Most employers are covered by the Fair Labor Standards Act (FLSA). It covers public agencies and businesses engaged in interstate commerce or providing goods and services for commerce. The FLSA provides guidelines on employment status, child labor, minimum wage, overtime pay, and record-keeping requirements. It determines which employees are exempt from the Act (not covered by it) and which are non-exempt (covered by the Act). It establishes wage and time requirements when minors can work. It sets the minimum wage that must be paid, and mandates when overtime must be paid.

Penalties for non-compliance
The Fair Labor Standards Act is administered by the Department of Labor. Employers who willfully or repeatedly violate the Act may be penalized up to $10,000 per violation. Second convictions can impose $10,000 and/or imprisonment up to 6 months.

The Minimum Wage
The minimum wage is currently $5.85 per hour. It is subject to review by the Federal government, and may be changed from time to time. (Note: many states have higher minimum wage provisions which supercede the FLSA).

Overtime
Employees covered by the Fair Labor Standards Act must be paid at least one and one half times their regular rate for all hours worked in excess of 40 in a week (seven consecutive days).The regular rate of pay must be determined to calculate overtime pay, and it includes: the base rate, bonuses, commission, piece rates, incentives, shift differentials, and training pay. The regular rate of pay excludes: premium pay under a union contract for Saturdays, Sundays, and holidays; pay for time not worked (i.e. vacation, sick time, holidays); contributions to pension and insurance plans; gifts; employer discretionary bonuses; distributions from profit sharing plans that meet Wage and Hour regulations contributions to bona fide thrift and savings plans; and longevity pay.

Tests for Exemption from the overtime provisions of the FLSA:

Executives are Exempt from the Act:

1. Whose primary duty is managing an enterprise of customarily recognized department or subdivision.
2. Who customarily and regularly direct the work of two or more employees.
3. Who has the authority to hire or fire other employees.
4. Who customarily and regularly exercises discretionary powers.
5. Who does not devote more than 20 percent of work time to non-exempt work.
6. Who is compensated for services on a salary basis at a rate of not less than $155 per week ($150 for Puerto Rico, Virgin Islands, American Samoa).

 Administrative Personnel are exempt from the Act:

1. Whose primary duty consists of either:
   1. performance of office or nonmanual work directly related to management policies or general business operations or
   2. Administration of a school system.
2. Who customarily and regularly exercises discretion and independent judgement.
3. Who regularly and directly assists a proprietor, a bona fide executive or administrative employee.
4. Who performs work under only general supervision along specialized or technical lines
5. Who does not devote more than 20 percent of work time to non-exempt work.
6. Who is compensated for services on a salary or fee basis of not less than $155 per week ($150 for Puerto Rico, Virgin Islands, American Samoa).

 Professionals are exempt from the Act:

1. Whose primary duties consist of the performance of:
   1. work requiring knowledge of an advanced type in a field of science or learning
   2. work that is original and creative in character or
   3. teaching, tutoring or instructing.
2. Whose work requires consistent exercise of discretion and judgement in its performance
3. Whose work is predominantly intellectual and varied in character.
4. Who does not devote more than 20 percent of work time to non-exempt work.
5. Who is compensated for services on a salary or fee basis at a rate of not less than $170 per week ($150 for Puerto Rico, Virgin Islands, American Samoa).

 Outside Sales people are exempt from the Act:

1. Who customarily and regularly work away from the employer's premises in making sales or obtaining orders or contracts.
2. Whose work other than making outside sales or obtaining orders or contracts for service cannot exceed 20 percent of the hours worked in a workweek by non-exempt employees.

 Computer related occupations are exempt from the Act:

1. Whose primary duties consist of:
   1. The application of systems an analysis skills to determine hardware, software or system function specifications.
   2. The design, analysis, testing or remodification of computer systems or programs based on and related to systems design specifications.
   3. The design, testing or modification of computer programs related to machine operating systems.
   4. A combination of the above.
2. Who is compensated less than $27.63 per hour, but meets the responsibilities and duties tests under white collar exemptions. Those who earn more than $27.63 per hour are exempt as long as they meet certain requirements.

 FLSA Recordkeeping Requirements

• name, address, date of birth if under 19
• day and hour on which the work week begins
• number of hours worked each day and total number of hours worked each week
• inclusions and exclusions from regular rate of pay
• total daily or weekly straight time earnings
• total overtime earnings
• total deductions from earnings
• total wage each period
• date of payment, amount, and period included in payment

NOTE: State requirements may be more strict.

Hours of Work

All time spent in an employee's principal duties and all essential ancillary activities must be counted as work time. Principal duties include productive tasks. Work time is compensable if expended for the employer's benefit, if controlled by the employer, or if allowed by the employer. Activities which occur before or after an employee's principal duties need not be counted as work time. Some examples:

Clothes Changing and Washing: Not compensated unless done at the workplace at the employer's request or because of the nature of the principal duties, such as handling toxic chemicals. May be subject to a collective bargaining agreement.

Travel time: Travel to and from work is not generally compensable. Travel in the course of the day, such as from one job site to another, is compensable work time. Travel out of town may be compensable, depending on when it occurs and whether the trip is overnight.

Meal periods and breaks: Meal periods are not compensable if they last for more than half an hour; if the employee is relieved of all duties; and if the employee is free to leave the workstation. Breaks of 15 minutes or less are considered work time, and are compensable.

Training time: Training is not considered work time if all these conditions are met: It is outside of regular work hours; attendance is in fact voluntary; no productive work is performed there; and the training is not directed toward making the employee more proficient in their present job.

Child Labor: The FLSA prohibits the employment of oppressive child labor and regulates the hours which children may permissably work. The requirements become more strict as the age decreases. Children are divided into three groups: 16 and 17 year olds, 14 and 15 year olds, and all younger children, for regulatory purposes. The hours that they may work and the occupations at which they may work vary from group to group. Anyone under the age of 18 is considered a child. States frequently regulate the employment of minors, and the requirements vary from state to state.

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