Wage and Hour Consulting Services

© 2006 Alicia Fenton

FAIR LABOR STANDARDS ACT (FLSA)

Nearly all employers operating in the United States or U. S. Territories have obligations under this statute, except when there is bona fide application of an exemption. The basic provisions seem simple enough; minimum wage, OVERTIME COMPENSATION, required records, and child labor. However, this is an extremely complex law, and its regulations cause employers great consternation. Many employers encounter difficulties with DOL because of failure to understand and properly apply key concepts, such as employment relationship, hours worked, and regular rate principles. Additionally, the correct application of EXEMPTIONS is a major problem for employers. Back wages that are owed are collectible by DOL through several types of administrative enforcement, and DOL pursues litigation alternatives when the agency deems such action to be appropriate. If employees are not paid back wages under DOL supervision, or they do not accept an offer of payment, they may file suit.

Many employers are covered by FLSA on an enterprise basis. Most of the non-covered enterprises are obligated to comply with FLSA (in some workweeks, at least) because of traditional coverage that applies to their employees. Individual (traditional) coverage is dependent on the duties performed by employees (the relationship of their activities to interstate commerce or production of goods for commerce). A charitable or religious organization or a small business might have some employees who are not covered in some workweeks. It is risky, however, to make assumptions; individual coverage is construed very broadly.

Consequences of Non-Compliance

Minimum wage and/or overtime compensation: Back wages are owed. Additionally, DOL may assess civil money penalties of up to $1100 per violation. DOL may also seek an injunction in a United States District Court, or employees may sue in "any court of competent jurisdiction." In the event of litigation, the employer faces restoration of unpaid wages, probable liquidated damages, and other costs.

Child labor: Civil money penalties may be assessed - up to $11,000 per minor when the violation did not result in death or serious injury. In the event of death or serious injury to a minor because of a child labor violation, the maximum penalty is $50,000 per violation; if the violation is repeated or willful, the maximum penalty is $100,000 per violation. Injunctive action may also be undertaken. See CHILD LABOR.

With regard to minimum wage, overtime, or child labor violations, DOL may take "hot goods" action in court, restraining the shipment of goods in interstate commerce by the employer who is under investigation or by subsequent business purchasers of the illegally-produced goods.

Typical Areas of FLSA Concern to Employers and Their Representatives

Exemption classification (especially the "white collar" exemptions)

Application of obscure exemption sections

Minimum wage compliance methods when employees are paid on a commission basis and an overtime exemption applies 

High Probabilities of FLSA Violations

Consultation may be very helpful to you if your operations fall within one of the categories listed below. Please realize that the list is not exhaustive, and that it merely demonstrates examples of the types of employment that are particularly likely to be accruing back wage liabilities.

• restaurants, "fast food," and taverns
• hotels, motels, and resorts
• spas, health clubs, and other physical-fitness facilities
• private clubs (e.g., country clubs)
• vending equipment stocking
• courier and "hot-shot" delivery services
• servicing and repair of business equipment
• banks, mortgage companies, and mortgage brokers
• phone banks of all types; especially customer service, technical assistance, and telemarketing
• insurance agencies and insurance companies 
• travel agencies
• landscape installation and maintenance
• plant nurseries and other agriculturally-related businesses  
• janitorial contractors
• construction contractors and subcontractors
• intrastate dump-truck hauling, such as of rock, sand, gravel, or asphalt  
• installation of cable (communications, cable television, and computer networking)
• installation and/or repair of automotive stereo equipment
• non-retail fabrication and repair (e.g., welding shops and radiator-repair shops)
• child care (whether domestic or preschool settings) 
• residential healthcare, such as nursing homes or community residences (group homes) 
• home-health services, especially when compensation is "per visit"
• employers who compute wages on the basis of commissions, piece rates, job rates, day rates, or on a salary basis 

Additionally, the following broad categories of places of employment are often found to be in violation of FLSA and/or other Wage and Hour Division statutes: 

Please see the WHAT's NEW? page for information regarding significant changes in the "Motor Carrier" exemption from overtime requirements. This page will be of particular interest to employers whose transportation of property utilizes vehicles with a gross vehicle weight rating or gross vehicle weight of less than 10,001 pounds.