👔Employment Law Unit 4 – Wage and hour laws

Key Concepts and Definitions

• Wage refers to the monetary compensation paid to employees for their work, typically expressed as an hourly rate or salary
• Hour laws regulate the number of hours employees can work, including maximum daily and weekly limits, and required rest periods
• Minimum wage sets the lowest hourly rate employers can legally pay their employees, with some exceptions for tipped workers and certain industries
• Overtime pay entitles non-exempt employees to additional compensation, usually 1.5 times their regular rate, for hours worked beyond a standard workweek (typically 40 hours)
• Exempt employees, such as executive, administrative, and professional workers, are not entitled to overtime pay based on their job duties and salary level
• Compensable time includes all time spent by employees performing work-related activities, which must be paid by the employer
  • Includes time spent on-call, in training, or traveling for work purposes
• Workweek is defined as any fixed, regularly recurring period of 168 hours (7 consecutive 24-hour periods) used to determine overtime pay eligibility

Historical Context of Wage and Hour Laws

• Early 20th century saw the rise of labor movements advocating for better working conditions and fair compensation
• The Great Depression highlighted the need for government intervention to protect workers' rights and prevent exploitation
• Fair Labor Standards Act (FLSA) of 1938 established the first federal minimum wage, overtime pay requirements, and child labor restrictions in the United States
  • FLSA has been amended multiple times to increase the minimum wage and expand coverage to additional industries
• Portal-to-Portal Act of 1947 clarified compensable time by excluding time spent commuting or engaging in preliminary or postliminary activities
• Equal Pay Act of 1963 prohibited wage discrimination based on sex, requiring equal pay for equal work
• Service Contract Act of 1965 and Davis-Bacon Act of 1931 established prevailing wage requirements for workers on government contracts
• State and local governments have enacted their own wage and hour laws, often providing greater protections than federal law

Federal Wage and Hour Regulations

• FLSA is the primary federal law governing wage and hour standards, administered by the U.S. Department of Labor's Wage and Hour Division
• Current federal minimum wage is $7.25 per hour, unchanged since 2009
  • Tipped employees may be paid a lower direct wage of $2.13 per hour, provided their tips bring their total compensation to at least the federal minimum wage
• Non-exempt employees are entitled to overtime pay at a rate of 1.5 times their regular rate for hours worked over 40 in a workweek
• Employers must maintain accurate records of employees' hours worked and wages paid, including time cards, payroll records, and pay stubs
• Child labor provisions restrict the employment of minors, with limitations on hours worked and prohibited occupations based on age
• FLSA covers most employers engaged in interstate commerce or with annual gross sales of at least $500,000
  • Certain small businesses and agricultural employers may be exempt from FLSA requirements

State-Specific Wage and Hour Laws

• Many states have enacted their own wage and hour laws that provide greater benefits and protections than the FLSA
• As of 2023, 30 states and the District of Columbia have minimum wages higher than the federal rate, with some cities and counties establishing even higher local minimum wages
  • Examples include California ($15.50), New York ($14.20), and Washington ($15.74)
• Some states have more restrictive overtime laws, such as California, which requires overtime pay for hours worked over 8 in a day or 40 in a week
• Meal and rest break requirements vary by state, with some mandating paid or unpaid breaks based on the length of the workday
• Certain states have broader definitions of compensable time, such as including time spent donning and doffing work gear or attending mandatory meetings
• Employers must comply with both federal and state wage and hour laws, following the provisions that are most beneficial to employees

Employee Classification and Exemptions

• Proper classification of employees as exempt or non-exempt is crucial for determining overtime pay eligibility under the FLSA
• Exempt employees must meet specific salary and duties tests:
  • Salary basis test: Employee must be paid a predetermined, fixed salary not subject to reduction based on quality or quantity of work
  • Salary level test: Employee's salary must meet a minimum threshold, currently $684 per week ($35,568 per year)
  • Duties test: Employee's primary job duties must fall under one of the exempt categories (executive, administrative, professional, outside sales, or computer professional)
• Misclassification of employees as exempt can result in significant back pay liabilities and penalties for employers
• Certain occupations, such as agricultural workers, seasonal amusement park employees, and commissioned retail sales employees, are partially or fully exempt from FLSA requirements
• Independent contractors are not covered by the FLSA, but misclassification of employees as contractors can lead to legal issues

Overtime Pay and Calculations

• Non-exempt employees are entitled to overtime pay at a rate of 1.5 times their regular rate for hours worked over 40 in a workweek
• Regular rate of pay includes all non-discretionary compensation earned during the workweek, such as commissions, bonuses, and shift differentials
  • Calculation: $Regular Rate = (Total Non-Overtime Compensation) / (Total Hours Worked)$
• Overtime pay is calculated by multiplying the regular rate by 1.5 and then multiplying the result by the number of overtime hours worked
  • Calculation: $Overtime Pay = (Regular Rate × 1.5) × Overtime Hours$
• Some states have daily overtime laws that require overtime pay for hours worked over a certain threshold in a single day, such as 8 hours in California
• Employers cannot average hours worked over multiple workweeks to avoid paying overtime
• Compensatory time off (comp time) in lieu of overtime pay is generally not permitted for private-sector employees under the FLSA

Record-Keeping Requirements

• FLSA requires employers to maintain accurate records of employees' hours worked and wages paid
• Records must include:
  • Employee's full name, Social Security number, address, and occupation
  • Workweek beginning and ending dates
  • Total hours worked each workday and workweek
  • Regular hourly rate of pay
  • 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 pay period covered
• Records must be kept for at least three years, with payroll records maintained for at least two years
• Employers must provide employees with a pay stub or written statement detailing their hours worked, wages earned, and any deductions made each pay period
• Failure to maintain proper records can result in penalties and make it difficult for employers to defend against wage and hour claims

Enforcement and Penalties

• The U.S. Department of Labor's Wage and Hour Division is responsible for enforcing the FLSA through investigations and legal action
• Employees can file complaints with the DOL or pursue private lawsuits against their employers for alleged FLSA violations
• Employers found in violation of the FLSA may be liable for:
  • Back pay: Unpaid minimum wages or overtime compensation owed to employees
  • Liquidated damages: An additional amount equal to the back pay owed, essentially doubling the damages
  • Civil penalties: Fines assessed by the DOL for willful or repeated violations
  • Criminal penalties: Possible imprisonment and fines for willful violations
• Collective actions and class action lawsuits allow multiple employees to join together in a single case against their employer, potentially increasing liability
• State labor agencies also enforce their own wage and hour laws, with penalties varying by jurisdiction
• Retaliation against employees who assert their rights under wage and hour laws is prohibited and can result in additional damages

Recent Developments and Future Trends

• Push for higher federal, state, and local minimum wages, with some advocating for a $15 per hour national minimum wage
• Increased scrutiny of employee misclassification, particularly in the gig economy and with the rise of remote work
• Focus on pay equity and transparency, with some states and localities enacting laws prohibiting salary history inquiries and requiring disclosure of pay ranges
• Expansion of overtime eligibility through updates to the salary level test, potentially extending overtime pay to millions of additional workers
• Growing use of technology and artificial intelligence in wage and hour compliance, such as automated time-tracking systems and predictive analytics for identifying potential violations
• Continued emphasis on enforcement and litigation, with wage and hour claims remaining a top area of employment law disputes
• Potential legislative changes to address emerging issues, such as the classification of gig workers and the impact of automation on the workforce