4.7 Fair Labor Standards Act (flsa)

LibraryThe Virginia Lawyer: A Deskbook for Practitioners (Virginia CLE) (2018 Ed.)

4.7 FAIR LABOR STANDARDS ACT (FLSA)

4.701 In General. The Wage and Hour Division of the Department of Labor (DOL) enforces the Fair Labor Standards Act (FLSA) and issues regulations based on the FLSA. 115 To encourage and facilitate private enforcement of the FLSA, an award of attorney fees and costs is mandatory to a prevailing plaintiff. 116

4.702 Wage and Hour Law. The FLSA (i) establishes a minimum wage; (ii) requires the payment of overtime compensation of one and one-half times the regular rate of pay for all hours over 40 worked in a workweek; (iii) prohibits retaliation against any employee for filing a complaint under the FLSA; (iv) requires various record-keeping and posting procedures; and (v) prohibits gender-based unequal pay practices in the Equal Pay Act. It also

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prohibits many forms of child labor. An employee cannot waive his or her rights under the FLSA. 117

4.703 Coverage.

A. In General. The scope of coverage under the FLSA is very broad and includes the great majority of employees working in the United States. The only rational approach for an employer is to assume that it is covered by the FLSA, unless it has received specific advice to the contrary.

B. Employer Coverage. There are two ways an employer is subject to the FLSA: enterprise coverage and individual employee coverage. Certain employers, such as hospitals, some residential institutions, schools for mentally or physically handicapped or gifted children, preschools, elementary schools, secondary schools, institutions of higher education, and those conducting an activity of a public agency are expressly included within the definition of "enterprise," regardless of other factors. 118

If the employer is not a business that is expressly included within the definition of "enterprise," then the employer is an "enterprise" if its "annual gross volume of sales made or business done is not less than $500,000." 119

C. Individual Coverage. Regardless of the employer's status as an enterprise, individual employees are covered by the FLSA if they handle instruments of interstate commerce, such as mail and telephones, or handle goods or products that have moved in interstate commerce. 120 Few businesses operating today can escape coverage under the individual employee tests. 121

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4.704 Exceptions.

A. In General. As stated in paragraph 4.703(A), the FLSA's coverage is extremely broad, and the safest course for any employer is to assume that its employees are covered. The exceptions outlined below are very narrow. It is also important to understand that the burden of proof in FLSA litigation is on the employer. Defendant employers must prove, by clear and convincing evidence, that the employee is exempt.

B. Independent Contractors. The FLSA applies only to employees, not to independent contractors. 122 This limitation is very narrow, however, and true independent contractor relationships are rare. 123

C. Trainees. Individuals who are being trained but who are not yet employees can be excluded from FLSA coverage.

D. Elected Officials. Elected officials and their personal staffs, policy-making appointees, legal advisors, and legislative employees generally are not covered by the FLSA.

E. Volunteers. Volunteers are excepted from the FLSA if they meet a six-part test. An employee may perform volunteer work for his or her employer under certain circumstances, but an employee cannot perform the same type of work for the same employer as both a paid employee and a volunteer.

F. Other Exceptions. Certain employees are not subject to the overtime requirement. 124 Certain others may be paid less than the minimum

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wage. 125 Business relationships that differ from the traditional employer-employee relationships may be excluded. 126

4.705 Exemptions from Minimum Wage and Overtime.

A. In General. Unless an employee meets the criteria of one of the FLSA exemptions, the employee is nonexempt and must receive at least the minimum wage and overtime compensation at a rate not less than one and one-half times the employee's regular rate of pay. Exemptions are an affirmative defense to a claim for unpaid minimum or overtime wages under the FLSA, and the burden of establishing the exemption is on the employer. As mentioned in paragraph 4.704(A), those exemptions must be established by clear and convincing evidence.

B. "White-Collar" Exemptions. The most commonly available exemptions are the "white-collar" exemptions, which exempt executive, administrative, and professional employees from the minimum wage and overtime requirements of the FLSA. 127 Under current regulations, an executive, administrative, or professional employee must be paid on a salary basis of not less than $913 per week and satisfy a job duties test to qualify for the exemption.

