Wages & hours

Wages & hours
Authored by Andrew Wampler

Wilson 1bca35f096d56ee718c45bfa7080d4cdc0dac51aa6b2e653b2ea8ce1b527da5a

Introduction to wages & hours

The federal Fair Labor Standards Act (FLSA) was enacted in 1938 to ensure employees a “fair wage for a fair day’s work.” The FLSA establishes standards for a minimum wage rate, maximum number of hours, overtime pay, child labor, and recordkeeping. In general, the FLSA requires employers to pay a minimum wage for all “hours worked” and prohibits work in excess of 40 hours in a workweek unless the employer pays the employee a premium of one and one-half times the employee’s regular rate of pay for those hours in excess of 40. It also contains numerous exemptions to these requirements. These subjects, among others, are addressed in this chapter.

 

Many states have enacted their own minimum wage and overtime laws, which may differ from the FLSA. However, wages and hours in Virginia are primarily governed by the FLSA.  Applicable Virginia laws are also discussed later in this section.

 

Who is covered by the FSLA?

The FLSA applies to enterprises with related operations performed for a common business purpose, including all operations regardless whether those operations are performed at the same location. For instance, all departments of a store or plant and all stores and plants within a company are included in the “enterprise.” Independent contractors and certain independent retail and service establishments are not included within the enterprise. A business that is a covered enterprise is subject to the FLSA with respect to all of its employees. To qualify as a covered enterprise, a company must have both:



  1. two or more employees who are engaged in commerce or in the production of goods for commerce or are handling, selling, or otherwise working on goods or materials that have already been moved in or produced for commerce




  2. an annual gross sales volume of at least $500,000.

     



In addition, the FLSA applies to some organizations regardless of their sales volumes.

 

Hospitals and nursing homes

Hospitals and institutions primarily engaged in the care of the sick, aged, mentally ill, or disabled who reside on the premises are covered by the FLSA.

 

Public agencies

Public employers have been covered under the FLSA since 1986, with a few exceptions. These exceptions include higher overtime eligibility levels and longer work periods in which to calculate overtime for law enforcement and fire protection employees. Elected officials and their personal staff members and appointees, as well as members of the legislative branch, are excluded from the FLSA’s coverage of public agencies.

 

Educational institutions

Preschools (including child care facilities), elementary schools, secondary schools, institutions of higher education, and schools for gifted or handicapped children are covered by the FLSA.

 

Manufacturing companies

The vast majority of manufacturing companies that are engaged in the production of goods for commerce are subject to enterprise coverage under the FLSA.

 

Transportation companies

Transportation companies are subject to enterprise coverage. However, certain employees such as interstate truck drivers, and the helpers and mechanics working on those trucks, are exempt from the overtime requirements of the FLSA.

 

Public utilities

Public utilities are covered under the FLSA.

 

Retail and service establishments

Retail and service establishments whose annual revenues are at least $500,000 are subject to the FLSA. These establishments include:


  • retail stores

     

  • restaurants

     

  • hotels

     

  • theaters

     

  • cemeteries.

     

Numerous businesses are excluded from this definition of retailers because the concept of retailing is not generally applicable to them. They may still be covered, however, under other provisions of the FLSA. Such businesses include:


  • accounting firms

     

  • financial institutions

     

  • brokerage houses

     

  • doctors’ offices

     

  • laundries

     

  • law firms

     

  • book publishers.

     

Certain employees of retail and service establishments who are paid on commission are not subject to the FLSA’s overtime requirements. In order to be considered such an employee, the employee’s regular rate of pay must be more than one and one-half times the current minimum wage, and more than 50% of his/her compensation for a representative period (not less than one month) comes from commissions.

 

Individual employee coverage

Even if an organization is not a covered enterprise as outlined previously, its individual employees may still be covered by the FLSA. An individual is covered if he/she is engaged in interstate commerce or in the production of goods for interstate commerce or performs activities closely related and directly essential to the production of goods for interstate commerce. The FLSA also covers certain domestic service workers, such as day workers, housekeepers, chauffeurs, cooks, or full time babysitters, depending on the amount of cash wages they receive from one employer in a calendar year, or if they work a total of more than eight hours a week for one or more employers.

 

FLSA postings

Employers covered by the FLSA are required to display an official poster outlining FLSA provisions. This poster is available at no cost from local offices of the Wage and Hour Division, including Virginia’s Department of Labor and Workforce Development. The poster is also available through the U.S. Department of Labor (DOL) by calling (866) 487-9243 and it is available electronically for downloading and printing at:


  • www.dol.gov/oasam/boc/osdbu/sbrefa/poster/matrix.htm

Minimum wage & overtime

Virginia does not currently have a minimum wage law. The FLSA, however, requires that employees be paid not less than the minimum wage for all hours worked. The current federal minimum wage is $7.25 per hour.

Under the FLSA, employees who receive tips may be credited up to $5.12 per hour (of the $7.25 per hour amount) for tips received. The employer must be able to demonstrate the employee receives at least the minimum wage each hour of work when tips and direct wages are combined.

