Copyright 2005 Fair Labor Standards Act Mary Elizabeth Davis

FLSA Requirements The FLSA requires:  Payment of federal minimum wage for all hours worked; and  overtime pay for all hours worked over 40 in a workweek

Typically Examples of Noncompliance in Hospitality Industry Failure to maintain records of, or pay overtime to, non-exempt salaried employees. Failure to record and pay employees for all hours suffered or permitted to be worked. Illegal deductions from pay for items like cash register shortages, uniforms, errors, bad checks, etc.

Noncompliance Issues Continued Tips not sufficient to make up the difference between the employer's direct wage obligation and the minimum wage. Failure to pay the correct overtime rate to tipped employees. Failure to pay overtime for hours worked beyond 40 per week, or averaging the hours worked over two weeks to avoid paying overtime. “Salaried” employees classified as exempt without regard to the duties performed or the % of time spent on non- exempt duties.

Penalties for Violation of the FLSA Department of Labor  recommend changes in employment practices to bring the employer into compliance  payment of any back wages due to employees Willful violators  criminal prosecution  fines up to $10,000  imprisonment for second conviction  civil money penalties of up to $1,000 per violation

Penalties Continued Civil Suit  back wages  liquidated damages in amount equal to back pay  attorneys’ fees  injunctions to restrain persons from violating the Act

Posting Requirements Employers must display an official poster outlining the Act  Local Wage and Hour Division offices  USWage ( ) 

Record Keeping Requirements Every covered employer must keep certain records for each non-exempt worker  no particular form  require accurate information  requires records include following information:

Record Keeping Requirements Full name and SSN Address Birth date, if younger than 19 Sex and occupation Time and day of week when employee's workweek begins Daily hours worked Total hours worked each workweek How wages are paid Regular hourly pay rate Total daily or weekly straight- time earnings Total overtime earnings for the workweek All additions to or deductions from wages Total wages paid each pay period; and Date of payment and the pay period covered by the payment

Retaining Records 3 years:  payroll records  collective bargaining agreements  sales and purchase records 2 years:  time cards  piece work tickets  wage rate tables  work and time schedules, and  records of additions to or deductions from wages

Illegal Deductions If reduce wages below minimum wage or reduce earned overtime pay:  cash shortages  required uniforms  customer walk-outs  errors  bad checks

FLSA Overtime Requirements rate of at least one and one-half times the employee's regular rate of pay for each hour worked in excess of 40 hours per workweek

Workweek Defined Period of 168 hours during 7 consecutive 24-hour periods  May begin on any day of the week  May begin at any hour of the day  Employees may not average hours worked during 2 or more weeks

Hours Worked All time an employee must be on duty, or on the employer’s premises or at any other prescribed place of work  on call time  waiting time All time an employee is allowed, “suffered,” to work  lunch break  working before/after clocked out

Tipped Employees Employees who regularly receive more than $30 a month in tips Employer may consider tip part of wages, but must pay at least $2.13 an hour in direct wages Tipped employees who receive $2.13 per hour in direct wages are also subject to overtime at one and one-half times the applicable minimum wage, $5.15, not one and one-half times $2.13

Uniforms If the employer requires the employee to bear the cost, such cost may not:  reduce the employee's wages below the minimum wage  cut into overtime compensation

Exemptions The FLSA provides an exemption from both minimum wage and overtime pay for employees who meet the following tests: Executive Professional Administrative Outside Sales Computer Highly Compensated Employees

Not Based on Job Titles Job titles or descriptions do not determine exempt status Specific job duties and salary must meet all the requirements of the DOL’s regulations

Administrative Exemption Compensated at least $455 per week on a salary or fee basis; Primary duty is performance of office or non-manual work directly related to the management or general business operations of the employer; and Primary duty must include the exercise of discretion and independent judgment with respect to matters of significance

Directly Related to Management or General Business Operations Work directly related to assisting with the running or servicing of the business Not day to day carrying out of its affairs Examples: human resources, accounting, budgeting

Outside Sales People Compensated at least $455 per week on a salary or fee basis; Primary duty is making sales or obtaining orders or contracts for services or for the use of facilities; and Customarily and regularly engaged away from the employer’s place or places of business

Away from the Place of Business Makes sales at the customer’s place of business, or, if selling door-to-door, at the customer’s home Does not include sales made by mail, telephone or the Internet unless such contact is used merely as an adjunct to personal calls Any fixed site, whether home or office, used by a salesperson as a headquarters or for telephonic solicitation is considered one of the employer’s places of business, even though the employer is not owner or tenant

Amusement/Recreational Exemption Any employee employed by an establishment which is an amusement or recreational establishment is exempt from overtime and minimum wage requirements, if:

Amusement Exemptions the facility does not operate for more than seven months in any calendar year, or

Amusement Exemptions during the preceding calendar year, the facility’s average receipts for any six months of such year were not more than 33-1/3 per centum of its average receipts for the other six months of such year

To Comply with FLSA Maintain records of all employees Record and pay employees for all hours “suffered”/worked Do not deduct where the deduction will drop wages below minimum wage or reduce overtime pay Pay tipped employees overtime based on the $5.15 per hour, not $2.13 per hour Pay overtime for hours worked beyond 40 per work week Be careful when classifying salaried employees as exempt

Thank You If further questions, please call or me at