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Enterprise Coverage:

The FLSA applies to virtually all employers, including:

  • Enterprises (including non-profits) with gross sales or business of $500,000 or more per year;
  • Hospitals; enterprises engaged in the care of the sick, the aged, or the mentally ill who reside on the premises; a school for mentally or physically disabled or gifted children; a preschool, an elementary or secondary school, or an institution of higher education (whether operated for profit or not for profit); and
  • Public agencies

Individual Coverage:

The FLSA also applies to employees individually if they engage in interstate commerce, foreign commerce, or the production of goods for interstate or foreign commerce, including any closely related process or occupation directly essential to such production.

Interstate commerce is defined broadly. These activities include but are not limited to:

  • Making out-of-state phone calls;
  • Receiving/sending interstate mail or electronic communications;
  • Ordering or receiving goods from an out-of-state supplier; and
  • Handling credit card transactions or performing the accounting or bookkeeping for such activities.

When individual coverage applies to a workweek, the FLSA covers that employee.

Exceptions:

Certain executive, professional, administrative, computer professional, outside sales, and highly compensated employees may be exempt from minimum wage and/or overtime requirements (see Tests for Determining Exempt Status).

State and Local Impact:

Some states and local jurisdictions provide workers greater overtime protections than the FLSA. For instance, California requires overtime pay for, among other things, all hours worked over eight in a workday in addition to all hours worked over 40 in a workweek. Check your state law to ensure compliance.

Workweek Defined:

A workweek consists of seven consecutive 24-hour periods. It can begin on any day and at any hour of the day as long as it is a fixed and regularly recurring period of 168 hours.

Each workweek must be considered separately in determining overtime hours, regardless of the length of the pay period. Therefore, employers who pay their employees on a bi-weekly basis may not offset time worked over 40 hours in one week against time worked under 40 hours in another week (except for certain arrangements permitted for hospital and nursing home employees, firefighters, and law enforcement personnel).

Regular Rate of Pay:

Overtime must be paid at a rate of at least 1.5 times the employee’s regular rate of pay. Generally, the regular rate includes but is not limited:

  • Salary or hourly rate of pay
  • Reasonable cost of employer-provided room and board
  • Commissions, piece rate pay, and shift differentials
  • Nondiscretionary bonuses (bonuses promised to employees before the work begins, such as production bonuses)
  • On-call pay
  • Cash payments under a cafeteria plan

Certain payments made to employees are excluded from the regular rate calculation, including but are not limited to:

  • Gifts
  • Payments made for vacation, holiday, or illness
  • Reasonable payments for travel expenses
  • Contributions made to a retirement, life, accident, or health insurance plan
  • Any value or income derived from employer-provided stock options

After-Hours Work, Early Punch-Ins, and Unauthorized Overtime:

Employees must be paid for any time worked, even if you have a policy prohibiting after-hours work, early punch-ins, and unauthorized overtime. You may subject your employees to your company’s disciplinary action policy for failing to follow company policy, but in no case may you withhold pay.

Training Time:

In most cases, the FLSA requires employers to pay non-exempt employees for the time they spend in training. In order for training time to be considered unpaid, the training must meet all of the following criteria:

  • Attendance is voluntary and outside of the employee’s regular working hours;
  • The course, lecture, or meeting is not directly related to the employee’s job; and
  • The employee does not perform any productive work during such attendance.

Example 1: A doctor’s office requires employees to attend training on patient privacy. The training will take place at the end of the employees’ regular shift.

Is pay required? Yes. The time spent attending the training must be paid because the training is not voluntary and is related to the employees’ job.

Example 2: The owner of a health club is offering a yoga glass to clients and allows employees to attend. While the owner says attendance is voluntary, supervisors tell their employees that they are expected to attend and schedule employees’ time off so they can do so.

Is pay required? Yes. Since supervisors make clear to all employees that their attendance is expected, and schedule employees’ time off to facilitate attendance, attendance is not truly voluntary.

Travel Time:

Travel time may be considered hours worked depending on the type of travel involved. Here are some common travel scenarios:

One-day assignment:

If an employee regularly works at a fixed location in one city but is given a special one-day assignment in another city, the time spent traveling to and from that special one-day assignment is considered hours worked. However, you may subtract the time it normally takes the employee to travel to and from his or her regular worksite.

Travel from jobsite to jobsite throughout the workday:

The time employees spend traveling between job sites during the workday is part of their principal work activity and is considered hours worked.

Overnight travel:

Pay is required for the time that cuts across the employee’s regular working hours (regardless of the day of the week). For example, if an employee’s regular work hours are 8 a.m. to 5 p.m., Monday through Friday and the employee goes on an overnight business trip that begins with a 9 a.m. flight on a Saturday (a time the employee would normally be at work), the time on the flight is considered work time. Travel to and from the hotel and airport must also be paid if it falls during the employee’s normal hours.

Work Performed During the Commute:

If an employer asks an employee to pick up office supplies or perform other work during their commute, the time the employee spends working and the time the employee spends traveling from the beginning of the first work-related duty to the work site (or home) would be considered hours worked.

Travel for Remote Employees:

If an employer requires telecommuters to come to the office periodically for meetings, those employees would be entitled to pay for the time spent traveling to and from the office.

Callback Travel:

If an employee who has gone home after completing a day’s work is subsequently called back and must travel a substantial distance to perform an emergency job for one of the company’s customers, all the time spent in travel (as well as the time spent performing job responsibilities once the employee arrives) is considered working time. Under the FLSA, there is generally no requirement to pay employees for time spent traveling when they are called back to their regular place of work outside normal work hours.

Pay for Travel Time and “Nonproductive” Work:

The FLSA allows employers to establish a separate wage for travel and other “nonproductive” work hours, provided the following requirements are met (see 29 CFR 778.318(b)):

  • The wage equals or exceeds the applicable minimum wage; and
  • The employee has agreed to the separate wage in advance.

Because of the challenges of administering separate wage rates (including calculating overtime), many employers choose to pay employees the same wage for both productive and nonproductive hours. If you wish to establish separate rates, make sure you comply with all applicable laws and obtain a written agreement from the employee in advance.

Donning and Doffing:

If safety and other gear is required by law, the employer, or the nature of the work, then the time an employee spends putting on and taking off gear on the employer’s premises must be paid. The time must be paid only when the employer or the nature of the job mandates that it take place on the employer’s premises.

According to the Department of Labor (DOL), if employees have the option and ability to change at home, there is no requirement for the time to be paid, even if employees choose to change at work.

Demographic Information:

  • Full name
  • Address
  • Occupation
  • Gender
  • Birth date (if under 19 years old)
  • Certificate of age (if under 18 years old)

Payroll Records:

  • Hour and day when workweek begins
  • Total hours worked each work day and each workweek
  • Basis on which employee’s wages are paid (per hour, per week, piecework)
  • Regular hourly pay rate
  • Total daily or weekly straight-time earnings
  • Total overtime pay for the workweek
  • Deductions from, or additions to, wages
  • Total wages paid each pay period
  • Date of payment and pay period covered

Generally, these records must be retained for at least three years. However, records on which wage computations are based (such as work schedules, time cards, and wage rate tables) must be retained for at least two years.