 

Youth opportunity wage

Employers can hire individuals who are less than 20 years old and pay them at a rate of $4.25 per hour for the first 90 days of employment. After the initial 90-day period, the employee’s hourly rate must be increased to at least the current minimum wage. Employers cannot take any actions against current employees, including a reduction of their hours or wages, in order to take advantage of the youth opportunity wage.

 

Payment below minimum wage

The FLSA also permits the employment of certain individuals at wage rates below the statutory minimum wage, so long as employers obtain certificates issued by the DOL, including:


  • student learners or apprentices (for example, vocational education students)

     

  • full time students in retail or service establishments, agriculture, or institutions of higher education (subject to limitations on hours of work)

     

  • individuals whose earning or productive capacities are impaired by physical or mental disabilities, including those related to age or injury.

     

Overtime pay

The FLSA requires an employer to pay an employee an overtime premium equal to one and one-half times the employee’s regular rate of pay for all hours worked in excess of 40 in a workweek unless the employee is exempt from overtime compensation.

Hours that are paid but not worked do not count as hours worked under the FLSA, such as holidays, vacations, sick days, and absences due to voting, jury service, or inclement weather. All compensation must be included in computing an employee’s regular rate unless specifically excluded by the FLSA. The FLSA excludes the following payments from the regular rate computation:


  • discretionary bonuses

     

  • prizes

     

  • gifts

     

  • expense reimbursements

     

  • benefit plan contributions (generally do not include cafeteria plans that include a cash option)

     

  • radio and television talent fees that satisfy government regulations

     

  • some stock options, including those exercised by non-exempt employees

     

  • premium payments for overtime work.

     

An employee’s regular rate is calculated by dividing the employee’s total weekly compensation by the total hours worked during the workweek. In other words, the calculation takes into account actual pay and actual hours to determine what the hourly pay is. 


Example

If an employee’s total weekly compensation is $500 and the employee works 40 hours, then the employee’s regular rate is $12.50.

 


Regular rate for overtime compensation purposes must include:


  • on-call pay

     

  • shift differential

     

  • weekend differential

     

  • longevity pay

     

  • commission payments

     

  • payments for “sold back” benefits (such as vacation or sick pay if the sale is during employment rather than after the employment relationship has been terminated)

     

  • safety, incentive, productivity, attendance, and merit bonuses.

     

Exceptions for hospital & nursing home employees

If a hospital, nursing home, or other healthcare provider has inpatients, then it may use a special option to calculate overtime. Instead of the 40 hour per week standard, eligible institutions with inpatient care for residents can elect to pay overtime based upon the “8 and 80” rule. Under this rule, if employees agree, they are eligible for overtime compensation if they work more than eight hours in a workday or in excess of 80 hours in a two-week work period.


Example

If a hospital employee works 24 hours (eight hours per day for three days) one week and 48 hours (eight hours per day for six days) the next week, he/she is not owed overtime compensation. This is because the total for the two-week period is only 72 hours, and the employee never worked more than eight hours in one day.

 


Unauthorized overtime

Employers often want to enforce a “no overtime without prior authorization policy” to control costs. However, such a policy will not prevent employees from being entitled to overtime compensation. Overtime pay must be given, even if the time is not authorized.  In such cases, employees should be told that working unauthorized overtime will lead to discipline (but not non-payment). If employees continue to perform such work, they should be paid for it and disciplined.

Special circumstances

There are a number of special circumstances under which the FLSA overtime provisions and regular rate of pay differ from the situations explained previously. A few examples of special plans for overtime compensation are discussed below.

 

Two rates in one workweek

Employees working two jobs at two different rates for their employer during the same workweek can be paid overtime earnings when the total hours worked exceeds the applicable overtime level according to two approaches:



  1. Weighted- average approach

    Under this approach, the employee’s total earnings for the two separate jobs is divided by the total number of hours worked. That figure is the weighted average regular rate.




Example

If an employee works 40 hours a week at a job paying $10 an hour and works 10 hours at another job paying $6 an hour, the weighted average rate would be $460 divided by 50 hours for an hourly rate of $9.20.




  1. Rate of overtime approach

    An employee and his/her employer can agree prior to performance of the work that the employee will be paid overtime compensation based upon the rate of the job being performed during the overtime hours. This agreement should be in writing.



Fixed salary for fluctuating hours

An employee may be employed on a salary basis but have hours which fluctuate from week to week. According to an agreement, the employee may be paid a fixed salary for each week he/she works, no matter how few or many hours. When the employee works overtime, his/her overtime compensation is determined by dividing his/her salary by the total number of hours worked.  This figure is multiplied by ½ times the number of overtime hours worked. The ½ figure is used because the salary is intended to provide the employee straight-time compensation for all hours worked, including overtime hours, so the employee only needs to receive the additional half-time for the overtime hours.


Example

A non-exempt employee whose salary is $400 works 50 hours in one week. Her salary of $400 is divided by the hours she worked yielding a rate of $8 per hour. She is entitled to $40 overtime compensation (half the hourly rate times the number of overtime hours worked – $4 x 10).

 


Belo contracts

A Belo contract is a very specialized guaranteed pay plan derived from a Supreme Court decision by the same name. Such a plan only applies where an employee’s hours of work regularly fluctuate between more or less than 40 hours per week for reasons beyond the employer’s control (for example, a service technician who handles customer emergency equipment breakdowns).