An employee may not be paid on a "salary basis" if the employer deducts from the weekly salary for partial-day absences. 128

"Highly compensated" employees who receive annual compensation of $134,004 or more (and at least $913 per week) and satisfy one or more of the exempt duties of an executive, administrative, or professional employee are also exempt from the FLSA. 129

The DOL issued revised regulations on the "white collar" exemptions with an effective date of December 1, 2016. These changes would increase

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the minimum salary to $913 per week, increase the "highly compensated" threshold to $134,004, and institute a mechanism to raise these amounts automatically every three years. 130 However, on November 22, 2016, a United States District Court in Texas enjoined the DOL from implementing the new rules. 131 The United States Court of Appeals for the Fifth Circuit refused to lift the stay on enforcement of this injunction. 132

C. Computer-Related Occupation Exemption. Certain employees engaged in computer-related occupations are exempt. As with executive, administrative, and professional employees, employees in computer-related occupations must regularly receive compensation of $27.63 per hour or more and satisfy a job duties test to qualify for the exemption. 133

D. Outside Sales Exemption. Outside sales employees are exempt from the minimum wage and overtime provisions if the following requirements are met:

1. The employee is employed for the purpose of making sales or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and
2. The employee is customarily and regularly away from the employer's place of business.

Employees who work at the employer's place of business making sales either in person or by telephone do not qualify for the outside sales exemption. 134

E. Partial Overtime Pay Exemption for Hospital Employees. Employees of hospitals and nursing homes may be paid overtime at one and one-half times their regular rate on the basis of a 14-day period, rather than the usual 7-day workweek, if there is a mutual agreement to that arrangement and if the employees receive overtime both for hours worked in

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excess of 8 on any day and for hours worked in excess of 80 during the two-week period. 135 There are additional record-keeping requirements for employers who have this pay plan. 136

F. Partial Overtime Pay Exemption for Certain Public Employees. Public law enforcement employees must be paid overtime for hours worked over 171 hours during a 28-day consecutive work period. Public employees engaged in fire protection must be paid overtime for hours worked over 212 hours during a 28-day consecutive work period. 137

G. Motor Carrier Act Exemption. The FLSA overtime provisions do not apply to any employee whose qualifications and maximum hours of service are subject to regulation by the Motor Carrier Act. 138 Before 2008, the Motor Carrier Act exemption was construed very broadly by some courts, and the Safe, Accountable, Flexible, Efficient Transportation Equity Act: a Legacy for Users (SAFETEA-LU) 139 was enacted at least in part to address the over-broad reading some courts had given to this exemption. As a result, the law is clear that the Motor Carrier Act exemption does not apply to a driver, driver's helper, loader, or mechanic in any workweek in which their work affects the safe interstate operation of certain motor vehicles weighing 10,000 pounds or less.

H. Other Exemptions. A number of job types are excluded from either the minimum wage or overtime provisions of the FLSA or both. These job types—many of which are regional in scope—include occupations like harvesters of maple sap, certain seasonal employees, certain agricultural employees, and others. 140

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4.706 Job Requirements Cannot Reduce Pay. An employee must receive the minimum wage and overtime compensation "free and clear" of his or her employer's interests. Job requirements, such as a certain type of uniform or use of a personal car, cannot reduce the amount the employee receives below the minimum wage for all hours worked in any workweek and may not reduce the employee's pay below one and one-half times his or her regular rate of pay for all hours worked over 40 in a workweek. 141

4.707 Overtime Compensation.

A. In General. Nonexempt employees must receive overtime compensation equal to no less than one and one-half times their regular rate of pay for all hours worked in excess of 40 hours per workweek. 142 The FLSA has no daily overtime requirement and simply requires the payment of overtime compensation when an employee works more than 40 hours in a week.

B. Calculation of Pay. When an employer is required under the FLSA to pay an employee overtime pay, the employer must pay the employee for the overtime hours at an hourly rate equal to one and one-half times the employee's regular hourly rate. In a simple working "off-the-clock" case, the employee's hourly rate is the employee's regular rate, and the regular rate is multiplied by 1.5 to determine the applicable...

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