Fair Labor Standards Act of 1938
Jessie Nall
The Fair Labor Standards Act of 1938 (FLSA) defines
the 40 hour work week, sets a federal minimum wage, states the requirements for
overtime pay and enforces child labor protection. President Franklin D. Roosevelt
signed the FLSA on
The FLSA is
administered by the Department of Labor Wage and Hour Division and applies to
those companies that engage in interstate commerce or who have annual sales
that are greater than $500, 000. In order to understand and comply with this Act,
we must first define who is exempt and nonexempt from this Federal Statute.
Exempt are those employees to whom minimum wage and overtime do not apply. Executive,
administrative and professional workers are exempt as well as seasonal
amusement and recreation workers, small farms and fishing operations, casual
babysitters, and certain skilled computer professionals just to name a few. Exemptions
are determined by the actual work the individual does, not the title of their
occupation and specifications are very narrowly defined by the Department of Labor. An employer can find out exact terms of an
exempt employee by contacting any local Wage and Hour Division office that is
headed by the Department of Labor.
The purpose of
making a national minimum wage was to make sure workers were able to earn an
amount that would allow them to live above the lowest standards that were
permitted by health and decency of that time period. The FLSA set the first
federal minimum wage at $.25 per hour and is currently $5.15 per hour. However, many States regulate their own
minimum wage standards and if the state has a higher wage standard in place, then
they are required to pay the higher rate to employees. By the time the bill was signed in 1938, most
states already had a minimum wage law in effect.
There are
several exemptions for minimum wage. Employer’s that have employees who receive
tips are exempt from paying them the federal wage and are able to pay them a
minimum of $2.13 an hour. However, the employee still must average the Federal
minimum wage standard with the tips they earn or the employer has to make up
the difference. Individuals that are
under the age of 20 may receive a minimum wage of $4.25 for the first 90 days
of employment as well. Student learners,
personal companions, babysitters and workers on small farms are examples of
some other workers that may be exempt from the minimum wage standards. Workers
that have a disability may be paid a special minimum wage. These are called
commensurate wages and they are based on that individual’s productivity. The
commensurate wages are determined by analyzing the non-disabled worker
standard, the prevailing wage rate which is the rate a non-disabled individual
is paid for the same work, and evaluation of the productivity of the disabled
worker. Any employee who gets paid commensurate wages has to be reevaluated at
a minimum of six months and a prevailing wage survey must be done yearly.
The overall idea of this act was to get rid of
employers who cheat workers out of fair wages, therefore, the status of an
employee is interpreted very broadly as to make sure that as many workers are
covered under the Act as possible.
Today, courts are still examining the use of contingent workers such as
temporary employees and independent contractors. These types of employees are excluded from
benefit plans and the employers do not have to pay insurance, social security,
and other various taxes. It is important to take a close look at job descriptions
in order to determine whether individuals should be considered as employees so
they can be covered under the provisions of the FLSA.
Paying employee’s overtime was
another major provision of the FLSA. Overtime must be paid to those individuals
who work more than 40 hours per week or more than 8 hours a day unless they are
nonexempt. Overtime is work that is not part of the employees normal work week
so that employee must be compensated. The employer must pay that individual at
time and one half of their regular pay for the hours of overtime that employee
works. FLSA does not require the
employer to pay overtime for work done on Saturdays, Sundays or Holidays. It applies this principle on a workweek basis;
specifically, seven 24 hour periods in a row.
This Act also helped to add flexibility for the wage earner and promoted
the hiring of more employees since many employers do not want to pay employees
at an overtime rate. An example of flexibility is the concept of compensatory
time. Compensatory or otherwise known as “comp” time allows for someone to work the overtime hours
but instead of the time and one half wage rates they would receive, they are
given time off for those hours worked.
The maximum amount of compensatory time that can be collected is 240
hours. Anything beyond that must be paid out to the earner at a rate of time
and one half. Employers
may
also allow for flexibility in hours worked by allowing four 10 hour days versus
five eight hour days. In today’s fast paced world, these ideas help to promote
a more flexible family life and work schedule.
Many individuals think they are automatically exempt
if they receive a salary and this is not always the case. If you make a set
salary but are given a bonus for extra hours worked or if you get a cut in pay
because of missed work, then you may be able to receive overtime
compensation. Salespersons are exempt if
they work outside of the employer’s office while doing sales or if they do not
spend more than 20% of work time doing work that isn’t selling. They are considered
exempt because they are paid through commissions and have no supervision during
the job.
Child Labor protection was one of the main ideas
behind the creation of the FLSA back in 1938 and its purpose was to protect the
educational opportunities of the young in addition to employing them in
positions that were not detrimental to their health and well being. It defined
minors as those who are under 16 years of age.
Specifically it set the minimum age for occupations that are defined as
hazardous at 18. Young adults at the age of 16 and 17 are able to work in
nonhazardous jobs for unlimited hours. Those in the 14 and 15 year old are
group are able to work outside of school hours only and it has to be a
nonmanufacturing position. There is also
a time limit of 3 work hours a school day, 18 hours per week or 8 hrs on a
nonschool day. They are also unable to
work earlier than
regarding
work during school hours and amount of time youths may be allowed to work. It is important that local laws are abided by
as well.
Another provision of the FLSA was the new standard of
recordkeeping. Employers have to keep
certain information about employees on hand at all times.They include personal
information such as name, address, birth date if under 18, totals hours worked
per week, hour and day that workweek began hourly rate and other basic
information that is kept in any business practice.
The enforcement of this act is done with investigator
throughout the country for The Wage and Hour Division of the Department of
Labor. If one of these investigators
does find a violation, they recommend changes that the employer needs to make
in order to be incompliance with the law. These employers will be asked to back
pay any wages that may be due to the employee. The FLSA is commonly violated
due to the general public being unaware of many of the regulations. If an employer is found to be knowingly
violating this act, they can be fined up to $10,000 and prosecuted in a
criminal court.
The FLSA is a frequently violated act and to be sure
an employer is following the correct laws, they must be aware of the
regulations and standards. The employer
also
needs
to be aware of their state and local laws and procedures in order to be within
complete compliance of Labor Legislation.
References:
Office
of Personnel Management. (2002). An Overview of the Fair Labor Standards
Act. Retrieved on