The guarantee may involve a straight-time and overtime component for workweeks up to a certain number of hours (50 for example) and a time and one-half payment for hours worked over that limit. The regular rate used in such plans must be a bona fide rate and operative in determining compensation. Due to the complexity of these contracts, an attorney specializing in this area should be consulted before implementing one.

 

Joint employment

With many companies combining operations and centralizing staff functions and a prevalence of mergers and acquisitions, joint employment issues are becoming more common under the FLSA. An employee working for two or more organizations at the same time (joint employers) is entitled to overtime after 40 hours of total work and cannot legally be required to work more than 40 hours of straight time for joint employers without receiving overtime pay.

Specifically, the wage and hour regulations provide that where the employee performs work that simultaneously benefits two or more employers, or works for two or more employers at different times during the workweek, a joint employment relationship generally will be considered to exist, and all employers are responsible, individually and jointly, for compliance with the overtime provisions of the FLSA.

The following situations represent joint employment relationships:


  • where there is an arrangement between employers to share the employee’s services (in other words, the employee performs jobs for each employer – or is an “interchanged” employee)

     

  • where one employer is acting directly or indirectly in the interest of the other employer (or employers) on behalf of the employee

     

  • where the employers are not completely disassociated with respect to the employment of a particular employee and may be deemed to share control of the employee, directly or indirectly, due to of the fact that one employer controls, is controlled by, or is under common control with the other employer.

Exemptions

The FLSA exempts some employees from its overtime pay and minimum wage provisions (total exemptions) and it also exempts certain employees from the overtime pay provisions alone (partial exemptions). Most of these exemptions relate to specific jobs or industries. Non-exempt employees are paid overtime compensation for all hours worked in excess of 40 per week and must be paid, at a minimum, the hourly wage set by federal law.

 

White collar exemption

There are six principal “white collar” exemptions to the FLSA.


  1. executive employee

     

  2. administrative employee

     

  3. professional employee

     

  4. computer employee

     

  5. outside sales employee

     

  6. highly compensated employee.

     

Paid on a salary basis

For the executive, administrative, or professional exemption to apply, the employee must be paid on a salary basis. An employee is paid on a salary basis if, for each week the employee works, he/she receives a predetermined salary (exclusive of board, lodging, or other facilities) that is not subject to reduction based upon the quality or quantity of work performed.

 

Exemptions on salaries

Under certain circumstances, employers may be able to make deductions from an employee’s salary without jeopardizing the employee’s exempt status. For instance, an employer does not have to pay an exempt employee for any week in which he/she performs no work, regardless of the reason for the employee’s absence. On the other hand, an employer may not deduct from exempt employees’ pay for absences of less than a week that are caused by the employer (for example, lack of work), except for unpaid disciplinary suspensions. Employers may not deduct from exempt employees’ pay for partial day absences, except for intermittent or reduced-schedule FMLA leave or partial absences during the initial or final week of employment.

 

Unpaid disciplinary suspensions

An employer may suspend an exempt employee without pay for one or more full days as discipline for an infraction of workplace conduct rules, if the suspension is in good faith, a written policy provides for such suspensions, and the workplace conduct rule involves serious misconduct (such as harassment, workplace violence, drug or alcohol violations, or violations of state or federal laws), but not performance or attendance problems.

 

Exemptions as penalties

An employer may deduct any amount from an exempt employee’s pay (including an amount that would be equivalent to a partial day of pay) as a penalty imposed in good faith for a violation of a safety rule of major significance (defined as a rule regarding the prevention of serious danger in the workplace or to other employees).

 

Improper deductions

If an employer makes improper deductions from salary, it may lose the exemption if the facts show that it did not intend to pay its employees on a salary basis. An actual practice of making improper deductions shows that the employer has violated the salary basis test.

 

An isolated or inadvertent partial day deduction generally can be made up without losing the exemption. However, such a deduction due to lack of work jeopardizes the exemption (for example, an employee sent home early and not paid for the full day). The exemption can also be lost if there is a corporate policy permitting partial day deductions or requiring that partial day absences be “made up.”

 

Safe harbor for improper deductions

The DOL’s regulations permit a “safe harbor” on the salary basis test. Under the safe harbor provision, an employer will not be considered to have violated the salary basis test if it has a policy against improper deductions, communicates that policy to its employees, and reimburses any employee found to have suffered an improper deduction.  On any deductions, however, state law requirements sometimes vary.

 

Executive employee exemption

The executive exemption applies to an employee who is paid more than $455 per week on a salary basis, if the employee:


  • manages the enterprise in which he/she is employed or a recognized department or subdivision of the enterprise

     

  • customarily and regularly directs the work of two or more employees

     

  • has the authority to hire or fire other employees or his/her suggestions and recommendations as to hiring, firing, promotion, or other change of status are given particular weight.

     

The executive exemption also includes any employee who owns at least a bona fide 20% equity interest in the enterprise in which he/she is employed and who is actively engaged in its management.

 

It is important to note that, when evaluating whether any exemption applies, the employee’s actual duties and responsibilities are determinative, not the job title or job description.

