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EEO LAW BASICS
CHAPTER 8
FAIR LABOR STANDARDS ACT (FLSA)
8-A | WHAT IS THE PURPOSE OF THE FLSA?
Brooklyn Savings Bank v. Maddrix, 324 U.S. 697, 707 (1945):
The FLSA was passed in recognition of the fact that due to the unequal bargaining power as between employer and employee, certain segments of the population required federal compulsory legislation to prevent private contracts on their part which endangered national health and efficiency and as a result the free movement of goods in interstate commerce. To accomplish this purpose standards of minimum wages and maximum hours were provided.
American Bar Association // Section of Labor and Employment Law
Equal Employment Opportunity Committee // EEO Law Basics // Spring 2006
8-B | WHO IS PROTECTED UNDER THE FLSA?
1) Private and public sector employees/the
FLSA uses the “
economic realities” test to determine whether a worker is an independent
contractor (not protected) or an employee
2) Economic realities test factors
a) Degree of the alleged employer’s right to control the manner in which the work is performed
b) Alleged employee’s opportunity for profit or loss depending on his/her managerial skill
c) Alleged employer’s investment in equipment or materials required for his/her task of his employment of helpers
d) Whether service rendered requires a special skill
e) Degree of permanence of the working relationship
f) Whether service rendered is an integral part of the alleged employer’s business
3) An employee in private industry may be covered by the
FLSA in one of two broadly interpreted ways:
a) If employee is engaged in interstate commerce, the production of goods for interstate commerce, or works in activities closely related and directly essential to the production of goods for commerce, he/she is covered/i.e., employees who manufacture or handle goods moving in interstate commerce, clerical workers who use the mails or telephones for interstate communication or keep records of interstate transactions, employees who regularly cross state lines in the course of their work, and communication and transportation workers, including those involved with maintenance, repair and improvement.
b) If the business enterprise/employer is engaged in interstate commerce, production of goods for interstate commerce, or working in goods or materials moved in interstate commerce and the business enterprise has an annual business volume of at least $500,000, all employees are covered. If an employer has two or more employees who are individually engaged in interstate commerce, then all the remaining employees are also covered.
American Bar Association // Section of Labor and Employment Law
Equal Employment Opportunity Committee // EEO Law Basics // Spring 2006
8-C | WHAT ARE AN EMPLOYER’S STATUTORY OBLIGATIONS UNDER THE FLSA?
An employer’s statutory obligations include:
1) Payment of the minimum wage (currently $5.15/was .25 when FLSA initially passed in 1938). In addition to actual wages, the reasonable cost or fair value of board, lodging or other “facilities” that are customarily furnished by the employer may be credited toward the minimum wage. (The FLSA makes it possible, subject to certain conditions, to employ learners, apprentices, messengers, and handicapped workers at sub minimum wage rates. In addition, persons aged 16-19 may be employed at a sub minimum training wage, subject to certain conditions) (Additionally, volunteers are not covered by the FLSA. The Supreme Court has held that volunteer means “an individual, who, without promise or expectation of compensation, but solely for his personal purpose or pleasure, worked in activities carried on by other persons either for their pleasure or profit.” Tony & Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290, 295 (1985)).
2) Payment for hours worked/includes all the time employee is required to be on duty or on the employer’s premises or at a prescribed work place and all time he/she is “suffered” or “permitted to work” for employer.
3) Payment of time-and-a-half for overtime/ one and one-half times regular hourly wage for hours worked beyond standard 40 hour workweek.17
4) Maintenance of required records.18
American Bar Association // Section of Labor and Employment Law
Equal Employment Opportunity Committee // EEO Law Basics // Spring 2006
Footnotes
17 The minimum wage and overtime provisions of the FLSA apply on a normal workweek basis. The normal workweek is a fixed and regularly recurring period of seven consecutive 24-hour periods. It may begin on any day of the week and at any time of the day. An employer may change the beginning day of the workweek only if the change is intended to be permanent and is not made to evade the statutory overtime pay requirements.
18 There are numerous and detailed requirements for maintaining employee records. The employer is responsible for determining the hours worked and paying the required wages. Failure to keep records or keeping inaccurate, uncertain records result in a presumption in favor of the employee. Failure to keep such records may also result in criminal penalties.
8-D | WHAT ARE THE ELEMENTS OF A CAUSE OF ACTION UNDER THE FLSA?
1) The plaintiff is an employee;
2) The plaintiff has worked the required period of time; and
3) The employer failed to fulfill its statutory obligations pursuant to the FLSA.
