Fair Labor Standards Act (FLSA)
The Fair Labor Standards Act (FLSA) regulates the wages and hours of U.S. workers. With some exceptions, the FLSA requires that employers pay their employees a specified minimum wage ($7.25 per hour currently) and overtime of time-and-one-half the employees’ regular wage for all hours worked over 40 hours per workweek.
Common mistakes under the FLSA include:
• incorrectly classifying employees as exempt and failing to pay them overtime,;
• improperly deducting exempt employees’ salaries; and
• failing to pay employees for time spent in activities mistakenly believed not to be “work,” such as traveling or putting on safety equipment.
The FLSA requires employers to maintain payroll records for three years and supplementary basic records, time cards, work sheets, etc. for two years.
The FLSA also contains child labor provisions that regulate the employment of children under age 18 in virtually all industries and occupations.
The FLSA is enforced by the Wage and Hour Division of the U.S. Department of Labor. The statute of limitations is two years for ordinary violations and three years for willful violations. Liquidated (predetermined) damages in an amount equal to back wages found due are also available as a remedy.
Similarly situated employees may, subject to a court’s approval, combine their individual FLSA claims into one multiple-plaintiff lawsuit known as a “collective action.” Such actions can rapidly multiply the damages an employer may be forced to pay if an FLSA violation is found.
To avoid FLSA liability, employers should be meticulous in their recordkeeping, require their employees to record their hours of work accurately, and conduct internal audits of their wage and hour practices to stop potentially illegal actions before they occur.
State wage and hour statutes may impose requirements greater than the FLSA, in which case they take precedence over the federal law.