Understanding your Pay Requirements under the FLSA

The Fair Labor Standards Act (FLSA) governs employer pay practices and sets requirements pertaining to minimum wage, overtime, equal pay, child labor, and recordkeeping. Under the Act, all non-exempt employees must be paid at least the minimum wage per hour and must receive overtime for all hours worked in excess of 40 in a given week.But, what are hours worked? Does time spent waiting to be called into work count as hours worked? What about time spent traveling for company business? Or time spent on breaks? The FLSA sets strict requirements pertaining to when employees must be paid given these types of circumstances.

Below are some of those “gray areas” in which non-exempt workers may be entitled to pay under the FLSA:

1. Breaks. Although there are no federal laws requiring that employers provide their workers with breaks, if breaks are granted employers cannot place any restrictions on employee activities while on break. If employers require that employees continue to do work while on their break, than that time must be paid. Federal law does not require breaks, however several states say otherwise. Some mandate employees receive breaks if working a certain number of hours a day. Check your state requirements in the Rest Periods section of our State & Federal Laws.
2. Meals. Employers are not required to pay employees for time spent during bona fide meal periods. Bona fide meal periods are breaks that ordinarily last at least 30 minutes. During an unpaid meal period, an employee must be completely relieved from duty for the purpose of eating a regular meal. Employees required to work while eating must be paid for the time. For example, a receptionist required to eat at her desk while waiting to receive calls, must be paid for that time. It is not necessary that an employee be permitted to leave the premises if he or she is otherwise completely freed from his or her job duties.
   

3. On-call. Depending upon the amount of freedom an employee has, if he or she must answer work-related phone calls or be on-call to work on short notice, pay for that time may be required. On-call workers who must remain on company premises or so close that use of their personal time is severely restricted must be paid.If employees are free to use this time primarily for personal activities, they don’t have to be paid. When determining whether or not to pay non-exempt workers for time spent on-call consider the following: the promiximity the employee must reamin to company premises; the amount of time the employee has to respond to calls, pages, or emails; and the duration of the on-call period.
   

4. Waiting time. Time spent by non-exempt employees waiting for work must be paid if that time meets the FLSA definition of “engaged to wait”. Engaged to wait means an employee has been asked to wait for an assignment. Even if the employee spends that time performing non-work related activities while waiting, the time is still compensable. It’s important to distinguish between engaged to wait and “waiting to be engaged”. Time spent reading the newspaper before an employee’s scheduled shift begins (“waiting to be engaged”) is not considered compensable.
5. Sleeping time. That’s right; an employee catching some ZZZ’s may be entitled to pay under the FLSA. An employee required to be on duty for fewer than 24 hours is working, even though he or she is permitted to sleep or engage in other personal activities when not busy. When an employee is required to be on duty for 24 hours or more, such as doctors or nurses in hospital settings, the employer and employee may agree to exclude from paid work time meal periods and a scheduled sleeping period of 8 hours or less, provided adequate sleeping facilities are furnished and the employee can enjoy an uninterrupted period of sleep. If the sleeping period is more than 8 hours, only eight hours is to be excluded from pay. If there is no agreement, the 8 hours of sleeping time is to be considered paid work time. If sleep is interrupted to an extent that the employee cannot get at least 5 hours of sleep, the entire period must be counted as working time.
6. Travel time. Under some circumstances, employers are required to pay employees for time spent traveling. Regular commute time is not compensable, but when a non-exempt employee is given a one-day assignment at a different location than their regular worksite, the time spent traveling must be paid. Employees required to drive to different worksites to perform their regular duties (e.g., electricians) must also be paid for the time spent driving between worksites. Further, travel that keeps an employee away from home overnight is designated as “travel away from home” and is paid work time when it “cuts across the employee’s workday”, for example 9am to 5pm. The time is not only hours worked on regular workdays, but also during the corresponding hours on non-work days. Time spent as a passenger on a plane, boat, bus, or in a car is excluded from compensable time.
   

7. Lectures, meetings, trainings. Employees are not required to be paid to attend trainings or other activities as long as the following four conditions are met: (1)the event is outside of normal work hours; (2) it is voluntary; (3) it is not job-related; and (4) no other work is being performed during the event.

