A little known federal statute, the Fair Labor Standards Act (“FLSA”), confers many important rights upon employees. Perhaps the most important is the employee’s right to receive overtime pay if the employee’s work time exceeds the threshold set by the Wage and Hour Division of the United States Department of Labor. Many employers attempt to avoid the requirements of the FLSA by improperly classifying their employees as exempt from the requirements of the Act. Knowing how the FLSA is intended to work can help an employee obtain the maximum amount of income to which he is entitled.
The FLSA was passed in 1938 to ensure that workers were paid the prevailing federal minimum wage and that they received paid overtime when required by their hours of work. Under current regulations, the federal minimum wage is $7.25 per hour. Many states have also prescribed minimum wages, some higher than the federal minimum. The federal minimum wage is a floor; no state can permit a minimum wage that is lower than the federal standard.
An employee is entitled to paid overtime at the rate of 150% of the worker’s normal wage if (a) the worker is covered by the act and (b) does not belong to an exempt category. Paid overtime is required if a worker spends more than 40 hours on the job in the course of one week. The Labor Department has specified certain exceptions to this rule, but for the most part, all persons who are paid an hourly wage are entitled to paid overtime if they work more than 40 hours in a week.
Perhaps the most common tactic used by employers to avoid the mandatory minimum wage and paid overtime requirements is the wrongful classification of employees as executive, administrative, professional or outside sales employees. Many employers attempt to make their employees exempt by simply giving them a job title that fits within one of the exempt categories. In doing so, employers ignore the two most important words in the statute: “bona fide.” The test for exemption is the actual circumstances of the job:
- What tasks does the employee actually perform?
- Are these tasks typical of the allegedly exempt classification?
- Is the employee paid an hourly wage instead of a salary?
- Does the employee have discretion to make independent management decisions?
If the circumstances of the allegedly exempt employee’s job do not match the reality of how an executive functions, the exemption will be denied and the employee will be eligible to receive both minimum wage and paid overtime at the rate of 150% of the normal wage. If an employee is required to go to court to establish the right to receive paid overtime, back pay or minimum wage, the employer will be required to pay the employee’s attorney’s fees and costs.
The FLSA is a complex statute. Anyone who believes that they have not received the compensation required by the act may wish to consult a knowledgeable labor law attorney for an evaluation of the situation and an estimate of the likelihood succeeding in a court case.