American Bar Association // Section of Labor and Employment Law
Equal Employment Opportunity Committee // EEO Law Basics // Spring 2006
8-E | HOW IS THE FLSA ADMINISTERED AND ENFORCED?
1) Secretary of Department of Labor
2) Private suit
American Bar Association // Section of Labor and Employment Law
Equal Employment Opportunity Committee // EEO Law Basics // Spring 2006
8-F | WHAT ARE THE EXEMPTIONS UNDER THE FLSA?
The
burden clearly is upon the employer affirmatively to show that the plaintiff-employee is within the scope of any exemption.
Idaho Sheet Metal Works, Inc. v. Wirtz, 383 U.S. 190 (1966);
Corning Glass Works v. Brennan, 417 U.S. 188 (1974).
1) “White collar exemptions”
a) Executive or Managerial Exemption Qualification/Employee:
(1) Earns at least $455 a week /($23,660/year)
(2) Has a primary duty of managing the enterprise or a recognized department or subdivision/determination of the employee’s primary duty “’must be based on all the facts in a particular case’ ... [T]he amount of time spent on managerial duties is a relevant, but not a dispositive factor.” Murray et al., v. Stuckey’s, 939 F.2d 614, 618 (8th Cir. 1995).
(3) Regularly and customarily directs work with two or more employees/ the equivalent of two full time employees is any combination of part-time and/or full-time employees whose total number of work hours meets or exceeds 80 per week Murray, 50 F.3d 564, 567-69 (8th Cir. 1995); Krieg v. Pell’s Inc., 2002 WL 449797 (S.D. Ind. 2002).
(4) Has authority to hire and hire other employees or their recommendations as to hiring, firing, promotion or other changes of status are given particular weight
b) Administrative Exemption/Employee:
(1) Earns at least $455 per week/($23,660/year)
(2) Has a primary duty of performing office or nonmanual work related to the management or general business operations19 of the employer or the employer’s customers
(3) Holds a position of responsibility20 with the employer
c) Professional Exemption:
(1) Earns at least $455 a week /($23,660/year)
(2) A primary duty of performing office or nonmanual work requiring advance knowledge in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction
(3) Such advanced knowledge or learning may be acquired by an equivalent combination of intellectual instruction and work experience
d) Computer Employee:
(1) Earns at least $455 a week or if paid on an hourly basis are he/she earns at least a regular rate of $27.63 per hour
(2) Must be employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field
(3) Subject to detailed definition of what constitutes computer work
e) Outside Sales:
(1) Have a primary duty to make sales, obtain orders or contracts for services, or use of the facilities
(2) Must customarily and regularly engage away from employer’s place of business while performing such duties
f) Highly Compensated Employees/executive, administrative or professional earning over $100,000
(1) In order to qualify for this exemption, the employee’s total annual compensation cannot be based entirely on commissions and bonus payments, and must include at least $455/week paid on a salary or fee basis); and
(2) Must perform office or non-manual work
(3) Must “customarily and regularly” perform one or more of the responsibilities of an executive, administrative or professional employee
(4) Additional highly detailed requirements
American Bar Association // Section of Labor and Employment Law
Equal Employment Opportunity Committee // EEO Law Basics // Spring 2006
Footnotes
19 “Management or general business operations” includes tax, finance, accounting auditing, quality control, purchasing, procurement, advertising, marketing, research, safety and health, personnel management, human resources, employee benefits, labor relations, public relations, government relations and similar activities.
20 “Position of responsibility” is defined as either work of substantial importance or work requiring a high level of skill or training.
8-G | WHAT RELIEF IS AVAILABLE UNDER THE FLSA?
8-H | WHAT ARE THE EMPLOYER’S PENALTIES FOR REPEATED AND WILLFUL FLSA VIOLATIONS?
A violation is
willful if the employer knew or showed reckless disregard for the matter of whether its conduct was prohibited.
Trans World Airlines v. Thurston, 469 U.S. 111 (1985).
1) Civil penalty of $1,000 per violation
2) Criminal penalty of up to $10,000/second conviction results in imprisonment
American Bar Association // Section of Labor and Employment Law
Equal Employment Opportunity Committee // EEO Law Basics // Spring 2006
8-I | CAN FLSA RIGHTS BE WAIVED?
Brooklyn Savings Bank v. Maddrix, 324 U.S. 697 (1945):
Held that basic policy considerations forbade waiver of the basic minimum and overtime wages guaranteed by FLSA.
American Bar Association // Section of Labor and Employment Law
Equal Employment Opportunity Committee // EEO Law Basics // Spring 2006
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Chapter 8 | EEO Law Basics