 

Administrative employee exemption

The administrative exemption applies to an employee who is paid at least $455 per week on a salary basis, if the employee:


  • performs office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers

     

  • performs functions in the administration of a school system, or educational establishment or institution, or of a department or subdivision of such facility, in work directly related to the academic instruction or training carried on there

     

  • customarily and regularly exercises discretion and independent judgment with respect to matters of significance.

     

Professional employee exemption

The professional exemption, which includes both “learned professionals” and “creative professionals,” applies to an employee who is paid $455 or more per week on a “salary basis” or a “fee basis.” Teachers, lawyers, and physicians are excepted from the salary requirement and have their own duty requirements for this exemption.

 

In the case of a creative professional, the employee also must perform work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor as opposed to routine mental, manual, mechanical, or physical work. In the case of a learned professional, the employee also must:


  • perform work requiring advanced knowledge in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instructionconsistently exercise discretion and judgment in performance

     

  • perform work that is predominantly intellectual and varied in character and of such character that the output produced or the result accomplished cannot be standardized in relation to a given period of time.

     

Employees in the following fields may be exempt as learned professionals: registered or certified medical technologists, registered nurses, dental hygienists, physician assistants, accountants, chefs, certified athletic trainers, and funeral directors.

 

Computer employee exemption

The computer employee exemption applies to an employee who is compensated on a salary or fee basis at a rate of at least $455 per week or who is compensated on an hourly basis at a rate of not less than $27.63 per hour (or approximately $57,460 per year), and whose primary duties consist of one or more of the following:


  • the application of systems analysis techniques and procedures including consulting with users to determine hardware and software specifications

     

  • designing computer based systems based on and related to user specification

     

  • creating or modifying programs based on, or related to, systems design specifications

     

  • creating or modifying computer programs relating to machine operating systems.

     

Outside sales employee exemption

Outside sales employees are exempt if they are customarily and regularly engaged away from the employer’s place of business or away from an in-home office in making sales or obtaining orders for services or the use of facilities. Outside sales must be the employee’s primary duty. There is no salary requirement for this exemption.

 

Highly-compensated employee exemption

Under the exemption for highly compensated employees, an employee with total annual compensation of at least $100,000 is considered exempt if:


  • the employee is paid on a salary basis or fee basis at a rate of at least $455 per week

     

  • the employee’s total annual compensation is at least $100,000 (including both salary and commissions, non-discretionary bonuses, and other non-discretionary compensation earned in a 52-week period)

     

  • the employee’s primary duty includes performing office or non-manual work

     

  • the employee customarily and regularly performs any one or more of the exempt duties or responsibilities of an executive, administrative, or professional employees.

     

Partial overtime exemption

The following employees are exempt from the FLSA overtime provisions only:


  • certain commissioned employees of retail or service establishments

     

  • auto, truck, trailer, farm implement, boat, or aircraft salespersons employed by non-manufacturing establishments primarily engaged in selling these items to ultimate purchasers

     

  • auto, truck, or farm implement parts clerks and mechanics employed by non-manufacturing establishments primarily engaged in selling these items to ultimate purchasers

     

  • railroad and air carrier employees, taxi drivers, certain employees of motor carriers, seamen on American vessels, and local delivery employees paid on approved trip rate plans

     

  • announcers, news editors, and chief engineers of certain non-metropolitan broadcasting stations (such as those in towns of fewer than 100,000, which are not part of a standard metropolitan statistical area of 100,000 or more, or a town with a population of fewer than 25,000 that is part of such an area but is at least 40 air miles from the center of the major city)

     

  • domestic service workers who reside in their employers’ residences

     

  • motion picture theater employees

     

  • farm workers.

     

Other exemptions

The following are some categories of employees that are either totally exempt (exempt from minimum wage and overtime requirements), or partially exempt (exempt from overtime requirements only) from the FLSA:


  • employees of recreational and amusement establishments and organized camps

     

  • local retail and service establishments (this exception is construed narrowly)

     

  • small agricultural concerns

     

  • employees of small local newspapers (fewer than 4,000 subscribers) and switchboard operators of small telephone companies

     

  • seamen employed on foreign vessels

     

  • employees engaged in fishing operations

     

  • employees engaged in newspaper delivery

     

  • farm workers employed on small farms

     

  • casual babysitters and persons employed as companions to the elderly or infirm.

Compensable working time

Time spent by employees engaging in activities other than those that are job duties, but are related to the job, may or may not have to be treated as compensable time. In general, the FLSA considers time spent performing activities that are primarily for the employer’s benefit as compensable, while time spent primarily for the employee’s benefit is not. Hours that are paid but not worked do not count as hours worked under the FLSA, including:


  • holidays

     

  • vacations

     

  • sick time

     

  • voting, jury duty, or inclement weather.

     

Employers may choose to credit this time away from work, and if so, should take care to comply with policies they adopt.

 

Rest periods

Rest periods are common and are considered to be primarily for the employer’s benefit. Thus, short periods of 20 minutes or less for breaks, such as for coffee and snacks, are compensable hours worked.

