professional, a classification

that applies to actors, musicians, composers, essayists, novelists, cartoonists and some

journalists. Regarding journalists, Steingold wrote, “Journalists may qualify if their

primary work is creative—for example, contributing a unique interpretation or analysis to

the news—but not if they only collect, organize and record information that’s routine or

already public.”xxxvii The Society of Human Resource Management advises that for jobs

to be covered by the creative professional exemption, employees in those positions

must “have a primary duty of performing work that requires invention, imagination,

originality or talent in a recognized field of artistic or creative endeavor.”xxxviii

Employees who earn high salaries but cannot easily be classified as executive,

administrative or professional will still be exempt if they perform one or more of the

duties of an exempt executive, administrative or professional and have a total annual

DelPo and Guerin advise against docking an exempt employee’s pay.


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compensation of more than $110,000, including a salary or fee of at least $455 per

week.xxxix Also exempt are certain computer employees (but not those who make or

repair computers and related equipment) earning a salary of $455 per week or $27.63

per hour and outside sales representatives who regularly perform their jobs away from

the employer’s facilities.xl There is no minimum salary for which outside sales

employees must be paid to be classified as exempt.xli

Steingold notes that there are some other employees who are always exempt

from minimum wage and overtime: employees of seasonal amusement or recreational

businesses; employees of local newspapers having a circulation of less than 4,000;

newspaper delivery workers; switchboard operators employed by phone companies that

have no more than 750 stations and some farmworkers.xlii DelPo and Guerin

recommend conducting annual job classification audits. “Once a year, review the jobs

titles, classifications, and actual responsibilities of the employees reporting to you.

Make sure that employees who are classified as exempt from wage and hour laws meet

the legal requirements.”xliii

According to The American Bar Association Guide to Workplace Law, the

requirement that exempt employees be paid on a salary basis under FLSA “requires

that the amount paid to the employee not be subject to reduction because of variations

in the quality or quantity of work performed. To maintain this exemption, an exempt

employee must receive the full salary for any week in which he performs any work,

without regard to the number of days or hours worked.”xliv There are certain

circumstances under which an exempt employee can suffer a pay deduction and not

lose exempt status under FLSA:

Deductions from pay are permissible when an exempt employee: is absent from work for one or more full days for personal reasons other than sickness or disability; for absences of one or more full days due to sickness or disability if the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for salary lost due to illness; to offset amounts employees receive as jury or witness fees, or for military pay; for penalties imposed in good faith for infractions of safety rules of major significance; or for unpaid disciplinary suspensions of one or more full days imposed in good faith for workplace conduct rule infractions. Also, an employer is not required to pay the full salary in the initial or terminal week of employment, or for weeks in which an exempt employee takes unpaid leave under the Family and Medical Leave Act.xlv

DelPo and Guerin advise against docking an exempt employee’s pay. “Find another

way to discipline exempt employees for poor performance or minor misconduct. If you

reduce an exempt employee’s salary for these reasons, you risk making that


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employee—and all other employees who work for you in the same job classification—

eligible for overtime.”xlvi

Overtime

Under the FLSA, employers are required to pay non-exempt employees overtime

pay for any hours worked beyond 40 in a week. The rate of pay for overtime is one-

and-a-half times the regular hourly rate. For salaried non-exempt employees, their

annual salary should be broken down to an hourly rate based on a 40-hour workweek.

An employee’s regular compensation rate, for the purposes of overtime computation,

includes longevity pay, shift differentials and nondiscretionary bonuses (such as

educational stipends).xlvii

Overtime pay must be paid to the employee when due, which is considered the

next regularly scheduled pay day. The danger to an employer of paying overtime

wages late is that it is usually considered the same as not paying wages under the

FLSA, which can result in a judgment against the organization of double damages. An

employer is only obligated to pay overtime on time actually worked, not on time for

which the employee is paid.xlviii For example, an employee on a 5-day a week, 8-hour

per day schedule takes two paid vacation days

on Monday and Tuesday, and then works three

10-hour days, has worked a total of 30 hours for

that 7-day period (assuming two weekend days

off), and is not entitled to overtime. The

employee would be paid for 46 hours, but only

entitled to straight time (regular) pay for the two

extra hours per day of work on Wednesday,

Thursday and Friday that fall beyond that

employee’s normal 8-hour day. An employer

can designate its workweek to start on any day

of the week, but cannot manipulate that day

from one week to another in order to avoid

paying overtime.

