If your business has employees, it is in your best interest to retain an experienced and skilled employment law attorney. Federal and state employment laws concerning wages and overtime are complex and impose significant responsibility on employers.
The federal government, through the Fair Labor Standards Act (FLSA), known popularly as the Wage-Hour Law, establishes a minimum wage. All employees covered by the FLSA must be paid at least the federal minimum wage. The federal minimum wage was $5.15 per hour for 10 years until changed by the Fair Minimum Wage Act of 2007. On July 24, 2007, the minimum wage rose to $5.85. It is scheduled to increase an additional 70 cents on the same date each in 2008 and in 2009.
Despite the national standard, states are free to set their own minimum-wage rates. Some states' minimum-wage levels are higher than those required by the federal government. Where there is a difference in the rate of minimum wage between a state and the federal FLSA, the higher rate applies. Also, usually the state minimum wage applies to employees not covered by the FLSA.
Generally, the FLSA requires that for covered employees overtime pay be one and one-half times the regular rate of pay. Normally, the overtime rate is required for hours worked above 40 hours in a workweek. Some states may have more generous overtime laws. For example, certain states require instead that overtime pay applies after eight hours have been worked in a day, no matter how many hours an employee has already worked in that week.
Whether an employee is covered by the FLSA and therefore eligible for federal minimum-wage and overtime pay protections can be a complex legal question. Not every employee is covered; those who are not are known as exempt employees not eligible for the FLSA wage and overtime requirements. Correspondingly, nonexempt employees who do fall within the scope of the Act are protected by its wage and overtime provisions.
In basic terms, most employees of larger private enterprises engaged in interstate commerce, most government workers and employees of hospitals and schools are covered by the Act. The law carves out exceptions from coverage for certain types of employees. Exempt workers tend to exercise higher levels of discretion on the job and their jobs may require significant specialized education. Generally, salaried white-collar employees in executive, administrative, professional and outside sales positions are not subject to FLSA provisions nor are certain agricultural workers, certain computer personnel, certain highly compensated individuals, apprentices, most babysitters, certain workers with handicaps, certain younger workers, workers in particular trades or industries and workers in a few other narrow categories. Tipped employees have a different wage formula that takes tipping into account.
This is only a general summary of important parts of the primary wage-hour law. Other factors may come into question in determining whether an employee is exempt or nonexempt. Coverage under the Act can even vary from employee to employee within the same business. Finally, state laws may provide additional benefits.
Speak to a Lawyer
If you are an employer facing complicated wage and overtime issues, consult a lawyer for guidance. An employment attorney is an excellent resource for this type of information.
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