What is the Fair Labor Standards Act (FLSA)?
The U.S. Department of Labor regulates federal employment laws, including the FLSA. This law sets the minimum wage at $7.25 per hour and determines eligibility for overtime pay for hours worked over 40 in a workweek.
The FLSA applies to any individual employed by an employer but not to independent contractors or volunteers because they are not considered “employees” under the FLSA. It was put in place to:
- Create a standard minimum wage requirement for most workers.
- Make considerations for “overtime” pay for workers that work beyond a set threshold.
- Limit the type of work certain minors can perform and the hours they can work.
- Create stiff penalties for those that fail to follow the law.
What does FLSA exclude?
The FLSA sets basic minimum wage and overtime pay and regulates the employment of minors, but there are several employment practices that FLSA does not regulate:
- Pay raises, bonuses, or benefits;
- Vacation length or pay;
- Holiday length or pay;
- Severance pay;
- Sick pay; or
- The length of the workday or week.
Some employers violate labor laws, resulting in wage theft. This includes paying below minimum wage, not paying workers, promoting employees to “managerial” positions to avoid overtime, pooling tips, and offering comp time instead of overtime pay.
Here are a few exemptions:
- Executives who earn a salary and are responsible for managing an enterprise with two or more employees.
- Administrators who earn a salary and are tasked with the management or general operations of the employer.
- Professionals who earn a salary and are tasked with the performance or knowledge of an advanced field of science that is normally acquired through specialized education.
Equal Pay Act of 1963
The Equal Pay Act prohibits gender-based wage discrimination between men and women who perform jobs that require equal skill, effort, and responsibility under similar working conditions in the same establishment.
Wages include all forms of compensation, and employers cannot lower one employee’s wages to make them equal.
Actual job duties assess job equality and whether both jobs require an equal amount of skill, effort, and responsibility.
Skill is measured by experience, ability, education, and training. Effort is the physical or mental exertion needed to perform a job, while responsibility is the degree of accountability required.
Lilly Ledbetter Fair Pay Act of 2009
In 2009, President Barack Obama signed a labor law that is named after an Alabama woman named Lilly Ledbetter. The Lilly Ledbetter Fair Pay Act of 2009 is an important legislation that protects employees from discrimination concerning compensation. This Act came about after a Supreme Court decision in Ledbetter v. Goodyear Tire & Rubber Co., Inc., 550 U.S. 618 (2007), severely restricted the period for filing complaints of employment discrimination.
Lilly Ledbetter had worked for Goodyear Tire & Rubber Co. in Gadsden, Alabama, for almost 20 years when she discovered that she was being paid less than her male colleagues for the same work. She filed a complaint with the EEOC in 1998 and won initially, but the judge later reduced the awarded amount to $300,000. Ledbetter appealed this decision to the U.S. Supreme Court, but the court ruled 5-4 to overturn the verdict, saying she was required to file suit within 180 days (about 6 months) of the initial act of discrimination, even though she had not known about the pay discrepancy until it had been going on for years.
Ledbetter started a campaign to change the law, taking her fight to the U.S. Senate and spearheading the legislation that now bears her name.
Thanks to the Lilly Ledbetter Fair Pay Act, every unfair paycheck is considered an act of discrimination, and each paycheck resets the statute of limitations. However, the law restricts back pay that can be collected to two years.
The Lilly Ledbetter Act allows employees to dispute employer decisions about base pay or wages, job classifications, career ladder or other non-competitive promotion denials, tenure denials and failure to respond to requests for raises.
Overtime Abuse
According to the Fair Labor Standards Act (FLSA), all “non-exempt” employees should receive overtime compensation for all hours worked over a certain threshold, usually 40 hours per week. There are specific criteria that must be met for an employee to be exempt from receiving overtime.
U.S. labor laws allow several exemptions to relieve an employer of meeting the statutory overtime, minimum wage, and record-keeping requirements. The largest are executive exemptions, which apply to professional, administrative, and executive employees.
The executive exemption under the FLSA lets companies pay store managers a fixed salary to avoid overtime pay when they work more than 40 hours per week. However, managers must perform management duties as their primary task instead of manual labor, such as stocking shelves and running a cash register.
It is also against the law for employers to avoid paying overtime by wrongly classifying their workers as independent contractors. This is a common practice that some employers use to avoid paying overtime.
Legal exemptions are narrowly defined, and an employer must prove that its employees fit within the exemption’s terms.
In 2004, changes were made to the FLSA’s overtime regulations that reclassified low-level working supervisors throughout the American industry as “executives,” causing them to lose their overtime rights. Attempts in Congress to overturn the new regulations have yet to be successful.
In addition to the FLSA, many states have laws that mirror the protections provided under the federal scheme. In some cases, state labor laws offer greater protections than the federal government’s.
Donning and Doffing of Personal Protective Equipment (PPE)
Another area of the FLSA in which we are litigating involves what is known as “donning and doffing.” These cases involve industries where employees must put on and take off protective gear, clothing, or uniforms as a prerequisite for doing their job.
Many companies need to pay employees for the time spent donning the protective gear and/or doffing the gear at the beginning and end of a shift or during break periods throughout the workday.
Most of the time protective clothing is not only required; it is often an essential part of the production process that guarantees the quality of the product. Industries where we typically see donning and doffing cases include electronic manufacturing facilities with clean rooms, chicken processing facilities, beef packing facilities and other agricultural industries.
Additionally, we have seen litigation in industries where protective clothing is safety gear for hazardous activities.
Independent Contractors
One of the most abused areas we have seen is the misclassification of employees as independent contractors.
The FLSA only applies to “employees.” Companies have tried to completely avoid their FLSA responsibilities by claiming that their workers are not employees at all but instead are independent contractors. Another reason companies attempt to misclassify employees as independent contractors is because of the enormous benefits of savings.
When companies classify their workers as independent contractors, they are no longer responsible for paying payroll taxes, workers’ compensation premiums, administering workers’ compensation claims, paying unemployment insurance, etc. As the workers are not considered employees, these companies are not required to provide benefits under the Family Medical Leave Act or protections under a host of other federal discriminatory laws. Many companies are accused of improperly classifying workers as independent contractors while trying to control all aspects of the person’s job.
In recent years, there has been a growing trend of companies misclassifying their employees as independent contractors in the service industry. For example, many businesses now outsource their customer service functions to individuals who work remotely, often from their homes. These individuals are typically paid a per-minute rate, which often results in them earning less than the minimum wage. Furthermore, many workers must spend hours training on specific products and services, yet they are not compensated for this time.
Other service industry jobs where we have identified independent contractor misclassifications include:
- construction industry
- delivery/courier services
- stocking vendors
- maintenance crews
- food processing plants
- dental assistants
- servers
- nail salons
- nurses
- secretaries
- landscaping crews
