Fair Labor Standards Act (FLSA)

The FLSA establishes federal requirements regarding minimum wage, overtime compensation, recordkeeping, and child labor for employees. Employees are generally classified into two categories under the FLSA: non-exempt and exempt. The FLSA includes specific requirements on who may be considered exempt, how to calculate wages or overtime for non-exempt, and when and how wages may be docked for absences. Special rules apply to both exempt and non-exempt employees.

A non-exempt employee must be paid for the actual hours worked, and accurate records must be kept ensuring proper compensation is given. While you can usually require non-exempt employees to work overtime, the FLSA requires you to pay them overtime pay at a rate not less than time and a half for any time worked in excess of 40 hours in a workweek. A workweek is defined as a fixed and regularly recurring period of 168 hours or seven consecutive 24-hour periods. Check if your state laws regarding overtime rates align with or are different than federal wage and hour laws.

While employers should have policies requiring advanced permission for overtime, employers violate the law if they are aware non-exempt employees are exceeding 40 hours and are not paid overtime. Even if non-exempt employees work overtime without permission, they can be disciplined for violating policy, but employers must still pay the overtime. Additionally, it is typically unlawful for private sector employees to provide compensatory time (compensation for overtime hours with time off in lieu of overtime pay) to non-exempt employees, with limited exceptions.

To be considered and exempt employee, the law primarily uses a salary threshold test and a duties test as determining factors. The following types of duties are typically considered exempt from the FLSA requirements: executive, administrative, professional, computer professional, and creative professional. Additionally, an exempt employee must be paid on a salary basis (meaning no deductions from weekly pay for quality or quantity of work), and that salary must not be less than $684 per week ($35,568 per year), as of January 1, 2020. Your state’s salary threshold could be different. If an employee performs exempt job duties but is not paid the minimum salary level, generally that employee will need to be considered a non-exempt employee and need to be paid at least minimum wage and overtime.

As mentioned above, exempt employees are compensated based on the type of work they perform rather than the number of hours they work. Consequently, with limited exceptions, the pay of an exempt employee may not be docked for partial-day absences. If an employee’s pay is docked for missing a fraction of a day, the exempt status could be lost. This could result in payment of back wages of overtime for a period of two to three years, in addition to other costs. One exception to this rule is that an organization can require employees to use paid time off first, in some circumstances, when taking time off for a certain period of time.

FLSA Resources from the Brotherhood Mutual Safety Library: