FLSA Training for Supervisors: Part V

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Introduction

The Fair Labor Standards Act (FLSA) was passed in 1938. It set standards for child labor, minimum wage and overtime pay. Since the passage of the Equal Pay Act in 1963 as part of the FLSA, the Act also prohibits gender-based wage discrimination. It is essential for all supervisors, in addition to the Human Resources staff, to understand how to comply with FLSA and with state child labor and wage and hour laws. Employers need to train new and retrain current supervisors on these laws to ensure the full and correct compliance.

These sample presentations on the FLSA are structured to be given in three sessions and are organized into five parts. The first session (Parts 1-3) covers an introduction to the Act, Child Labor Regulations, and the Equal Pay Act. The second session (Part 4) covers exempt employees. The third session (Part 5) covers non-exempt employees. The sessions are intended for presentation to supervisors and other individuals who manage employees. They are designed to be presented by an individual who has comprehensive knowledge of the FLSA and the employer’s state child labor and wage and hour laws. These sample presentations must be customized to match state laws and the employer’s own policies and practices.

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Presentation Contents

• This training session is the fifth part of our five-part series on the FLSA. It is Part 5 – Non-Exempt Employees.

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Objectives

At the close of this session, you will be able to:

• State the definition of a non-exempt employee under the Fair Labor Standards Act (FLSA).

• Know the FLSA recordkeeping requirements for time worked for a non-exempt employee.

• Understand minimum wage requirements.

• Understand overtime pay requirements.

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Objectives (cont’d)

Know what compensable time is pertaining to:

• Travel• Meetings and training• Rest and meal periods• On-call duty• Changing clothes and preparing for working

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Definition of Non-Exempt Employee

• As you may recall from the previous training session, under the FLSA, all employees are considered non-exempt unless the employer establishes that the employee’s position meets specific exemption criteria.

• Accordingly, the definition of a non-exempt employee is an employee who does not meet any one of the Fair Labor Standards Act’s exemption tests and is paid on an hourly basis and covered by wage and hour laws regarding minimum wage, overtime pay, and hours worked.

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Time Worked Records

The FLSA requires the following information regarding time worked by non-exempt employees:

• Time and day of week when workweek begins• Hours worked each day• Total hours worked each workweek• Basis on which wages are paid (i.e., per hour, piecework)

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Time Worked Records (cont’d)

• Regular hourly pay rate

• Total daily or weekly straight-time earnings

• Total overtime earnings

• Additions to or deductions from wages

• Total wages paid each pay period

• Date of payment and pay period covered by payment

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Time Worked Records (cont’d)

• Employers may use any timekeeping method they choose – time clocks, manual timesheets, electronic timesheets.

• Under the FLSA, payroll records must be retained for at least three years. Records on which wages are based (time cards, timesheets, computer records) must be retained for at least two years.

• Employers may record employees’ starting and stopping times to the nearest 5 minutes or nearest 1/10th or quarter of an hour, provided that amounts rounded off average out over time and do not fail to properly compensate the employee.

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Questions? Comments?

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Minimum Wage Requirements

• The federal minimum wage for covered, nonexempt employees is currently $7.25 per hour.

• Many states have minimum wage laws that differ from the federal minimum wage.

• In cases where an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher of the two minimum wages.

• Various minimum wage exceptions apply under specific circumstances to workers with disabilities, full-time students, youth under the age of 20 in their first 90 consecutive days of employment, tipped employees, and student-learners.

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Overtime Pay Requirements

• For covered, nonexempt employees, the Fair Labor Standards Act (FLSA) requires overtime pay at a rate of not less than one and one-half times an employee's regular rate of pay after 40 hours of work in a workweek.

• Some states also have enacted overtime laws which differ from the federal. Where an employee is subject to both the state and federal overtime laws, the employee is entitled to overtime according to the higher standard (i.e., the standard that will provide the higher rate of pay).

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Overtime Pay Requirements (cont’d)

• Overtime pay is calculated on actual time worked. Time paid for but not actually worked (vacation, sick leave, holidays, other paid leave) is excluded from overtime calculations.

• The FLSA does not require overtime pay for work on Saturdays, Sundays, or holidays, simply for working on those days; an employee must work more than 40 hours during their established 7-day workweek to be entitled to overtime pay under the FLSA.

• Similarly, the FLSA does not require overtime pay for work on nights or weekends, simply for working at those times.

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Overtime Pay Requirements (cont’d)

• Some exceptions to the 40 hours per week standard apply under special circumstances to police officers and firefighters employed by public agencies and to employees of hospitals and nursing homes.

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Overtime Pay Requirements (cont’d)

• Compensatory time off -- Private sector employers must pay non-exempt employees wages equal to one-and-one-half times their regular hourly rate of pay for all hours worked in excess of 40 in a single workweek. They cannot provide compensatory time off instead of overtime pay.

• State or local government employers, with the agreement of employees, are allowed to provide nonexempt employees with compensatory time off at a rate of at least one and one-half hours of paid time off for each hour of overtime work instead of overtime pay.

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Overtime Pay Requirements (cont’d)

• In many companies overtime must be authorized in advance by an employee’s supervisor. If an employee works overtime without authorization, it still must be paid. Unauthorized overtime is a disciplinary issue not a compensation one.