 

Meal periods

If an employee does not punch in and out for an unpaid meal period during the work shift, the employer must ensure that the employee actually is relieved of duties for the entire meal period. Supervisors must be sure that employees actually take their scheduled meal periods. When they do not, the time cards must be marked accordingly. Meal periods not spent predominantly for the benefit of the employer are not compensable; while meal periods for the employer’s benefit are compensable. For instance, if an office employee is required to eat at his/her desk and answer telephone calls during the meal period; or a factory worker is required to be at his/her machine is working while eating, such time is compensable.

 

There is a distinct recordkeeping risk in allowing employees to eat at their workplace because the question arises as to whether they had an uninterrupted meal period. If a meal period is interrupted by more than an insignificant amount of time (two or three minutes), then the employee must be paid for the lunch period as hours worked or receive a second lunch period. Repeated interruption of meal periods on a continuing basis may lead to a finding that all the meal periods are not duty free (the employee is not entirely relieved of duties) and hence are compensable hours worked.

 

Waiting time while on duty

When employees are idle during their regular workday because of interruptions beyond their control, the time spent waiting is counted as working time if it is unpredictable and short in duration such that employees are unable to use that time for their own purposes and it is instead controlled by the employer.

 


Examples of compensable waiting times


  • a factory worker who, while waiting for the machine he/she operates to be repaired, talks with his/her co-workers

     

  • a clerk who, while waiting on an assignment or for a large copy job to be completed, reads a book or works a crossword puzzle

     

  • a repairman who, while waiting on his/her customer to get the premises ready, talks on the phone with a friend.

     


24-hour duty

Employees on duty 24 or more hours or who reside on the employer’s premises may agree in writing to have uninterrupted sleep time of up to eight hours per night deducted from hours worked. Bona fide meal times also may be so deducted by agreement. Persons who reside on the employer’s premises also may sign agreements setting forth their work and non-work time on a fair and reasonable basis. Such agreements are voluntary on the employee’s part.

 

On-call time

Whether on-call time is compensable depends on the extent to which the employee’s personal time is restricted. Carrying a beeper does not constitute hours worked, provided the employee is relatively free to come and go as he/she pleases or use the time for personal pursuits. The employee can be required to refrain from drinking alcoholic beverages during this period. The employee must be given sufficient time to report (generally 20 to 30 minutes, depending on geographic population density) so that the employee can be free to use time for his/her own benefit. Requiring an employee to stay at home or at work means that time spent is counted as hours worked. Placing an employee constantly on-call or frequently interrupting the on-call period may lead to a finding of hours worked.

 

Travel time

Travelling that takes place within one day:


  • NO - normal commuting to and from work in the particular geographic area is not compensable hours worked.

     

  • YES - travel time to a distant out of town location is hours worked for drivers and passengers (all forms of travel).

     

  • YES - travel between work locations and between a “normal” work location and another place of assignment is considered hours worked.

     

Out of town and overnight travel:


  • YES - travel during normal work hours is hours worked.

     

  • NO - travel outside normal work hours as a passenger does not constitute hours worked.

     

  • YES - travel time as a driver, other than normal commuting, is hours worked.

     

Commuting in a company vehicle

The use of an employer’s vehicle for travel by an employee and activities performed by an employee that are incidental to the use of such vehicle for commuting, such as getting a car washed or its oil changed, shall not be considered part of the employee’s principal activities if:



  • the use of such vehicle for travel is within the normal commuting area for the employer’s business or establishment

     




  • the use of the employer’s vehicle is subject to an agreement on the part of the employer and the employee or representative of such employee under the Employee Commuting Flexibility Act of 1996.

     



Meetings, lectures, and courses

Attendance at meetings, lectures, and training programs or courses is considered compensable hours worked unless all four of the following are met:



  1. time is outside of the employee’s normal working hours

     




  2. the course subject is not directly related to employee’s regular job (such as learning the requirements of a new or higher rated job)

     




  3. attendance is truly voluntary (except for state mandated training)

     




  4. no productive work is performed.

     



Time spent outside of normal work time in state or licensing agency mandated training, such as to meet continuing education requirements, is not hours worked.

 

Uniform changing

Time spent in uniform changing activities must be counted as hours worked if the employees must change at work, and the employee cannot perform his/her job without the uniform.

 

Medical attention

Time spent by employees in waiting for and receiving medical attention is compensable if the medical attention is received during normal work hours and either one of the following situations exists:



  • the medical attention is received at the employer’s facility or on plant premises

     




  • the employer directs the medical attention to be obtained elsewhere.

     



Physical examinations

Time spent receiving a physical examination that is required for continued employment is compensable. Time spent on tests (such as drug screens) by applicants seeking employment is not compensable.

 

Civic and charitable work

Time spent by employees working for public or charitable purposes at the employer’s request, or under its direction or control, or while the employee is required to be on the premises, is compensable hours worked. For example, an employee directed by the employer to attend a charitable function must be paid for that time. However, time spent voluntarily in such activities outside of the employee’s normal working hours is not compensable.

 

Nursing mother accomodation

The Patient Protection and Affordable Care Act of 2010 (PPACA) added a new provision to the FLSA regarding lactating mothers. The FLSA now requires employers to provide reasonable unpaid breaks for nursing mothers. These unpaid breaks must be provided each time that a lactating employee needs to express breast milk, and the employer must provide a private place for that activity. Making a bathroom or a bathroom stall available for this purpose is not sufficient. These breaks must be allowed for nursing mothers up to one year after the birth of a child.  The requirements are mandatory for employers with 50 or more employees; however, employers with fewer than 50 employees can be exempt from the requirements upon a showing that compliance would impose an undue hardship on the employer. 

