Fair Labor Standards Act: An Overview of Overtime Laws

The Fair Labor Standards Act (FLSA) is more commonly known as the wage-hour law. Employers must pay employees at least the minimum wage for all their “hours worked”; must pay them 1.5 times their regular hourly rate for all time worked over 40 hours in a workweek (unless they are exempt); and must keep accurate records of their daily and weekly hours worked. Indeed, this 60-year-old law is in many ways a creature of a different time and can be impractical as applied to the circumstances of today’s workforce. Nevertheless, the FLSA remains the law, and it is applied very strictly. Broadly stated, employees are covered if they work for an “enterprise” which has 1) employees who handle, sell or otherwise work on goods or materials that have been moved in or produced for interstate commerce; and 2) an annual business dollar volume of at least $500,000. Hospitals, residential-care institutions, and certain schools and educational institutions generally are covered without regard to a dollar-volume threshold. Alternatively, employees can be covered individually if they themselves engage in interstate commerce or in the production of goods for interstate commerce, or to meet the needs of interstate commerce. The FLSA applies only to employment relationships. Thus,a threshold question is whether such a relationship exists. The Act does not offer much help in deciding this question, saying only, for example, that to “employ” someone is to “suffer or permit” the person to work. The courts and the U.S. Department of Labor apply the concept of employment very broadly under the FLSA and usually tend to find that an employment relationship exists. The fact that an employer calls someone an independent contractor or a “temporary” or “leased” employee, or that an individual is not considered an employee for tax purposes or under other laws, or is paid a certain way, does not determine employment status under the FLSA. There is substantial risk in erroneously treating someone as not being an employee. Next we will discuss what is an employee and an Independent Contractor?

© 2008 www.mymaliklaw.com