DelPo and Guerin recommend that employers require employees to get

authorization prior to working overtime. “If your reports work overtime—even without

your knowledge or permission—the company will have to pay them for it. Cut down on

surprises by requiring employees to get your approval in advance. And discipline

employees who continue to work unauthorized overtime.”xlix An announcement that the

An employee’s regular compensation rate includes longevity pay, shift differentials and nondiscretionary bonuses.


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company will not pay overtime or permit any employee to work overtime will not protect

the employer from responsibility to pay an employee who works overtime.

Many managers make the mistake of believing that compensatory time (“comp

time”) is an acceptable alternative to paying overtime. For private employers, giving an

employee an hour to take off from work at a later date for an hour of overtime worked is

illegal under FLSA. It is legal to adjust an employee’s hours during a workweek to

ensure that the employee does not work more than 40 hours during said workweek.l In

addition, employers can avoid paying overtime for employees who work more than 40

hours in a week if those employees then take time off without pay in the same pay

period (for example, in the following week), making the total amount of the paycheck for

the two-week period what it would normally equal without overtime pay. In this

situation, the employee would need to take off an hour and a half for every hour worked

over 40 the previous week so that the arrangement would be legal under FLSA.li

Although some workers would not mind trading an hour of future time off for an

hour of overtime worked, and in fact may prefer it to overtime pay, Steingold cautions

against making private deals with employees, even though federal and state labor

investigators rarely look into comp time arrangements unless an employee files a

complaint. “This can be dangerous. You never know when a friendly, loyal employee

may turn sour and look for some legal technicalities to use against you.” lii

DelPo and Guerin concur with Steingold: “It is illegal for private employers to use

comp time, but some managers have an informal practice of allowing it anyway. Even if

your employees would rather take comp time than be paid overtime, don’t fall into this

habit.”liii In fact, the Department of Labor’s fact sheet on overtime pay requirements

explicitly states that the “overtime requirement may not be waived by agreement

between the employer and employees.”liv

Equal Pay Act

The Equal Pay Act of 1963 is a significant amendment to the FLSA, making it

illegal for employers to practice gender discrimination when paying employees. At the

time it was passed, women made just 59 cents for every dollar earned by a man. The

Equal Pay Act requires that men and women be provided equal pay and benefits for the

same or “substantively” equivalent work without regard to gender. “A common core of

tasks must be similar, but tasks performed only intermittently or infrequently do not

make jobs different enough to justify significantly different wages.” lv Two jobs are equal

for the purposes of the Equal Pay Act, according to Steingold, “when both jobs require

the same level of skill, effort and responsibility—and are performed under equal


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conditions. The jobs do not have to be identical to be equal.”lvi Steingold recommends

employers consider as equal those jobs that contain only small differences.lvii However,

employers are allowed to pay women and men

in the same jobs differently due to differences

in seniority, performance, quality or quantity of

production and factors other than sex, such as

“skill, effort and working conditions.”lviii The

Equal Employment Opportunity Commission

enforces the Equal Pay Act, which applies to all

employers regardless of size. Employers

should note that while the Equal Pay Act was

passed to combat rampant discriminatory

practices against women in matters of compensation and benefits, the law’s protections

against unequal pay extend to men as well as women.

A related concept gaining increasing support in some states is pay equity, which

holds that pay for jobs of similar worth or requiring similar levels of knowledge, skill and

ability should receive similar pay. The impetus for the idea of pay equity is that, in 2008,

the annual average pay rate for full-time female workers was 80 percent of what the

average full-time male worker earned.lix Federal courts, however, have typically “ruled

that the existence of pay differences between different jobs held by women and men is

not sufficient to prove that illegal discrimination has occurred.” lx

Health Care Reform and FLSA

The most recent amendment to the FLSA occurred as a result of the passage of

the Patient Protection and Affordable Care Act in 2010. The law entitles a new mother

