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- Employer's Guide to Compliance with Federal Wage-Hour Laws
-
- Note:
-
- This publication provides general information about the laws
- administered and enforced by the Wage and Hour Division. It does
- not attempt to answer all legal questions which may arise under
- these laws. It should not be considered in the same light as
- official statements of position contained in regulations or
- interpretative bulletins published in the Federal Register and
- the Code of Federal Regulations, or in the official opinion
- letters of the Wage and Hour Administrator. Copies of these
- publications may be obtained free from the Division's nearest
- office.
-
- Why has a Wage and Hour Representative visited me?
-
- The Wage and Hour Division of the U.S. Department of Labor
- administers a number of Federal laws which set basic labor
- standards. The Division's representative, called a compliance
- officer, will make an investigation to determine whether these
- laws apply to your business. If your business is subject to
- these laws, the compliance officer will verify that your workers
- are paid according to the law and that youths under 18 are
- employed as provided by law. The Division does not require a
- compliance officer to previously announce the scheduling of an
- investigation. Although in many instances the compliance officer
- does advise employers prior to opening the investigation, he/she
- cannot always do so. The compliance officer must have sufficient
- latitude to initiate unannounced investigations in many cases in
- order to observe normal business operations and expedite
- development of the facts. However, you have the right to request
- that the investigation be delayed briefly if you are unable to
- meet with the compliance officer due to prior commitments.
-
- Why was my business selected for an investigation?
-
- Wage and Hour conducts investigations for a number of reasons.
- Many are initiated by complaints. All complaints are
- confidential; the name of the worker and the nature of the
- complaint are not disclosable.
-
- In addition to complaints, the Division selects certain types of
- businesses or industries for investigations. Occasionally, a
- number of businesses in a specific geographic area will be
- examined. In either situation, the objective is to improve
- compliance with the law in those businesses, industries, or
- localities. Regardless of the reason for the investigation, all
- investigations are conducted in accordance with established
- policies and procedures.
-
- What are my rights as an employer?
-
- As an employer you have the right to:
-
- * Look at the compliance officer's credentials and, if there
- is any question, verify his/her identity by calling the Wage
- and Hour area director for your locality.
-
- * Receive a full explanation of the investigative process.
-
- o Ask any questions concerning the application of the law and
- receive copies of Wage and Hour's publications.
-
- o Receive an explanation of any violations or back wages found
- due.
-
- o Meet with the compliance officer's supervisor should you
- fail to resolve any compliance problems with the compliance
- officer.
-
- o Present additional information for consideration if
- violations are disclosed.
-
- o Request the presence of your attorney, accountant, or other
- advisors at any time during the investigative process.
-
- o Pursue your case in the courts.
-
- What are the laws and how do they apply?
-
- Coverage under the Fair Labor Standards Act (FLSA) is very broad.
- The FLSA applies to all employees of certain enterprises having
- workers engaged in interstate commerce, producing goods for
- interstate commerce, or handling, selling, or otherwise working
- on goods or materials that have been moved in or produced for
- such commerce by any person. A covered enterprise consists of
- the related activities performed through unified operation or
- common control by any person or persons for a common business
- purpose, and which is:
-
- o Engaged in laundering or cleaning or repairing of clothing
- or fabrics.
-
- o Engaged in the business of construction or reconstruction.
-
- o Engaged in the operation of a hospital; an institution
- primarily engaged in the care of the sick, the aged, the
- mentally ill or defective who reside on the premises; a
- school for mentally or physically handicapped or gifted
- children; a preschool; an elementary or secondary school; or
- an institution of higher education (regardless of whether or
- not such hospital, institution or school is public or
- private or operated for profit or not for profit).
-
- o Comprised exclusively of one or more retail or service
- establishments (as defined in the Act) whose annual gross
- volume of sales or business done is at least:
-
- Beginning July 1, 1978 - $275,000
- Beginning July 1, 1980 - $325,000
- Beginning January 1, 1982 - $362,500
-
- (any retail or service enterprise which had an annual gross
- volume of not less than $250,000 on June 30, 1978 and which
- later ceases to be a covered enterprise as a result of
- increases in this dollar volume test must continue to pay
- its employees at least the minimum wage in effect at the
- time of the enterprise's removal from the coverage, as well
- as overtime in accordance with the Act).
-
- o Any other type of enterprise having an annual gross volume
- of sales or business done of at least $250,000.
-
- The dollar volume standard mentioned in (4) and (5) excludes
- excise taxes at the retail level which are separately stated.
-
- Employees who are not employed in a covered enterprise may still
- be entitled to the Act's minimum wage, overtime pay, and child
- labor protections if they are individually engaged in interstate
- commerce or in the production of goods for interstate commerce.
- These include:
-
- o Communication and transportation workers.
-
- o Employees who handle, ship, or receive goods moving in
- interstate commerce.
-
- o Clerical or other workers who regularly use the mails,
- telephone, or telegraph for interstate communication, or who
- keep records on interstate transactions.