8. Callback pay. Callback pay applies when employees are “called back” to perform work beyond regularly scheduled hours. No federal law guarantees employees a minimum number of hours of work when they are called back. However, the hours they do work must be paid.In the case of an emergency, if an employee is called back to work beyond his or her usual working hours and must travel a “substantial distance,” the employer may be required to pay for the employee’s travel time as well as the additional hours worked.
   

9. Report-in pay. When an employee is called to work and there is no work available, the employer may be required by state law to pay for a minimum number of hours of work (reporting premium). Report-in pay applies when employees report to work as scheduled, but are unable to work due to unusual circumstances. No federal law requires employers to pay employees in this situation. However, many states have laws that set minimum pay requirements when employees report in or are called back to work. For additional information, refer to the Callback Pay/Report-in Pay section of our State & Federal Laws.

Employers should use caution in situations in which employees are required to be ready to report to work on short notice, travel for purposes of performing their job duties, or are in some way or another restricted in their personal activities. Under these circumstances employees may be entitled to pay under the FLSA.

How to Make your Internship Program a Success

With the school year back in full swing, now is the perfect time to think about hiring student interns. Internships offer students an opportunity to gain valuable hands-on experience. They also allow employers to work with enthusiastic students that often bring fresh perspectives and valuable insights.Although there are a multitude of benefits that come from hiring student interns, there can be some potential problems related to wage and hour laws, employment status, and job responsibilities that employers need to be mindful of.

Below are some tips for avoiding liability and making your internship program a success.

1. Pay. The main legal concern with regards to internships relate to the Fair Labor Standards Act (FLSA). The FLSA acknowledges that not all persons who perform some duties for an employer are “employees” and thus entitled to compensation in accordance with wage and hour laws. Interns, graduate assistants, and apprentices may be exempt from wage and hour laws so long as they meet specific criteria and can be considered “trainees” not “employees”.

2. Trainee status. An intern may be exempt from wage and hour requirements if he or she meets the six-factor test for “trainee status”, set forth by the Department of Labor (DOL). To be considered a trainee, each of the following criteria must be met: (a) the training is similar to that which would be given in a vocational school; (b) the training is for the benefit of the trainee; (c) the trainee does not displace regular employees; (d) the employer that provides the training derives no immediate advantage from the activities of the trainee; (e) the trainee is not necessarily entitled to a job at the completion of the training period; and (f) the employer and trainee understand that the trainee is not entitled to wages for time spent in training.

3. Stipends. An intern may receive a stipend or tuition assistance from the employer or educational institution to cover costs for meals, lodging, and travel. These stipends do not change the trainee status and are not considered to be wages.
4. Length. Internships of short duration, such as one or two weeks, will rarely constitute employment relationships and therefore, employers shouldn’t be concerned with wage and hour laws. In most cases, internships of such short duration do not give the participant time to learn enough to perform work that benefits the employer nor will they learn enough to take the place of an employee.Certain institutions or programs may require a pre-determined number of hours to fulfill internship requirements. In this case the arrangement ends upon completion of the hours.
5. Change in status. For internships that are longer in duration, employers need to keep in mind that the individual may start out as a trainee, but as their responsibilities change, they may no longer be considered a trainee. As interns gain experience and begin to perform meaningful work, it’s important to reevaluate their status. If an intern can be considered an employee, they will be entitled to pay under the FLSA and must complete employment paperwork.
6. Documentation. As with any employment-related matter, documentation relating to the internship program is essential. It’s important to maintain records of hours worked, training provided, and activities the individual participated in. Records of the types of projects an intern completed as well as the types of training opportunities he or she received will help to support unfounded claims that an intern was incorrectly classified.
7. Minimum wage. If your interns are paid, they’re subject to FLSA requirements. Make sure interns are paid at least the minimum wage. Paid interns are also eligible for overtime for all hours worked in excess of 40 in a given workweek.
8. Limit liability. Employers may want to go a step further to protect themselves from legal liability. To ensure that it is understood that an individual is an intern and not an employee, employers may want to work with the college or university in drafting some sort of hold-harmless or internship relationship agreement. Contractual agreements between the employer, the student intern, and the college or university can serve to support the notion that all parties were aware of the nature of the relationship and that the employer is acting in good faith.
9. Build relationships. Employers should reach out and build relationships with neighboring institutions. Speak with program directors, attend career fairs, and post flyers around local campuses in order to promote the internship program within your organization. Inform members of nearby universities of the benefits interns can expect to gain as well as the types of activities they will be involved with. This will serve to attract a pool of applicants interested in gaining the experience you can provide.