to take a break from work each time she needs to express breast milk for up to a year

following the birth of a child. The employer must have a private place, other than a rest

room, where the new mother can express the breast milk.lxi The law does not indicate a

specific time or numbers of breaks, but calls for “reasonable” break time as needed for

the aforementioned purpose. Employers with fewer than 50 employees are exempted

from following the law if it would impose an undue hardship (Steingold: “defined as

significant expense or difficulty, considering the employer’s size, structure and

resources”) on the organization.lxii Only employees who are not exempt from overtime

under the FLSA are entitled by law to lactation breaks, though state laws may require

such breaks for all new mothers.lxiii

Employers are not obligated to compensate employees for such breaks, though

employers who give paid breaks to their workers must similarly compensate the

The Equal Pay Act’s protections extend to men as well as women.


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lactation breaks. However, employers who do not wish to give paid breaks must ensure

the entire break time is free from work; otherwise they are obligated to pay the

employee.

DelPo and Guerin believe the new law benefits not just new mothers, but

employers as well. “For employers, providing these breaks makes good sense. It

allows women to return to work more quickly after having a baby, enhances employee

loyalty, and provides mothers and babies with the proven health benefits of breast

feeding.”lxiv

Rest Breaks

Under the FLSA, employers are not obligated to provide rest or coffee breaks for

employees. If an organization does give rest breaks, it must pay employees for breaks

of 20 minutes or less. The employer is not required to compensate employees for

breaks longer than 20 minutes, including meal breaks, assuming the employee is

relieved of all job duties for the duration of that break.

Steingold advises employers that “it’s better not to quibble” when it comes to

providing—and paying—for brief rest periods. “Most employees today expect to get one

or two paid breaks during an eight-hour shift. Such breaks may help employees work

more efficiently, because they’ll return to the job refreshed. It can put a damper on

employee morale if you try to avoid paying for that time.”lxv

Employee Records

All employers covered by the FLSA must keep certain accurate employee

records for each non-exempt employee that includes identifying information about the

employee and data on their hours worked and wages earned. No specific form is

mandated, but the Department of Labor lists the following information as required:

1. Employee's full name and social security number.

2. Address, including zip code.

3. Birth date, if younger than 19.

4. Sex and occupation.

5. Time and day of week when employee's workweek begins.

6. Hours worked each day.

7. Total hours worked each workweek.


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8. Basis on which employee's wages are paid (e.g., "$9 per hour", "$440 a week", "piecework")

9. Regular hourly pay rate.

10. Total daily or weekly straight-time earnings.

11. Total overtime earnings for the workweek.

12. All additions to or deductions from the employee's wages.

13. Total wages paid each pay period.

14. Date of payment and the pay period covered by the payment.lxvi

Under the FLSA, employers are required to maintain payroll records, collective

bargaining agreements and sales and purchase records for three years. “Records on

which wage computations are based should be retained for two years, i.e., time cards

and piece work tickets, wage rate tables, work and time schedules, and records of

additions or deductions from wages.”lxvii The

records need to be housed at the place of

employment or a central office and made

available for inspection by the Wage and Hour

Division of the Department of Labor.

While a company could be sued for

failing to comply with FLSA record-keeping

requirements, most issues related to record

keeping arise during litigation over such claims

as failure to pay overtime or improper

deductions of pay.lxviii DelPo and Guerin

explain, “The real danger of failing to keep

adequate records is that your company will be

unable to prove that it complied with wage and hour laws if the government or an

employee challenges its practices…And once workers offer some evidence that they

worked any hours for which they were not paid, the burden shifts to the company to

prove its workers wrong, or to at least show that they are overstating their unpaid hours.

A company that hasn’t kept records won’t be able to meet this burden.”lxix

Employers are required to maintain payroll records, collective bargaining agreements and sales and purchase records for three years.


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Conclusion

Since 1938, the Fair Labor Standards Act has been responsible for giving non-

exempt workers basic rights, such as a minimum wage and overtime pay. It has

protected younger U.S. workers from suffering the abuses experienced by children prior

to its passage and prevented employers from having minors toil in hazardous

occupations. Over the years, the law has been amended to help female workers

overcome wage discrimination and assist new mothers who are balancing the demands

of their employer with health needs of their newborn.

