The Fair Labor Standards Act: Your Right To Get Paid

Learn how the FLSA works for you.

The French writer Voltaire once pointed out that work spares us from three great evils: boredom, vice and need. Most of us can tolerate a little boredom, and some may even enjoy a small helping of vice. But need is something we would all rather avoid. Although most people like their jobs to be fun and fulfilling, what they likely want most is to be paid -- fairly and on time -- so that they can enjoy the other aspects of their lives.

The Fair Labor Standards Act

The most important and most far-reaching law guaranteeing a worker's right to be paid fairly is the federal Fair Labor Standards Act or FLSA (29 U.S.C. §§201 and following). The FLSA:

• defines the 40-hour workweek
• covers the federal minimum wage
• sets requirements for overtime, and
• places restrictions on child labor.

Basically, the FLSA establishes minimums for fair pay and hours -- and it is the single law most often violated by employers. An employer must also comply with other local, state or federal workplace laws that set higher standards. So in addition to determining whether you are being paid properly under the FLSA, you may need to check to see if other laws also apply to your situation.

The FLSA was passed in 1938 after the Depression, when many employers took advantage of the tight labor market to subject workers to horrible conditions and impossible hours. One of the most complex laws of the workplace, the FLSA has been amended many times. It is full of exceptions and exemptions -- some of which seem to contradict one another. Most of the revisions and interpretations have expanded the law's coverage, for example:

• requiring that male and female workers receive equal pay for work that requires equal skill, effort and responsibility
• including in its protections state and local hospitals and educational institutions
• covering most federal employees and employees of states, political subdivisions and interstate agencies, and
• setting out strict standards for determining, paying and accruing compensatory or comp time -- time given off work instead of cash payments.

Who Is Covered

The FLSA applies only to employers whose annual sales total $500,000 or more, or who are engaged in interstate commerce. You might think that this would restrict the FLSA to covering only employees in large companies, but in reality the law covers nearly all workplaces. This is because the courts have interpreted the term interstate commerce very broadly. For example, courts have ruled that companies that regularly use the U.S. mail to send or receive letters to and from other states are engaged in interstate commerce. Even the fact that employees use company telephones to place or accept interstate business calls has placed an employer under the FLSA.

Who Is Exempt

A few employers, including small farms -- those that use relatively little outside paid labor -- are explicitly exempt from the FLSA. In addition, some employees are exempt from the FLSA even though their employers are covered. A few common categories of employees are exempt from FLSA requirements, such as pay for overtime and minimum wages.

Executive, administrative and professional workers. This is the most confusing and most often mistakenly applied broad category of exempt worker.

The requirements for executive workers are most rigorous. To qualify as an exempt executive, you must:

• be paid with a salary, so that compensation is not subject to reductions for quality and quantity of work
• use discretion in performing job duties
• regularly direct the work of two or more people
• have the authority to hire and fire other employees, or to order such hiring and firing
• be primarily responsible for managing others, and
• devote no more than 20% of worktime to other tasks that are not managerial. For certain retail and service companies, 40% of nonmanagerial time is allowed.

The definitions of administrative and professional employees are similar, but contain minor differences. For example, employees categorized as professionals must perform work that is primarily intellectual.

The definitions also change with the employee's salary level. For example, if the weekly salary of the executive, administrative or professional employee exceeds a certain minimum, fewer factors are required to qualify for the exemption.

Above all, bear in mind that you are not automatically exempt from the FLSA because you receive a salary; the work you do must be of a certain type as well. However, watch for how and when your employer docks your pay. If you are called a salaried employee, for example, but you get a cut in pay if you miss work or you get a bonus for working more hours, the pay you receive may not legally be a salary -- and you may be entitled to overtime for some of your working hours.

Outside salespeople. An outside salesperson is exempt from FLSA coverage if he or she:

• regularly works away from the employer's place of business while making sales or taking orders, and
• spends no more than 20% of worktime doing work other than selling.

Typically, an exempt salesperson will be paid primarily through commissions and will require little or no direct supervision in doing the job.

Computer specialists. This exemption applies to computer system analysts and programmers who receive a salary of at least $170 a week or who, if paid by the hour, receive at least $27.60 an hour.

You will likely be exempt from the wage and hour laws as a computer specialist if your primary duties consist of such things as determining functional specifications for hardware and software, designing computer systems to meet user specs and creating or modifying computer programs.

Miscellaneous workers. Several other types of workers are exempt from the minimum wage and overtime pay provisions of the FLSA. The most common include:

• employees of seasonal amusement or recreational businesses
• employees of local newspapers having a circulation of less than 4,000
• newspaper delivery workers
• switchboard operators employed by phone companies that have no more than 750 stations
• workers on small farms, and
• personal companions and casual babysitters. Officially, domestic workers -- housekeepers, childcare workers, chauffeurs, gardeners -- are covered by the FLSA if they are paid at least $1,000 in wages from a single employer in a year, or if they work eight hours or more in a week for one or several employers. For example, if you are a teenager who babysits only an evening or two each month for the neighbors, you probably cannot claim coverage under the FLSA; a fulltime au pair would be covered.

Apprentices. An apprentice is a worker who's at least 16 years old and who has signed an agreement to learn a skilled trade. Apprentices are exempt from the requirements of the FLSA. But beware that your state may have a law limiting the number of hours you can work as an apprentice. State law may also require that as an apprentice, you must be paid a certain percentage of the minimum wage. Check with your state labor department for more information.

Finally, the FLSA covers only employees, not those who work as independent contractors. However, whether a person is an employee for purposes of the FLSA generally turns on whether that worker is employed by a single employer, not on the Internal Revenue Service definition of an independent contractor.

The FLSA was passed to clamp down on employers who cheated workers of their fair wages. As a result, employee status is broadly interpreted so that as many workers as possible come within the protections of the law.

If nearly all of your income comes from one company, a court might rule that you are an employee of that company for purposes of the FLSA -- even if other details of your work life might convince the IRS otherwise.

In court cases determining close questions of employment status, workers are increasingly found to be employees rather than independent contractors. Key realities cited by the courts: the relationship appeared to be permanent, the workers lacked bargaining power with regard to the terms of their employment (Martin v. Albrecht, 802 F. Supp. 1311 (1992)) and the individual workers were economically dependent upon the business to which they gave service (Martin v. Selker Bros., Inc., 949 F. 2d 1286 (1991)).

But workers' skill and pay levels can push courts to the opposite conclusion. Some courts are more likely to class workers with higher skills and higher pay as independent contractors rather than employees. In two recent cases hailing from Texas, for example, two groups of workers -- pipe welders and topless dancers -- who were classified as independent contractors claimed they were really employees under the labor laws and so should be entitled to overtime pay. The courts, apparently reasoning that welding pipes takes more skill than dancing topless, held that the welders were independent contractors, but the dancers were employees. (Carrell v. Sunland Constr., Inc., 998 F.2d 330 (5th Cir. 1993); Reich v. Circle C. Investments, Inc., 998 F.2d 324 (5th Cir. 1993).)

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