The U.S. Department of Labor is responsible for a wide range of rules and regulations that affect both employers and employees all across the country. Various laws have been instituted over the years, including the Fair Labor Standards Act (FLSA), passed by Congress in 1938. The main objective of the act was to eliminate “labor conditions detrimental to the maintenance of the minimum standards of living necessary for health, efficiency, and well-being of workers.”
Today, the FLSA establishes minimum wage, overtime pay, recordkeeping, and child labor standards affecting full-time and part-time workers in both the private sector and in federal, state, and local governments. Covered nonexempt workers are entitled to a minimum wage, as well as overtime pay at a rate of not less than one and one-half times their regular rate of pay after 40 hours of work in a workweek.
The 1996 amendments increased the minimum wage to $4.75 an hour on October 1, 1996 and to $5.15 an hour on September 1, 1997. The amendments also established a youth sub-minimum wage of $4.25 an hour for newly hired employees under age 20 during their first 90 consecutive calendar days of employment; in addition, the tip credit provisions were revised to allow employers to pay qualifying tipped employees no less than $2.13 per hour if they received the remainder of the statutory minimum wage in tips.
As with most other federal regulations, there are exceptions to the minimum wage rules. The only time an employer may pay less than the minimum wage is when:
- vocational education students (also known as “student-learners”) are hired
- full-time students are hired in retail, service establishments, agriculture, or institutions of higher education
- individuals are hired whose earning or productive capacity is impaired by a physical or a mental disability (including those related to age or injury)
In order for an employer to pay their workers less than the federally mandated minimum wage, they must first apply for a certificate through the Wage and Hour division of their local FLSA office.
While the FLSA does set basic minimum wage and overtime pay standards and regulates the employment of minors, there are a number of employment practices that it does not regulate.
For example, the FLSA does not require:
- vacation, holiday, severance, or sick pay
- meal or rest periods, holidays off, or vacations
- premium pay for weekend or holiday work
- pay raises or fringe benefits
- a discharge notice, reason for discharge, or immediate payment of final wages to terminated employees
The issue of overtime pay has always been a touchy subject between employers and employees. It is important to point out that some employees are exempt from the “overtime pay” provisions (and possibly the minimum wage provisions).
The following types of employees are exempt from both the minimum wage and overtime pay rules. (However, if you are in doubt, check with your local FLSA office for an official ruling.)
- any professional, executive, or administrative employees
- teachers and academic administrative personnel in elementary and secondary schools
- outside sales employees
- employees in certain computer-related occupations