Chapter Six WAGE AND HOUR – FAIR LABOR STANDARDS ACT

Wage and Hour Fair Labor Standards Act

Chapter Six

Chapter Six

WAGE AND HOUR ? FAIR LABOR STANDARDS ACT

137 Copyright ? 2016 FordHarrison LLP. All rights reserved.

Chapter Six

WAGE AND HOUR ? FAIR LABOR STANDARDS ACT

Table of Contents

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141

II. FAIR LABOR STANDARDS ACT (FLSA) AND AMENDMENTS . . . . . . . . . . . . . . . 141

A. President Pursues Regulatory Revision of Wage Hour Laws in the Absence of Congressional Cooperation on New Legislation . . . . . . . . . . . . . . . . . . 141

B. Increased DOL Aggressiveness Continues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142

III. PORTAL TO PORTAL ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143

A. Statute of Limitations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144 B. Employer's Defenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144 C. Liquidated Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144

IV. DETAILED ANALYSIS OF THE FLSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144

A. Coverage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144 B. Status as Employee or Independent Contractor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148 C. Status as Employee or Student/Trainee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 D. Interns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 E. Volunteers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 F. Ministerial Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 G. Minimum Wage Issues, Generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 H. Uniforms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152 I. Tip Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153 J. Deductions from Wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 K. Computation of Hours Worked . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 L. Overtime Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163 M. Child Labor Restrictions Under FLSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 N. Record Keeping Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168 O. Exemptions from Minimum Wage, Overtime Pay, Equal Pay, Child Labor,

and Record Keeping Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169

V. ALTERNATIVES FOR FLSA COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186

A. Salaried Exempt Personnel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186 B. Reduced Hourly Wage Rate and Work Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . 186 C. Fluctuating Workweek Salaried Pay Plan.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187 D. Fluctuating Day Rate Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188 E. Belo Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189

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VI. MISCELLANEOUS FLSA VIOLATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189

A. Retaliation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189 B. Back Pay Awards to Undocumented Aliens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190 C. Unpaid Wages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191

VII. FLSA ENFORCEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191

A. Inspections and Investigations by Wage & Hour Division . . . . . . . . . . . . . . . . . . . . . 191 B. Penalties for Violations of FLSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192 C. Action by More Than One Plaintiff. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194 D. Manager of Business as "Employer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194 E. Prohibition on the Shipment of Hot Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195

VIII. MIGRANT AND SEASONAL AGRICULTURAL WORKER PROTECTION ACT . . . . 195

140 Copyright ? 2016 FordHarrison LLP. All rights reserved.

Chapter Six

WAGE AND HOUR ? FAIR LABOR STANDARDS ACT

Salvador P. Simao, ssimao@, David S. Kim, dkim@, and

Ashwin R.Trehan, atrehan@, Chapter Editors

I. INTRODUCTION

The Fair Labor Standards Act (FLSA) governs the minimum wage as well as overtime pay and is the basic wage and hour law under which most problems and litigation arise. This Chapter provides a detailed summary of the FLSA. Wage and hour laws affecting federal contractors are discussed in the Government Contracting Chapter of the SourceBook. Individual state wage and hour laws are not addressed in this Chapter. Specific state laws should be consulted when making decisions potentially affected by wage and hour laws.

II. FLSA AND AMENDMENTS

The FLSA, 29 U.S.C. ?? 201-219, is administered by the Department of Labor (DOL), Wage and Hour Division (WHD). The FLSA sets minimum wage rates, establishes overtime requirements, contains record keeping provisions, and imposes child labor standards and penalties.

A. President Pursues Regulatory Revision of Wage Hour Laws in the Absence of Congressional Cooperation on New Legislation. In 2014, faced with Congressional gridlock, President Obama used his executive power to increase wages where possible and urged states to raise their minimum wage rates. As of June 30, 2015, 29 states and the District of Columbia had minimum wage rates higher than the federal minimum wage. See State Minimum Wage/Minimum Wage by State, . Additionally, in February 2014, the President issued an Executive Order (EO) raising the minimum wage rate for certain federal contractors to $10.10 per hour effective January 1, 2015. The EO authorized the DOL to make an annual determination of the minimum wage rate for subsequent years, and the agency has announced that the federal contractor minimum wage will be $10.15 per hour effective January 1, 2016. See DOL Announces Increase in Minimum Wage Rate for Federal Contractors, . dol-announces-increase-in-minimum-wage-rate-for-federal-contractors.

The President also directed the DOL to "update" and "modernize" overtime rules to expand the number of workers eligible for overtime pay. Accordingly, on June 30, 2015, in a 295-page report, the DOL released proposed changes to the "white collar" exemption tests for executive, administrative, and professional employees (located in 29 CFR Part 541).1 The DOL refrained from amending the duties portion of the tests; however, it did revise the salary basis and salary level tests. If adopted, the DOL estimates that the new regulation will eliminate the exempt status for approximately 21.4 million employees -- increasing the financial and regulatory burdens on employers throughout the United States. Although it did not propose amendments to the duties portion of the white collar exemptions in the proposed changes, the DOL discussed in detail the long and short tests, which were eliminated in 2004, and suggested that it may revisit the issue.

The proposed rule more than doubles the annual salary required for an employee to be considered exempt from overtime or minimum wage under the FLSA's white collar exemptions. Historically, the

1 On May 18, 2016, the DOL published its Final Rule amending the white collar exemption tests. The new regulations are to become effective by December 1, 2016. The new regulations are discussed in more detail in the appendix to this Chapter, available on our website at .

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