For employers, the FLSA remains a sometimes daunting piece of legislation that

requires time and effort for adequate compliance. An organization that treats

employees as independent contractors, misclassifies non-exempt employees, fails to

pay overtime, makes private comp time agreements with non-exempt employees, has

pay or benefit systems that differ along gender lines, retaliates against an employee

who files an FLSA complaint or simply fails to remain abreast of the latest regulations of

the Department of Labor can find itself facing stiff penalties. The investigations

conducted by the Wage and Hour Division and penalties subsequently imposed by the

DOL can cost an organization millions of dollars. Moreover, courts will likely find in

favor of employees unless the company can disprove the employees claims. Failure to

pay overtime can result in liquidated (double) damages imposed on the offending

organization. It is essential for any organization to regularly review its job

classifications, job duties, compensation and benefit policies and recordkeeping. And

when in doubt, consult an attorney.


September 2012 17

End Notes i Patrick J. Cihon and James Ottavio Castagnera, Employment & Labor Law, 7th ed. (United States:

South-Western Cengage Learning, 2011) 689. ii The American Bar Association Guide to Workplace Law, 2nd ed. (New York: Random House Reference,

2006) 281. iii Chamberlain, Kaufman and Jones: Attorneys at Law, “FLSA Homepage,” (2006), accessed April 12,

2012, http://www.flsa.com/index.html. iv Ronald Miller and Lisa Milam-Perez, “CCH Employment Law Briefing: White-Collar Exemption

Revisions,” CCH, (April 21, 2004), accessed April 12, 2012. http://www.cch.com/press/news/2004/EmploymentLawBriefing.pdf. v Miller and Milam-Perez, “CCH Employment Law Briefing.”

vi Fred S. Steingold, The Employer’s Legal Handbook, 10th ed. (United States: Nolo, 2011) 71.

vii American Bar Association Guide to Workplace Law, 280-281.

viii Amy DelPo and Lisa Guerin, The Manager’s Legal Handbook, 6th ed. (United States: Nolo, 2011) 59-

60. ix Cihon and Castagnera, Employment and Labor Law, 684-685.

x Cihon and Castagnera, Employment and Labor Law, 685.

xi Society for Human Resource Management: SHRM Essentials of HR Management (United States:

SHRM, 2010) 23. xii

xii

Steingold, Employer’s Legal Handbook, 81. xiii

SHRM Essentials of HR Management, 28. xiv

SHRM Essentials of HR Management, 28. xv

SHRM Essentials of HR Management, 28. xvi

SHRM Essentials of HR Management, 28. xvii

SHRM Essentials of HR Management, 23. xviii

SHRM Essentials of HR Management, 23. xix

SHRM Essentials of HR Management, 24. xx

SHRM Essentials of HR Management, 24. xxi

SHRM Essentials of HR Management, 24. xxii

SHRM Essentials of HR Management, 24-25. xxiii

U.S. Department of Labor, Wage and Hour Division, “Fact Sheet #13: Employment Relationship Under the Fair Labor Standards Act (FLSA),” accessed April 12, 2012. http://www.dol.gov/whd/regs/compliance/whdfs13.pdf. xxiv

DelPo and Guerin, Manager’s Legal Handbook, 85. xxv

SHRM Essentials of HR Management, 25. xxvi

Steingold, Employer’s Legal Handbook, 62. xxvii

SHRM Essentials of HR Management, 26. xxviii

DelPo and Guerin, Manager’s Legal Handbook, 85. xxix

“FLSA Homepage.” xxx

“FLSA Homepage.” xxxi

“FLSA Homepage.” xxxii

“FLSA Homepage.” xxxiii

“FLSA Homepage.” xxxiv

“FLSA Homepage.” xxxv

Steingold, Employer’s Legal Handbook, 68. xxxvi

Steingold, Employer’s Legal Handbook, 68. xxxvii

Steingold, Employer’s Legal Handbook, 68. xxxviii

SHRM Essentials of HR Management, 26. xxxix

SHRM Essentials of HR Management, 26. xl SHRM Essentials of HR Management, 26.