 

The DOL has not specified the frequency, number, or minimum duration for these breaks. The breaks however must be “reasonable,” and provided as often as needed by the employee. The location need not be exclusively reserved for expressing milk, but may be temporarily converted for this purpose. It must be free from intrusion by co-workers or the public, and shielded from view. If the employee is not completely relieved from duty during the break, then the time must be treated as worked time, and if the employer allows paid breaks, then the employer must compensate a nursing employee if she uses paid break time to express breast milk. This provision does not apply to employees who are completely exempt from the FLSA’s overtime requirement.

 

Public employees

Volunteers:

Public employees are able to engage in voluntary sporadic or occasional work for their employer in a different capacity without those hours being combined for overtime purposes. An example would be a school clerk collecting tickets at a high school football game. There are also very liberal rules covering outside employment by law enforcement and fire protection employees.

 

Compensatory time off:

In general, federal, state, and local government employers, with the agreement of their employees, can give compensatory (or “comp”) time off (at time and one-half) rather than pay cash overtime. In other words, if an employee worked 60 hours in a week, he/she could get 30 hours of comp time off instead of 20 hours of overtime pay.

 

If the work done by an employee for which comp time may be provided includes work in a public safety activity, emergency response activity, or seasonal activity, the employee can accrue up to 480 hours of comp time (320 hours of actual overtime worked). “Public safety activity” generally refers to law enforcement officers and firefighters. “Emergency response activities” generally refer to the dispatch of emergency vehicles, rescue work, and ambulance services. “Seasonal activities” typically include work during periods of increased demand that are regular and recurring in nature. There is a 240-hour cap on comp time (160 hours of actual overtime worked) for all other types of work.

 

Compensatory time received by an employee in lieu of cash must be at the rate of not less than one and one-half hours of compensatory time for each hour of overtime work and must be under an agreement or understanding between the employer and employee prior to beginning the overtime. There is no specific time limit as to when a public employee may elect to use comp time earned. However, the public employer must permit the employee to use such time within a reasonable period after the employee requests time off, unless such use will unduly disrupt the government’s operations (which generally depends on the government’s workload and specific circumstances of each case). When an employee’s employment is terminated, he/she must be paid for all remaining comp time at his/her current rate of pay.

 

Sample Nursing Mothers Break Time Policy

Bonuses

Many employers provide bonuses as an additional form of compensation for employees. How the bonus is structured and calculated affects whether an employee has a right to the bonus. For merit bonuses, the right generally arises at the beginning of the employment relationship and will be for a set amount or based upon a formula for calculating an exact amount for the bonus. If bonuses are not based on an established system or criteria, then a right to the bonus does not arise.

 

When a bonus is payable at the discretion of the employer, an enforceable right generally does not exist. Many courts have addressed issues regarding bonuses after resignation or termination. The question of discretion by the employer to grant or deny a bonus or to set its level is generally determinative. Also, a bonus plan may require an employee to continue working for the company to be eligible for a bonus payment.

 

In general terms, a commitment to pay a percentage of earnings as a bonus is sufficiently exact to be legally enforceable, but a system that is established to make a payment in a certain range may not be enforceable. 

Recording hours worked

Employers are required to maintain payroll records showing the following information for all employees:


  • employee’s name and company identification number

     

  • home address

     

  • birth date (if under 19)

     

  • sex and occupation

     

  • time of day and day of week employee’s workweek begins

     

  • total wages paid per pay period

     

  • date paid and pay period covered by payment.

     

For employees subject to minimum wage and overtime provisions of the FLSA:


  • regular hourly rate of pay in effect for time period covered by the records

     

  • hours worked per day and per week (must furnish this information to employees with every payment of wages)

     

  • total daily or weekly earnings exclusive of premium overtime pay

     

  • total premium pay for overtime hours

     

  • total additions or deductions from pay including purchase orders or wage assessments (payroll deduction information must be furnished to employees with every payment of wages).

     

For exempt employees:


  • basis on which wages are paid in sufficient detail to permit calculation for each pay period of total compensation, including fringe benefits.

Note:

A copy of the paycheck is not sufficient to meet these requirements.

 

Record retention under the FLSA

Payroll records (such as ledgers, W-2 forms, and payroll registers), employment agreements, and sales and purchase records must be kept for three years. The FLSA does not require any particular form in which the records must be kept. Supplementary basic records (such as time cards, worksheets, wage rates, and billing records) must be kept for two years.

 

How should hours worked be recorded?

Compensable hours are all hours an employee is engaged to work, engaged to wait, or actually at work, whether or not authorized. Thus, if an employee starts work early or works beyond the end of his/her shift, such work must be compensated, whether or not it was authorized or even necessary. Employees, however, may be disciplined for unauthorized or unnecessary work.

Employers may keep track of employees’ time in any method they choose. Employers, for example, may use a time clock, have a timekeeper keep track of employees’ work hours, or tell their workers to write their own times on the records. Generally, any timekeeping plan is acceptable as long as it is complete and accurate.

