Q 1:2 What is the Fair Labor Standards Act?

The Fair Labor Standards Act (FLSA) [28 U.S.C. §§ 201 et seq.] establishes the federal minimum wage, the payment of required overtime pay, and childlabor standards. The FLSA covers all employees of employers that are engaged in interstate commerce or the production of goods for interstate commerce and that meet a volume-of-business requirement. Businesses with fewer than two employees are not covered by the FLSA.

The federal minimum wage rose to $7.25 per hour beginning July 24, 2009. The overtime pay provisions of the FLSA require that employees who are not otherwise exempt under its regulations be paid no less than the federal minimum wage and be paid time and a half for hours worked in excess of 40 hours during a workweek. Employees who are exempt from the overtime pay requirements of the FLSA include those employed in a bona fide executive, administrative, or professional capacity or as an outside sales person. The regulations provide guidance and rules for determining whether an employee fits the criteria for an exempt classification. In addition, an employee who fits within a designated exempt category must be paid on a salary basis. [29 C.F.R. § 541.118] Subject to limited exceptions, this means that the employee must receive his or her full salary for any workweek in which he or she performs any work, regardless of the number of hours or days worked. However, just because an employee is paid a salary does not make him or her exempt from overtime pay. Rather, only exempt employees who are paid on a salary basis are exempt.

The Department of Labor (DOL) administers the FLSA, and, through the Secretary of Labor, it may bring an action for violations of the Act. Individuals can exercise a private right of action under the Act as well. Relief for violations are many, including the recovery of unpaid minimum wages, overtime compensation, liquidated damages, and penalties. Willful violation can subject an employer, or somebody acting on behalf of the employer, to criminal penalties as well. (See chapter 8 for a more detailed look at the FLSA.) Unless supervised by the DOL, a court or unsupervised settlements reached due to a bona fide FLSA dispute over hours worked or compensation owed, an FLSA claim cannot be waived or released. In Bodle v. TXL Mortgage Corp. [2015 WL 3478146 (5th Cir. June 1, 2015)], the court held that the language in a settlement of a non-compete suit which, by its terms, relinquished claims for overtime compensation under the FLSA was not given effect when there was no discussion or disputes involving the FLSA at the time that the settlement documentation was signed.

 

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This text originally appeared in Employment Law Answer Book, Ninth Edition (Wolters Kluwer, 2016). Reprinted with permission.