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Fair Labor Standards Act (FLSA)

Among other things, the Fair Labor Standards Act (FLSA) regulates overtime compensation. The act mandates that specific employees are entitled to overtime pay. This is true for all employees, with the exception of those who are exempt under one or more of the exemptions provided for in the regulations.

Positions, which are not exempt under the provisions of the regulations, are covered by the overtime provisions and are referred to as non- exempt.

Definition of Exempt Status

Exempt: The FLSA guidelines offer several categories under which a position can be considered exempt and provide guidance to managers for identifying those positions that fall into the exempt category. These exemptions may include:

  • Executives
  • Administrators
  • Professionals
  • Certain computer employees

Because the available exemptions are narrowly defined under the FLSA, a manager should work diligently with Human Resource Services to define the work and responsibilities of each position.

Exemption Determination

The FLSA rules in determining exempt status must be followed:

  • The classification must be based on a determination of the duties actually performed by the employee - not the job title, position description, or pay grade assigned (with the exception of non- managerial blue collar workers and employees who have a a salary of $23,660 or less annually, or who earn $455 or less weekly)
  • Supervisory responsibilities
  • Decision-making authority
  • Executive exemption for pay over $100k (automatic)
  • The classification determination is made by Human Resources
  • The classification determination must be reevaluated whenever duties change on a permanent basis

Non-exempt Status

The FLSA guidelines are very specific regarding the FLSA status of certain positions.

The following are always non-exempt:

  • Non-managerial blue collar workers
  • Administrative assistants, coordinators, research assistants, budget specialists (w/no supervisory role)
  • Employees who have a salary of $23,660 or less annually, or who earn $455 or less weekly
  • Any other employee not determined to be exempt under executive, administrative, professional, or computer exemptions

Definition of an Overtime Hour

Within the scope of the FLSA, an overtime hour is any hour over 40 hours actually worked in a workweek. Leave taken and holiday hours do not count as hours actually worked.

Compensation for Overtime Hours

Overtime hours worked by non-exempt employees under the FLSA mandates that any hour actually worked by a non-exempt employee in excess of 40 hours in a workweek must be compensated with time and one-half pay.

What Hours are Classified as "Work Hours?"

Hours worked include all the times the employer permits the employee to work, hours that the employee is not directed to work but that are worked without official acknowledgement, or "off-the-record" hours, such as:

  • Work performed by the employee while at lunch (such as answering the phone while eating a sandwich)
  • Work performed when the employee arrives at work early
  • Work that the employee takes home and performs at home

Work Performed (Non-Exempt)

The employer is liable for payment for these hours worked, whether the employer authorizes the work or simply allows the work to be performed - if he or she knows or has reason to know that the work is being performed.

The employer may have actual or constructive knowledge that the work is being performed.

  • Actual knowledge is when the employer sees the employee performing the work
  • Constructive knowledge is when the employer should realize that the work was performed as a result of the performance outcome. For example, if the typing of the report was not finished at closing time but was finished the next day at the beginning of business, an employee worked outside of the regular work hours

Management Obligation "Good Faith"

  • Courts will probably not accept an employer's defense that the employee was told not to work overtime. If the employer benefited from the work and was at least constructively aware of it, the employer must pay for it
  • The fact that there is a rule or policy prohibiting an employee from working before or after work or during lunch does not, in and of itself, relieve management from this responsibility
  • Management has the power to enforce the rule or policy and must make every effort to do so

Examples of Overtime Hours Under FLSA

Under the FLSA, for an employee with the status of non- exempt, an overtime hour is any hour (or portion thereof) actually worked, which exceeds 40 hours in a workweek. Only hours actually worked are counted. Counted hours do not include hours of leave and holidays.