FLSA Pitfalls to Avoid in Overtime and Wage Calculations

Topic: The FLSA- Pitfalls To Avoid in Overtime and Wage Calculations

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Source: The U S Department of Labor ‘s Wage and Hour Division

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AGENDA• Coverage Areas

The Scope of FLSAHours Worked- and its componentsMinimum Wage and its ComponentsRecord Keeping RequirementsYouth Employment and Child Labor lawsOvertime and non-exempt employeesFLSA minimum wage and overtime exemptionFLSA Pitfall to Avoid

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Two types of coverage

• The Scope of FLSA

Every employee working in the United States is covered by FLSA.

Enterprise coverage: If an enterprise is covered, all employees of the enterprise are entitled to FLSA protections

Individual coverage: Even if the enterprise is not covered, individual employees may be covered and entitled to FLSA protections

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Components of Hour worked

• Hours Worked- and its components

Suffered or PermittedWaiting TimeOn-Call TimeMeal and Rest PeriodsTraining TimeTravel TimeSleep Time

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Minimum Wage

• Minimum Wage and its Components

The minimum wage is $7.25 per hour effective July 24, 2009

Components Include:

wages (salary, hourly, piece rateCommissions some bonuses tips received by eligible employees and the reasonable cost of room, board, and other “facilities” provided by the employer for the employee’s benefit

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Basic Record

Record Keeping Requirements

Employee's full name and social security number. Address, including zip code. Birth date, if younger than 19. Sex and occupation. Time and day of week when employee's workweek begins. Hours worked each day. Total hours worked each workweek. Basis on which employee's wages are paid (e.g., "$9 an hour," "$420 a week," "piecework“)Workplace Compliance Training

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Hazardous Occupations

• Youth Employment and Child Labor LawManufacturing and

storing of explosives.Driving a motor vehicle and being an outside helper on a motor vehicleCoal mining.Forest fire fighting and fire prevention, timber tract management, forestry services, logging, and saw mill occupations etc.

Hours Restrictions 14- and 15-year-olds may not work before 7:00 a.m., nor after 7:00 p.m., except from June 1 through Labor Day, when their permissible hours are extended to 9:00 p.m.

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Non Exempt Employees

• Overtime and non-exempt employees

Non-exempt employees must receive one and one-half times the regular rate of pay for all hours worked over forty in a workweek. For example: An employee worked 48 hour in a week at a regular rate of $8 an hour. Total earning = 48 * 8= $384 over time rate = 8*.5= $4His overtime due= $4*8hours= $32 Total earning= $384 + $32= $416

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Overtime Exemption

• FLSA minimum wage and overtime exemptionExempt Employees

Executive EmployeesAdministrative EmployeesProfessional EmployeesOutside Sales EmployeesComputer Employees

To qualify for exemption, employees must meet these tests for each exemption

The Salary Test: the minimum salary level required for an exempt employee is $455 per week- Must be paid “free and clear”

The Duty Test

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Pit Falls To Avoid

• FLSA Pitfalls to Avoid

We Are a Small Organization Not Covered By FLSAManagers Are Exempt- SalariedThe Salary We Pay Covers All the Hours WorkedEmployees Volunteer for Extra TimeEmployee Maintains Their Time RecordsWe Give Employee Compensatory Time Off, So We Do Not Pay OvertimeWe Use Contract Labor Hence We Do Not Pay Overtime

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