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Questions? Comments?

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Compensable Time - other than time spent on principal work activities

Travel Time

• Whether travel time is compensable time depends on the kind of travel involved.

• Home-to-work travel is not work time and not compensable.

• Time spent in travel as part of the employee’s principal activity, such as travel from one job site to another during the workday, is work time and must be paid.

• When the non-exempt employee travels on a one-day assignment to another city, the time spent traveling is work time and must be paid.

• Travel that keeps the employee away from home overnight is work time when it cuts across the employee’s workday. However, time spent traveling to an airport terminal or train station is not treated as hours worked. By contrast, all the time spent waiting at the terminal until arrival at the destination is compensable.

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Meetings and Training

• Time spent attending lectures, meetings, and training programs is counted as hours worked unless all of the following conditions are met:

• The meetings are held outside regular working hours and • Attendance is voluntary. (Attendance is not voluntary if the employee is led

to believe that non-attendance would adversely affect his employment.)

• And the course, lecture, or meeting is not directly related to the employee's job. (Training is directly related to an employee's job if it is designed to make the employee more effective in the present job, not if it teaches a different job.)

• And the employee does no productive work during the meeting or training.

Compensable Time - other than time spent on principal work activities (cont’d)

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Meetings and Training

• Trade school or college courses -Employees who voluntarily attend courses at independent schools, colleges, or trade schools outside their regular working hours are not engaged in compensable working time, even if the instructional program is related to their current job.

• Similarly, voluntary attendance by employees outside working hours at an employer-sponsored course that corresponds to courses offered by independent learning institutions does not constitute hours worked, even if the courses are job-related.

Compensable Time - other than time spent on principal work activities (cont’d)

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Rest and Meal Periods• The FLSA does not require rest or meal periods. However, when

employers offer these short breaks (usually lasting about 5 to 20 minutes), they are paid time.

• Bona fide meal periods (typically lasting at least 30 minutes) serve a different purpose than rest breaks and are not work time and are not compensable.

> Note: Some states have specific provisions for rest and meal periods.

Compensable Time - other than time spent on principal work activities (cont’d)

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On-Call Duty

• Whether on-call or waiting time is to be treated as working time depends on whether “the time is spent predominantly for the employer's benefit or for the employee's.”

• An employee who is required to remain on call on the employer's premises is working while "on call" and the time is compensable.

• An employee who is required to remain on call at home, or who is allowed to leave a message where he/she can be reached, is not working (in most cases) while on call and the time is not compensable.

• Additional constraints on the employee's freedom could require this time to be compensated.

Compensable Time - other than time spent on principal work activities (cont’d)

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Changing Clothes and Preparing for Working

• Time spent by employees changing clothes or preparing for work, such as washing up at the beginning or end of the workday, is considered part of an employee’s “principal activities” whenever the changing or preparing for work is required by the nature of the workers' jobs. These activities would be compensable time with the following exception:

• Clothes-changing and wash-up time may only be excluded from compensable time in unionized workplaces under the terms of a collective bargaining unit even where changing clothes or washing is required by the nature of the job or by a law or rule.

Compensable Time - other than time spent on principal work activities (cont’d)

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• Compensable time spent traveling for business, attending meetings and training, on paid breaks, on on-call duty, and changing clothes and preparing for working are counted the same as any other time worked and may result in overtime.

Compensable Time - other than time spent on principal work activities (cont’d)

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Questions? Comments?

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Summary

• A non-exempt employee is an employee who does not meet any one of the Fair Labor Standards Act exemption tests and is paid on an hourly basis and covered by wage and hour laws regarding minimum wage, overtime pay, and hours worked.

• The FLSA requires employers to keep detailed and accurate records of time worked by non-exempt employees for at least three years and records on which wages are based for at least two years.

• Employers may use any timekeeping method they choose.

• Employers must pay covered, non-exempt employees at least the higher of the federal minimum wage rate or the state minimum wage rate.

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Summary (cont’d)

• Minimum wage exceptions apply under specific circumstances to workers with disabilities, full-time students, youth under the age of 20 in their first 90 days of work, tipped employees, and student-learners.

• The FLSA requires employees to pay covered, non-exempt employees an overtime rate of not less than one and one-half times an employee’s regular rate of pay after 40 hours of work in the workweek.

• Some states have overtime laws which differ from federal requirements. Where an employee is subject to both, the employee is entitled to overtime according to the higher standard.

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Summary (cont’d)

• Overtime is calculated on actual time worked. Time paid for but not actually worked (vacation, sick leave, holidays, other paid leave) is excluded.

• Private sector employers cannot provide compensatory time off in lieu of overtime pay. Only state and local government employers, with the agreement of employees, are allowed to provide compensatory time off.

• If an employee works unauthorized overtime, it must be paid. Unauthorized overtime is a disciplinary issue not a compensation one.

• Compensable time for covered, non-exempt employees may include travel, meetings and training, rest and meal periods, on-call duty, and changing clothes and preparing for work.

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Questions? Comments?

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Course Evaluation

Please be sure to complete and leave the evaluation sheet you received with your handouts.

Thank you for your attention and interest!