10. Growth potential. It’s important that you invest in your interns. The effort you expend in developing the knowledge and skills of your interns may pay off in the long-run. Interns can be perfect candidates for full-time positions once the internship has ended. Their internship status gives them the opportunity to learn about the company and get the experience needed to fulfill full-time positions within the company.

Internships provide employers with talented and motivated individuals who can provide a variety of benefits for any business. But it’s important that internships emphasize exposing students to their field of interest and not on production or “cheap” labor. Remember, if the individual provides your company with meaningful work, can take the place of a full-time employee, and performs duties for the company without supervision or direction, he or she must be considered an employee and treated as such.

How to Prepare for the Minimum Wage Increase

July 24, 2008 marks another federal minimum wage change; the second in a three phase increase. Last July, the minimum wage increased to $5.85 per hour. On July 24^th the minimum wage will increase again to $6.55 per hour. And next July, the minimum wage will rise, for the final scheduled increase, to $7.25 per hour.

With the impending change, many states have also decided to raise their minimum wage rate to match the federal minimum wage. Other states have decided to adopt a minimum wage that is higher than the federal minimum in order to adjust to the rising cost of living and to meet the needs of their citizens. Check your state minimum wage rates in our State & Federal Laws section.

The minimum wage requirement is governed by the Fair Labor Standards Act (FLSA), which regulates minimum wage, overtime, equal pay, recordkeeping, and child labor practices. The provision requires employers to pay all non-exempt employees at least a minimum hourly rate.

Below are some tips to keep in mind to ensure compliance with your minimum wage requirements:

1. Check your state minimum wage rate. Your state may establish a greater minimum wage rate than the federal requirement; employers are required to comply with the rate, state or federal, that provides for a higher minimum wage to be paid to the employee. For example, the state of Connecticut has a minimum wage of $7.65; therefore since the federal minimum wage is less, employers operating in the state of Connecticut are required to pay their employees a minimum hourly rate of $7.65.
2. Post required labor posters. All employers are required to post the federal minimum wage poster; many states require employers to post their state minimum wage posters as well. Labor posters should be posted in a conspicuous and easily accessible area of the workplace, such as break rooms, time clock areas, or the reception room. Your state and federal posting requirements can be found in the State & Federal Resources area of the website, free of charge.
3. Pay at least the minimum wage. An obvious requirement under the minimum wage rule is that employers must pay non-exempt employees at least the minimum wage per hour. Exempt employees are not required to be paid a minimum hourly rate; however, they must meet certain weekly salary requirements.
4. Exemptions. Besides employees classified as exempt, there are a few other employee classifications that are not subject to the minimum wage requirement. Full-time students employed in retail or service stores, agriculture, or colleges and universities may be paid sub-minimum wages. Employers hiring students can obtain a certificate from the Department of Labor (DOL) which allows the student to be paid not less than 85 percent of the minimum wage. In addition, the DOL may issue certificates allowing employment at wages below the minimum for apprentices, learners, messengers, certain employees who receive tips, and workers with disabilities.
5. Tip credits. Employees working primarily for tips (the federal law defines these workers as those that receive more than $30 per month in tips) may be paid less than the minimum hourly rate so long as each employee earns enough in tips to make up the difference between the wages paid and the federal minimum wage. The federal law states employees regularly receiving tips may be paid an hourly rate of $4.42 per hour (as of July 24, 2008). Remember, your state requirements may be different for tip credits, please check the State & Federal Labor Laws Minimum Wage section for details.

6. Living wage. A living wage is a pay rate above the minimum wage that is considered to be sufficient to meet the basic needs of citizens in a particular geographic area. Cities or counties with living wages must pay city workers and employees of companies benefiting from city contracts, subsidies, or actions a “living wage” that is in excess of federal and state statutory requirements. These employers must also comply with other provisions of the living wage ordinance, which may require offering health benefits, providing leave, and posting notices regarding local living wages.

7. Prevailing wage. Prevailing wages must be paid by employers with federal contractors. Prevailing wages are the rate of pay and fringe benefits determined by the DOL to be the norm for each classification of laborers in particular geographic areas for particular types of projects. These wages are calculated by surveying local rates of pay and costs of living standards in the applicable jurisdiction.

