Wage and hour standards for most employers are governed by the federal Fair Labor Standards Act (FLSA), which was originally enacted in the 1930s.
The FLSA applies to any enterprise which has two or more employees who engage in business with other states, create products destined for other states, or handle goods or materials that have come from other states, and which has a gross annual sales volume of $500,000 or more. The FLSA also applies to companies involved in construction, home repair or landscaping, laundry and dry-cleaning operations, hospitals and facilities that care for people who are disabled or old, and schools, without regard to how much money they make.
The FLSA sets the national minimum wage and mandates that most employees, those popularly known as “hourly” or “non-exempt,” be paid one and one-half times their regular rates of pay for any hours worked over forty hours in one week. Hospitals and care centers may calculate overtime on a fourteen-day, instead of seven-day, basis, paying overtime only to employees who work more than eighty hours in two weeks. An employer who adopts this standard, however, must also pay overtime to any employee who works more than eight hours in a day.
“Hours worked” include any time that an employer “suffers or permits” an employee to work, even if the employee was not asked to work, including time spent performing preparatory duties, such as assembling tools or receiving work assignments; short rest periods during the work day, such as fifteen minute breaks; time when an employee is “on call,” if the employee must, for example, wait at the work site; and time spent traveling for the employer, if the travel is part of the employee’s principal activities (for example, traveling between multiple work sites, or on a day trip to an out-of-town location).
An employer is not required to pay overtime compensation to exempt, or white collar, employees. An employee may be deemed exempt if he or she is paid more than a certain minimum amount per week, his or her pay does not vary depending on how many hours he or she actually works, and the employee performs mostly executive, professional, or administrative duties. In order to preserve the exempt status of an employee, an employer may generally deduct from the employee’s pay only if the employee misses one week of work or more, or if the employee is suspended for less than a week for the violation of a major safety rule. In addition, an employer may deduct for a leave from work of less than one week if the leave is taken pursuant to the Family and Medical Leave Act.