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The Fair Labor Standards Act (FLSA) is a federal law which sets standards for minimum wage, overtime pay, and record keeping. The standards are a bare minimum, and states, such as Florida, have passed legislation to expand on the regulations set by the FLSA.
Who is Covered Under the FLSA?
There are two types of coverage under the FLSA.
Enterprise coverage extends to employees in companies with two or more employees which earn at least $500,000 annually. Enterprise coverage also extends to those who work in a school, government, hospital, or business which provides medical or nursing care.
Individual coverage applies to nearly all other employees. As long as the work regularly involves interstate commerce (which can be as minimal as talking to people in other states or working in a building where manufactured goods will be shipped to another state), the employee is covered by the FLSA.
Exempt and Non-Exempt Employees and Overtime Pay
Non-exempt employees are covered by the FLSA and are therefore entitled to overtime pay. Exempt employees are not eligible for overtime pay.
Non-exempt employees earn less than $23,660 a year, or $455 per week, and include the following: “blue collar” workers; non-management employees; inside sales workers; employees whose work requires repetitive operations with their hands, physical skill, and energy; and police, firefighters, paramedics, and other first responders. Typically, if an employee does not fall into one of the exemption categories, they should be covered by the FLSA.
All non-exempt employees are entitled to minimum wage and overtime pay.
To be exempt from overtime pay, the employee must pass three “tests,” which question the amount of wages the employee receives, the manner in which they are paid and the type of work they perform. In some cases, employers will misclassify an employee by giving them a prestigious title so they fall under the exempt category, thereby avoiding payment of any overtime. For instance, an employer may classify a cashier as an “assistant manager” and claim that the employee is exempt from overtime pay under the executive exemption; however, if the employee performs non-managerial tasks, such as operating the cash register and stocking shelves, they should typically be classified as non-exempt and receive overtime pay for hours exceeding 40 in a single workweek, regardless of their title.
Employees who earn at least $455 per week, are paid on a salary basis and meet one of the following exemptions are not entitled to overtime pay.
Executive: Primary job duties must include “managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise,” and supervising at least two full-time employee. The employee must also have the power to hire and fire other employees or influence such decisions.
Administrative: Primary duties must include work that is directly related to the operation of the business or customers.
Learned Professional: Primary duties must include “the performance of work requiring advanced knowledge” is the field of science or learning. The employee must be trained to perform their work through “a course of specialized intellectual instruction.”
Creative Professional: Primary duties must include “the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.”
Computer Analysts, Programmers, and Software Engineers: The work must consist of “the application of systems analysis techniques and procedures; including consulting with the users to determine hardware…” or the design and development of computer systems or programs.
Outside Sales: Primary duties must include making sales, obtaining orders or contracts for the use of facilities paid for by the client. The employee must regularly be away from the employer’s place or places of business.
Highly Compensated Employees: Employees performing non-manual work who earn $100,000 or more in a year and regularly perform at least one of the duties of an executive, administrator, or professional employee.
Salaried Employees: Being paid on a salary basis does not automatically exempt an employee from overtime pay. The amount of the employee’s salary, along with their job duties, will determine whether they are entitled to overtime pay.
Classification and Misclassification of Managers for Overtime Pay
There are several factors that determine whether a manager is exempt and therefore ineligible for overtime pay:
- If the employee truly manages or supervises other employees, he or she would be exempt from overtime pay.
- A manager who cannot control other employees, direct their work or make decisions in the workplace is a non-exempt manager or supervisor.
- An employee who does not regularly exercise management powers and who spends most of his time performing the work of non-management employees is usually non-exempt from overtime pay.
- Hourly employees are non-exempt from overtime regardless of their management functions.
What is the Federal Minimum Wage Law?
The Fair Labor Standard Act sets the minimum wage for most employees in the United States. As of July 24, 2009, the federal minimum wage is $7.25 per hour. States have the option to pass legislation to increase the minimum wage for employees within the state. The state minimum wage in Florida is $8.05 per hour.
Employers are required by the Department of Labor to pay non-exempt employees the higher of the two rates. Employers must adjust an employee’s compensation with each minimum wage rate change. If an employee began working when the minimum wage was $7.31 in Florida, and is still paid that rate, even though the rate rose to $8.05 as of January 1, 2013, the employer is in violation of the FLSA.
Florida Hourly Wage Law
Under wage and hour laws, employers are required to alert their employees of any changes in the minimum wage. If an employer fails to do so, they could be subject to penalties for the violation and/or legal action from employees seeking back pay. Every private, federal, Florida state and local government employer with any workers subject to the FLSA provision must post notices of their employees’ wage rights.
According to Florida state wage and hour legislation, employees who perform manual labor and are paid by the day, week or year cannot work more than ten hours in a single, daily shift. If an employee works in excess of ten hours in one day, Florida law mandates that they receive extra pay. There is one exception to this rule; if an employee previously signed a contract stating that more than ten hours of work is still considered as one complete day, they are not entitled to additional compensation.
Under Florida wage and hour laws, workers who have jobs in which they are paid hourly (i.e. interstate commerce) are eligible for overtime pay if they work over 40 hours in a given week. A standard workweek is made up of seven consecutive 24-hour days. Overtime is paid at one-and-a-half times the worker’s regular rate of pay. For example, if an employee regularly makes $10 per hour, their overtime pay rate would be $15 per hour.