 

Time clocks

Time clocks are not required but can be used to record hours worked. If time clocks are used, rounding practices may be used. If the rounding method is followed, employers must ensure that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked. Employers should round employee time to the nearest increment (five minutes, 10 minutes, not to exceed 15 minutes).

 

Sample Hours of Work Policy

Paying wages

Payment of wages is generally governed under state law and Virginia is no exception.  Virginia has enacted the Payment of the Wage statute that governs how and when employers must pay their employees.  This Virginia Payment of the Wage statute applies to all “employers operating a business.”

 

Time of payment

The Virginia Payment of the Wage statute provides that covered employers must pay salaried employees at least once a month and employees paid on an hourly rate at least once every two weeks or twice in each month.  Hourly employees that are either enrolled in work-study programs or whose weekly wage is more than 150% of the average weekly wage (as published annually by the Virginia Employment Commission), may be paid once a month if the employee and employer so agree.  Employers in Virginia should be aware that the Virginia Payment of the Wage statute imposes a civil penalty ($1,000 per violation) on employers who knowingly fail to pay their employees in accordance with its provisions and also carries with it criminal penalties for willful violations with the intent to defraud the employee.

 

Enforcement

The child labor, minimum wage, and overtime provisions of the FLSA are enforced by the Wage and Hour Division of the DOL. Government investigators have the authority to inspect and make a typed record of an employer’s records, to interview employees, and to otherwise make determinations of FLSA violations. The Secretary of Labor, an individual employee, or a group of employees may sue an employer to collect past due minimum wages or overtime compensation.

 

Statute of limitations

The statute of limitations to collect past due wages is two years for ordinary violations and three years for willful violations.

 

Civil remedies

Liquidated (pre-determined) damages in an amount equal to unpaid back wages are available as a remedy, plus attorneys’ fees and costs. An injunction is also possible in court cases brought under the act by the Secretary of Labor. Attorneys’ fees can be recovered in successful private actions. Civil fines of up to $1,000 can be assessed by the DOL for repeated or willful violations.

 

Criminal penalties

Violations of the FLSA, such as those related to child labor, can result in criminal prosecution. First offenders are subject to a fine not to exceed $10,000. Second offenders are subject to a fine and maximum prison term of six months.

 

The FLSA is very complex and involves numerous detailed regulations. In addition, DOL investigators are quite experienced. Thus, it is extremely important that employers consult an attorney at the earliest stage of any potential lawsuit involving wage and hour laws. Keep in mind that the information contained in this chapter only addresses a portion of the relevant laws and regulations related to wage and hour laws.

 

Do men and women need to be paid equally?

The equal pay provisions of the FLSA provide that persons performing jobs requiring equal skill, effort, and responsibilities at the same establishment may not be paid different wage rates based upon their sex. Title VII and the Lilly Ledbetter Act taken together provide that an employer may not discriminate in pay based on sex, race, national origin, age, religion, or disability. These statutes are enforced by the Equal Employment Opportunity Commission (EEOC). Recently the EEOC has increased enforcement to bring wages of women more in line with those of men.

 

The Equal Pay Act has the same statute of limitations – two years for ordinary violations and three years for willful violations – as the FLSA. Liquidated (pre-determined) damages are also available to claimants where the employer is unable to prove its actions were taken in good faith.

Virginia-specific laws

While the FLSA does not address the timing, frequency, or method of wage payments, Virginia law does address these issues.

 

Restrictions on garnishments

Wage garnishment occurs when an employer withholds a portion of an employee’s earnings for the payment of a debt as the result of a court order or other equitable procedure. Employers are prohibited from discharging an employee because his/her earnings have been subject to garnishment for any one debt. However, an employee is not protected from discharge if the employee’s earnings have been subject to garnishment for a second or subsequent debt.

 

Under federal law, the maximum amount of an individual’s disposable earnings (earnings after statutory withholding) that can be subjected to garnishment is the lesser of:


  • 25 percent of disposable earnings for that week

     

  • 30 times the federal minimum hourly wage (currently $7.25 x 30 = $217.50) in effect at the time the earnings are payable.

     

The Virginia statute on garnishments is similar to the FLSA, however it permits employers to garnish up to 40 times the federal minimum hourly wage. Employers are encouraged to only garnish up to the limits set forth in the more restrictive FLSA.

 

The intent of these restrictions is to save a certain amount of the earnings for the wage earner. The restrictions do not apply to any debt due for a state or federal tax, child support or alimony, or any order of a bankruptcy court under Chapter 13 of the Bankruptcy Act. Up to 50% of a worker’s disposable earnings may be garnished for child support or alimony if the worker is supporting another spouse or child, or up to 60% if the worker is not.

 

Virginia child labor laws

Virginia law limits minors under the age of 16 from working more than three hours on any day when school is in session, more than eight hours on any other day, more than 18 hours in any week when school is in session or 40 hours in any one week when school is not in session. Virginia employers are also prohibited from requiring employees under 16 from working before 7 a.m. or after 7 p.m. (except between June 1st and Labor Day, such employees may work until as late as 9 p.m.). Similarly, employees under 16 may not work during school hours unless enrolled in a school work-training program. Finally, employees under 16 must be given a 30-minute rest or meal period after five consecutive hours of work.