The Department of Labor uses a variety of remedies to enforce compliance with FLSA requirements. If violations are found, changes in employment practices are needed in order to bring the employer into compliance with the Act’s provisions and punitive fines are often incurred. In addition, the employer may be required to pay any back wages due to employees. Understanding your minimum wage and FLSA requirements will be your best defense against these types of sanctions.

Hiring Minors this Summer? Be Aware of Child Labor Laws

With most students out of school, or about to finish classes for the summer, now is the time many teenagers begin to look for summer work. Typically these workers find jobs in retail, in the restaurant and hospitality industry, at summer camps, and even in an administrative capacity. Whatever the role, when employing workers under the age of 18, the child labor provisions of the Fair Labor Standards Act (FLSA) must be strictly followed. In addition to child labor, the FLSA, also known as the wage and hour law, regulates minimum wage, overtime, equal pay, and recordkeeping practices.

Child labor laws are intended to protect the health, safety, and well-being of minors. Specifically, these laws govern permissible work ages, pay, hours, and the types of work children under the age of 18 are permitted to perform.

Below are the considerations you should make prior to hiring a minor:

1. Minimum age. The FLSA child labor provision applies to workers under the age of 18. But for a few exceptions, the minimum lawful employment age established by the FLSA is fourteen. Those performing work in agriculture, newspaper delivery, acting and performing, or those employed by their parents are permitted to work if under the minimum age of fourteen.
2. Age verification. While federal law does not require minors to obtain work permits, many states do. Check your state child labor laws to be sure of the requirements for your state. The Department of Labor recommends employers obtain an age certificate issued by the Wage and Hour division and most states consider a birth certificate to be acceptable proof of age. Whatever the document, be sure to include it within the employee’s personnel file.
3. Pay. All employees, including minors, must be paid at least the minimum wage with the following exceptions: opportunity wages and apprenticeship/student learner pay. New hires under the age of 20 may be paid an opportunity wage of $4.25 per hour during the first 90 calendar days of employment. Additionally, the federal wage and hour division may issue special certificates allowing employment at wages below the minimum for apprentices, student learners, and messengers.
4. Hours. The number of hours a minor can work in a given day as well as when he or she can work during the day depends on the minor’s age. Those aged fourteen and fifteen may work only: outside of school hours; for 18 hours during any week in which school is in session; for 40 hours during a week when school is not in session; for 3 hours during any day when school is in session; for 8 hours on a day when school is not in session; and from 7 a.m. to 7 p.m. on any day except from June 1st to Labor Day when the minor may work from 7 a.m. to 9 p.m. There are no federal limits on workings hours for minors ages 16 and 17, however, many states do restrict work hours for these individuals.
5. Types of work. Minors are prohibited from working in dangerous occupations and from performing tasks that present a hazard. Fourteen and fifteen year olds are not permitted to work in construction or repair jobs, operate power-driven machinery, or perform warehouse, manufacturing or mining work. In addition, these workers are prohibited from driving a motor vehicle, assisting a driver, performing public messenger jobs, and transporting persons or property. Other restrictions on the type of work minors are permitted to perform can be found in the Child Labor section of our State & Federal Laws.
6. Safety. Although the restrictions on the types of work minors are permitted to perform are intended to protect these workers from hazards, employers may want to go a step further and create specific safety guidelines and procedures for minors. Consider creating a safety checklist for younger workers that addresses how to use equipment safely, what to do in an emergency situation, and what hazards to stay away from. Even identify hazards with brightly colored stickers and warning signs. Remember that these safety and health procedures shouldn’t solely focus on your younger staff; your entire workforce should be protected by, and aware of, safety protocol.
7. Training. Ensure your managers are aware of child labor laws by conducting training sessions on FLSA and state-specific child labor laws. Managers need to be knowledgeable of permissible work hours for minors and how to create work schedules accordingly. In addition, the types of job duties managers are permitted to assign to minors must also be clarified. In order to be effective, accountability needs be a part of the system. Managers failing to comply with child labor provisions should be subject to disciplinary action.

Although complying with child labor laws may seem like an obstacle, don’t let youth employment requirements intimidate you from hiring qualified summer help. Youths in the workplace typically bring energy and enthusiasm to their jobs and are often a welcome addition to any staff. Just be sure you follow the guidelines outlined above and that you think about an individual’s age as well as company work schedules and safety procedures when bringing a minor onboard.