-
- o Employees who regularly cross state lines in the course of
- their work.
-
- o Employees of independent employers who perform clerical,
- custodial, maintenance, or other work for firms engaged in
- commerce or in the production of goods for commerce.
-
- o Employees who produce, manufacture, or otherwise work on
- goods for commerce, or in processes or occupations closely
- related and directly essential to the production of goods
- for commerce.
-
- If your business is covered by the FLSA, there are certain
- standards you must follow:
-
- Minimum Wage: Presently $3.35 an hour for all covered employees.
-
- Overtime: Nonexempt workers must be paid one and one-half times
- their regular rates of pay for all hours worked over 40 in a
- workweek. Some employees are excluded from the minimum wage or
- overtime provisions, or both, by specific exemptions. Because
- each exemption is narrowly defined under the law, an employer
- should carefully check its exact terms and conditions before
- applying it.
-
- Recordkeeping: Business owners are required to keep payroll
- records and records of hours worked for their covered employees.
- The Act requires no particular form for the records. All it
- requires is that the records include certain identifying
- information about your employees, the hours they work and the
- wages earned. The law requires this information to be accurate.
- Following is a breakdown of the basic information that an
- employer must record.
-
- Identifying Information
-
- o Employee's full name and social security number.
-
- o Address, including zip code.
-
- o Birth date, if younger than 19 years old.
-
- o Sex.
-
- o Occupation in which employed.
-
- Hours
-
- o Time of day and day of week when employee's workweek begins.
-
- o Total hours worked each day.
-
- o Total hours worked each workweek.
-
- Wages
-
- o Basis on which employee's wages are paid (e.g., "$4 an
- hour," "$160 a week" "piecework").
-
- o Regular hourly pay rate for any week when overtime is
- worked.
-
- o Amount and nature of each payment excluded from the "regular
- rate".
-
- o Total daily or weekly straight-time earnings.
-
- o Total overtime earnings for the workweek.
-
- o All additions to or deductions from the employee's wages for
- each pay period.
-
- o Total wages paid each pay period.
-
- o Date of payment and the pay period covered by the payment.
-
- Most of the information required by the Act is of the kind that
- any company would keep in following ordinary business practices.
-
- Records with somewhat different information are required for
- workers with unusual pay arrangements. This would include
- domestics, homeworkers, certain hospital and nursing home
- employees, tipped employees, employees whose pay includes board,
- lodging, or other facilities, and employees who are exempt from
- the Act's minimum wage and overtime pay requirements.
-
- Child Labor: Restrictions on the employment of minors in nonfarm
- occupations vary according to their age and the nature of the
- work to be performed. The minimum age when employing minors in
- nonfarm jobs is 14. Minors who are 14 and 15 years old may work
- outside of school hours in various nonmanufacturing, nonmining,
- nonhazardous jobs, under these conditions.
-
- o No more than 3 hours on a school day, and 18 hours in a
- school week.
-
- o No more than 8 hours on a nonschool day, and 40 hours in a
- nonschool week.
-
- o No earlier than 7 a.m. and no later than 7 p.m. except from
- June 1 through Labor Day, when evening hours are extended to
- 9 p.m.
-
- Minors who are 16 and 17 years of age may work unlimited hours
- and in any occupation other than those which have been determined
- to be hazardous. These are no restrictions for minors 18 years
- or older. At any age, youths may work for parents in their
- solely owned nonfarm business (except in manufacturing or on
- hazardous jobs).
-
- Note
-
- Not all businesses are covered by the FLSA, and some employees of
- those that are covered may be exempt from the minimum wage and/or
- overtime provisions. The compliance officer will tell you how
- the law applies to your business.
-
- Government Contracts
-
- If you have a contract or subcontract to provide goods or
- services to the Federal government or to perform on federally
- financed or assisted construction projects, there are several
- other labor standards laws which may apply.
-
- Walsh-Healey Public Contracts Act: Sets basic labor standards
- for workers performing on contracts in excess of $10,000 for the
- manufacture or furnishing of goods to the Federal government.
- Covered employees must receive the FLSA minimum wage and overtime
- compensation of one and one-half times the regular or basic rate
- of pay for hours worked after 8 in a day or 40 in a week,
- whichever is greater. The Act also prohibits the employment of
- minors under 16 years of age on contract work.
-
- Service Contract Act: Requires that service employees performing
- on contracts in excess of $2,500 for the furnishing of services
- to the Federal government (as well as any subcontract thereunder)
- be paid not less than locally prevailing wage rates and fringe
- benefits, as determined by the Department of Labor, or, in
- certain cases, the wages and fringe benefits (including
- prospective increases) provided for in a predecessor contractor's
- collective bargaining agreement. No employee of an employer
- performing on a government service contract may be paid less than
- the FLSA minimum wage.