 

Employees between 16 and 18 do not have the same hour limitations (however, such employees are restricted from working with hazardous materials). In addition to these hour requirements, employers should consult with the Virginia Department of Labor and Industry when hiring minor employees to ensure compliance with Virginia child labor laws. More information is available at:

The duty to issue child labor certifications was transferred from public school superintendents to the state Department of Labor and Industry. The necessary forms are:


  • a “permission for employment” form must be completed by the youth’s parents or guardians and signed before a public notary, who must officially seal the document

     

  • an “employer intent to employ” form must be completed by the potential employer

     

Both forms must be completed for processing through the Virginia Department of Labor and Industry in person, or by U.S. mail. Faxed copies will not be accepted.

 

The law also requires employers to prove they have verified the child’s age before the child begins work. In order to do this, the youth must provide acceptable evidence of their age, which the employer must retain and certify the youth’s age through the Labor and Employment Law Division. The following documents are accepted:


  • birth certificate

     

  • official transcript issued by a statistical registrar or other officer in charge of recording births, such as from a school or hospital

     

  • record of baptism or “duly certified transcript thereof showing the date of birth and place of baptism”

     

  • other documents approved by the commissioner, such as:

    • any government issued identification

    • a passport

    • a department of motor vehicles identification card or driver’s license

    • military identification card

       



The youth may not begin work until all the aforementioned steps are completed. For more information, please visit the Virginia Department of Labor and Industry website:

To acquire the proper forms, please visit:

Virginia & paid sick leave

Currently there are no federal or Virginia requirements for paid sick leave. However, a growing number of states have legislated paid sick leave laws, while some other states are discussing such laws. States that have enacted paid sick leave laws point to the public policy that employees, as individuals, are valued, along with their health and the health of their family. The requirements are intended to prevent employees from being faced with choosing between their health and their continued employment.

 

The requirements vary widely from state to state. Some jurisdictions require that an employer have a certain number of employees before being required to comply.  For instance, in New York, an employer must have at least five employees. Typically, employees must work for a minimum period before they qualify for paid sick leave. California requires that an employee work 90 days or more in a calendar year to be entitled to paid sick leave. Sick time can be calculated by varying methods. The most common is the accrual method where employees earn a certain number of hours or days of sick leave, up to a fixed number, based on how long they have worked for the employer during the calendar year. Some states allow accrued paid sick leave to carry over to following years of employment. The number of hours or days allotted for paid sick leave can also change depending on the number of employees. For now, employers in Virginia have the ability to set their own leave policies and place the requirements and restrictions on that leave that they desire.

 

Internal audits

Given the potential liability to employers and the level of back pay that can be awarded in a wage and hour investigation or lawsuit, internal audits are advisable. Audits should focus on:



  • exempt status

     




  • proper recording of hours worked

     




  • correct calculation of overtime compensation

     




  • equal pay.

     



The assistance of an outside attorney specializing in this field is advisable in such audits to allow the employer to eliminate compliance issues before becoming the subject of an investigation.  However, these audits become valueless if any compliance issues discovered during the audit are not promptly resolved.

 

Employer Intent to Employ Minor Form



Permission to Employ Minor Form

Federal government contracts

In addition to the FLSA, other federal wage and hour laws may apply to employers who do business with the federal government, as set forth briefly in the following paragraphs.

 

The Walsh-Healy Public Contract Act is enforced by the DOL and sets basic labor standards for employers with federal government contracts to manufacture or supply articles with a value of more than $10,000. Under this law, government contractors are required to pay prevailing wage rates in addition to conforming to the requirements of the FLSA.  The amount recoverable includes the difference between the wages paid and the prevailing wage or benefit rate and liquidated (pre-determined) damages to claimants. There is also the possibility of exclusion from government work.

 

Federal public buildings

The Davis-Bacon Act is enforced by the DOL and covers mechanics and laborers engaged in federal public buildings and work projects with a value of $2,000 or more. Under this law, government contractors are required to pay prevailing wage rates in addition to conforming to the requirements of the FLSA. Disqualification from government work is a possible sanction in addition to back wages for underpayments.

 

Service contracts worth more than $2,500

The Service Contract Act covers employers with federal government service contracts worth $2,500 or more. Its provisions and enforcement are similar to the Walsh-Healey and Davis-Bacon Acts.

Where to go for more information

Wage and hour enforcement activity has increased dramatically in recent years. In addition to increased administrative enforcement, there have also been an increasing number of private lawsuits brought by individuals and groups of individuals. In the lawsuits, liquidated damages (double back pay) are often sought and the three-year statute of limitations for willful violations invoked.  Thus, compliance with federal wage and hour laws is essential and self-audits should be conducted at regular intervals.

 


  • U.S. Department of Labor Wage and Hour Division: www.dol.gov/whd/

     

  • Virginia Department of Labor and Industry, Division of Labor and Employment Law

North Run Business Park

1570 East Parham Road

Richmond, Virginia 23228

(804) 371-3104



www.doli.virginia.gov/laborlaw/laborlaw_forms_p1.html