September 2012 18

xli

SHRM Essentials of HR Management, 26. xlii

Steingold, Employer’s Legal Handbook, 62-63. xliii

DelPo and Guerin, Manager’s Legal Handbook, 85. xliv

American Bar Association Guide to Workplace Law, 77. xlv

U.S. Department of Labor, Wage and Hour Division, “Fact Sheet #17G: Salary Basis Requirement and

the Part 541 Exemption Under the Fair Labor Standards Act (FLSA),” accessed April 12, 2012,

http://www.dol.gov/whd/regs/compliance/fairpay/fs17g_salary.pdf. xlvi

DelPo and Guerin, Manager’s Legal Handbook, 85. xlvii

Steingold, Employer’s Legal Handbook, 71-73. xlviii

Steingold, Employer’s Legal Handbook, 71-73. xlix

DelPo and Guerin, Manager’s Legal Handbook, 85. l Steingold, Employer’s Legal Handbook, 73-74. li Steingold, Employer’s Legal Handbook, 73-74.

lii Steingold, Employer’s Legal Handbook, 73.

liii DelPo and Guerin, Manager’s Legal Handbook, 85.

liv U.S. Department of Labor, Wage and Hour Division, “Fact Sheet #23: Overtime Pay Requirements of

the FLSA,” accessed April 12, 2012, http://www.dol.gov/whd/regs/compliance/whdfs23.pdf. lv Robert L. Mathis and John H. Jackson, Human Resource Management, 13th ed. (United States: South-

Western Cengage Learning, 2011) 83. lvi

Steingold, Employer’s Legal Handbook, 75. lvii

Steingold, Employer’s Legal Handbook, 75. lviii

Mathis and Jackson, Human Resource Management, p.83. lix

Mathis and Jackson, Human Resource Management, p.83. lx Mathis and Jackson, Human Resource Management, p.83.

lxi DelPo and Guerin, Manager’s Legal Handbook, 71-72.

lxii Steingold, Employer’s Legal Handbook, 79.

lxiii U.S. Department of Labor, Wage and Hour Division, “Fact Sheet #73: Break Time for Nursing Mothers

Under the FLSA,” accessed April 16, 2012, http://www.dol.gov/whd/regs/compliance/whdfs73.pdf. lxiv

DelPo and Guerin, Manager’s Legal Handbook, 71. lxv

Steingold, Employer’s Legal Handbook, 79. lxvi

U.S. Department of Labor, Wage and Hour Division, “Fact Sheet #21: Record Keeping Requirements

under the Fair Labor Standards Act (FLSA),” accessed April 12, 2012,

http://www.dol.gov/whd/regs/compliance/whdfs21.pdf. lxvii

DOL, “Fact Sheet #21” lxviii

DelPo and Guerin, Manager’s Legal Handbook, 84. lxix

DelPo and Guerin, Manager’s Legal Handbook, 84.


September 2012 19

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September 2012 21

Ross Brand is an HR professional, SHRM Chapter President and Master of Science candidate in HR Management and Development at New York University. His professional background includes working as a writer, print journalist and radio personality. He earned a Bachelor of Arts in History from Lafayette College.

Acknowledgements

Thank you to Dr. Susan Alevas, my graduate professor of Advanced Labor

Relations and Employment Law at New York University, for providing the forum for, and

encouragement of, in-depth exploration of legal and ethical issues. Also, thanks to

Bintal Patel, M.S. Candidate in Publishing at NYU, for formatting the final text into e-

book form. And, of course, thank you to my parents for your ongoing love and support.

Disclaimer

The contents of this paper are not intended or offered as legal advice. The

materials contained herein have been prepared for educational and informational

purposes only. They are not legal advice or legal opinions on any specific matters.

Transmission of the information is not intended to create, and receipt does not

constitute, a lawyer-client relationship between this paper or its author, and you or any

other user. Readers should not act, or fail to act, upon this information without seeking

professional counsel. No person should act or fail to act on any legal matter based on

the contents of this paper. Unless expressly stated otherwise, no contents contained

herein should be assumed to be produced by an attorney licensed in your state. The

author of this paper is not an attorney.

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