Florida wage and hour laws do not state that employers must provide lunch breaks for employees over the age of 18; however, these laws require that any breaks lasting 20 minutes or less must be paid. Employees under the age of 18 must be allotted a 30-minute time slot to eat without interruption. This break can be taken once every four hours.
The Fair Labor Standards Act requires overtime pay for all covered, non-exempt employees who work more than 40 hours in a workweek. Overtime is calculated by multiplying the employee’s regular rate of by at least one and a half. Some states have passed their own legislation regarding overtime pay. For instance, Florida has no limit to the number of hours of overtime that may be worked in a single day.
The following are general overtime pay guidelines regarding exemptions and non-exemptions for overtime pay.
- Any employee who receives less than $23,600 annually is entitled to overtime pay.
- Non-management employees performing maintenance, construction, installation, production, repair, clerical, secretarial and kitchen work are usually entitled to overtime pay.
- Although there are a few, rare exceptions, all hourly employees should receive overtime pay.
- Most commissioned employees are entitled to overtime, except for those who regularly travel.
- Salaried employees earning less than $455 per workweek are entitled to overtime.
- Salaried employees who earn more than $455 per workweek are entitled to overtime unless their job duties qualify them for an exemption, including executive, professional, administrative, computer-related or outside sales.
The same exemptions that apply for FSLA eligibility also apply for the right to receive overtime wages.
In some instances, employers will try to avoid paying their employees overtime wages. Some common tactics include:
Working off the Clock: When an employee’s shift ends and there is still work left to be completed, an employer may not insist that the employee “clock out” and finish the work.
Shortchanging Hours: Employers may not deduct break times lasting 5 to 20 minutes from the number of hours worked. Many times, employees are required, by law or by the employer themselves, to take regular breaks.
Employee Misclassification: Companies may try to avoid paying overtime by misclassifying employees into an exempt category.
Approval for Overtime: If the employer knows or has reason to know the employee is working overtime, and the employee is non-exempt, they must provide overtime pay for this time. Employers cannot deny an employee overtime wages because they did not request to work extra hours.
Independent contractors may have legal recourse through a wage and hour lawsuit against their employer. The fact that a worker is called an independent contractor should have no bearing on whether overtime pay is permitted and/or required. The nature of the work and the relationship with the employer will determine whether overtime pay is required. In some cases, employers have intentionally mislabeled employees as independent contractors to avoid paying overtime wages.
Three factors are typically examined in determining whether a worker should be categorized as an employee or independent contractor.
Behavior: Does the company have control over how the worker performs their job?
Financial: How is the worker paid? Are they reimbursed for expenses? Does the employer or worker provide supplies or tools?
Relationship: Are there written contracts? Does the worker receive benefits? Will the relationship continue after the work is completed? There is no exact formula in determining whether a worker is an independent contractor or an employee; however, weighing the answers to the questions above can help clarify this important distinction.
Chinese Overtime is paid to employees who are on payroll on a fixed salary basis, but have fluctuating hours from week to week. Chinese overtime is calculated at half of the employee’s hourly rate.
In some cases, an employer may try to save money by compensating non-exempt employees with Chinese overtime instead of regular overtime pay. If an employee does not meet the required criteria, they are entitled to traditional overtime pay—time and a half of their regular hourly wage—and cannot be compensated using the Chinese overtime method.
The following requirements must be met for an employer to use Chinese overtime:
- The employee must have a work schedule with fluctuating hours;
- The employee must be paid a fixed salary, regardless of whether they work 40 hours in a workweek;
- No reduction salary may be made for shorter workweeks, in most cases; and
- The employee’s regular hourly rate of pay which is used to calculate the Chinese overtime rate must be at least the minimum wage
Non-exempt employees who are entitled to overtime pay must receive 1.5 times their regular hourly rate. An employee’s hourly rate can be found by dividing all pay, including shift pay and bonuses, by 40 hours.
When calculating overtime pay, make sure you received payment for all hours worked. Compensable time includes all the time spent performing work for the benefit of the employer and can include the following:
- Staying late on the job
- Work done at home
- Time spent waiting for work
- Breaks lasting between 5 and 20 minutes
- Time spent cleaning and preparing equipment
- Time spent during training or safety classes
- Travel time on the behalf of the employer
- Time spent on charity work when requested by the employer
- Time spent in dispute resolution meetings
- Time spent receiving medical attention on site
Overtime and Record Keeping
Employers are required, by law, to keep records on the hours and wages of their employees.
Basic records that an employer must maintain include:
- Employee’s full name and social security number.
- Address, including zip code.
- Birth date, if younger than 19.
- Sex and occupation.
- Time and day of the week when employee’s workweek begins.
- Hours worked each day.
- Total hours worked each workweek.
- Basis on which employee’s wages are paid (e.g., “$9 per hour”, “$440 a week”, “piecework”).
- Regular hourly pay rate.
- Total daily or weekly straight-time earnings.
- Total overtime earnings for the workweek.
- All additions to or deductions from the employee’s wages.
- Total wages paid each pay period.
- Date of payment and the pay period covered by the payment.
Payroll records, collective bargaining agreements, sales and purchase records should be kept for a minimum of three years. Time cards, wage rate tables, work and time schedules, and records of addition to or deductions from wages should be kept for two years. If an employer fails to keep accurate time records, they may have difficulty disputing legal action from non-exempt employees who claim they were not properly paid for all hours worked.
If an employer fails to keep these records and faces overtime or minimum wage claim, he or she may not be able to dispute the number of hours worked.