-
- Davis-Bacon and Related Acts: Require payment of locally
- prevailing wage rates and fringe benefits to employees of
- contractors or subcontractors performing work on federally
- financed or assisted construction projects in excess of $2,000.
-
- Contract Work Hours and Safety Standards Act: Requires payment
- of overtime compensation at one and one-half times the regular or
- basic rate of pay after 8 hours a day or 40 hours a week to
- laborers and mechanics working on most federally funded or
- assisted construction contracts in excess of $2,000, on Federal
- service contracts in excess of $2,500, and on Federal supply
- contracts in amounts between $2,500 and $10,000.
-
- If you have a government contract, the compliance officer will
- determine your compliance with these laws.
-
- Wage Garnishment: The Wage and Hour Division also administers
- the wage garnishment provisions of the Consumer Credit Protection
- Act. This law limits the amount of an individual's income that
- may be legally garnisheed, or withheld to pay a debt. It also
- prohibits firing an employee whose pay is garnished because of
- only one debt.
-
- What are the procedures followed in an investigation?
-
- Section 11(a) of the FLSA authorizes representatives of the
- Department of Labor to investigate and gather data concerning
- wages, hours, and other employment practices; enter and inspect
- an employer's premises and records; and question employees to
- determine whether any person has violated any provision of the
- Act.
-
- An investigation is conducted by a compliance officer of the Wage
- and Hour Division who will identify him- or herself and show you
- official credentials. The compliance officer will explain the
- investigation process to you. If you have any questions as to
- the identity of the individual, you should ask for the name of
- the person's supervisor and his/her telephone number so that you
- may verify the compliance officer's identity.
-
- An investigation consists of the following steps:
-
- o Examination of records to determine what laws or exemptions
- apply. These records include, for example, those showing
- your annual dollar volume of business, your involvement in
- interstate commerce, and your work on government contracts.
- Information from your records will not be revealed to
- unauthorized persons.
-
- o Examination of payroll and time records and taking notes or
- making transcriptions or photocopies essential to the
- investigation.
-
- o Interviews with certain employees in private. The purpose
- of these interviews is to verify your payroll and time
- records, to identify workers' duties in sufficient detail to
- decide what exemptions apply, if any, and to determine if
- minors are legally employed. Interviews are normally
- conducted on the employer's premises, but other arrangements
- may be made at the employer's request. In some instances,
- present and former employees may be interviewed at their
- homes or by a mail interview form.
-
- o When all the factfinding steps have been completed, the
- compliance officer will ask to meet with you and/or your
- representative. You will be told whether violations have
- occurred and, if so, what they are and how to correct them.
- If you owe back wages to employees because of minimum wage
- or overtime violations, the compliance officer will ask you
- to restore the under payments, and may ask you to compute
- the amounts due.
-
- Should you wish to be represented by your accountant or attorney
- at any point during this process, it is your right to do so.
- When the compliance officer has advised you of his/her findings,
- you and/or your representative may wish to present additional
- facts for consideration if violations were disclosed. At this
- point, any questions you have will be answered to the best of the
- compliance officer's ability. In some cases, the compliance
- officer may have to do research to provide the correct answers.
-
- Should you reach an impasse in the resolution of the compliance
- problems with the compliance officer, you may ask to meet with
- the area director who supervises the Wage and Hour operations in
- your area.
-
- What enforcement procedures are provided by law?
-
- While every effort is made to resolve the issue of compliance and
- payment of back wages at an administrative level, the laws also
- provide for enforcement procedures. You should be aware that the
- FLSA provides for the following:
-
- o A employee may file suit to recover back wages and an equal
- amount in damages, plus attorney's fees and court costs.
-
- o The Secretary of Labor may file suit on behalf of your
- employees for back wages and an equal amount in damages.
-
- o The Secretary may obtain a court injunction to restrain any
- person from violating the law, including unlawfully
- withholding proper minimum wage and overtime pay.
-
- o Employers who have willfully violated the law may face
- criminal penalties, including fines and imprisonment.
-
- o Employees who have filed complaints or provided information
- during an investigation may not be discriminated against or
- discharged for having done so. If they are, they may file a
- suit or the Secretary of Labor may file a suit on their
- behalf for relief, including reinstatement to their jobs and
- payment of wages lost plus monetary damages.
-
- In the case of the government contracts statutes, contract funds
- may be withheld for violations under the Walsh-Healey Public
- Contracts Act, Service Contract Act, Davis-Bacon and Related
- Acts, and Contract Work Hours and Safety Standards Act.
- Administrative hearings or, in some cases, court action may be
- initiated to recover back pay under these laws. In addition,
- liquidated damages may be assessed for certain violations.
- Violators of these laws may also lose their Federal contracts and
- be declared ineligible for future contracts for a specified
- period.
-
- Where can I obtain additional information?
-
- If you have any questions or want additional information, please
- contact your local Wage and Hour Area Office, listed in the
- telephone directory under U.S. Government, Department of Labor,
- Employment Standards Administration, Wage and Hour Division.