Understanding the Minimum Wage Component of the FLSA

fair-payOriginally enacted in 1938, the Fair Labor Standards Act, or FLSA, established the 40 hour work week and guaranteed time and a half under certain circumstances, among other federal mandates. One of the key provisions of the FLSA is the federal minimum wage, which currently stands at $7.25 an hour. Over the years, the FLSA has been amended a handful of times, so it can be complicated to try to determine which employers must adhere to its tenets, and which employees are protected by it.

The FLSA is enforced by the federal government’s Wage and Hour Division (WHD), which has in excess of 200 local offices in the United States. The WHD has the authority to investigate and enforce the FLSA should an employee file a claim. If a claim is substantiated, the WHD can fine the employer. So, it’s important for any business to have a firm grasp on who and what is covered under the FLSA.

Minimum Wage Exceptions for Young Employees

The myriad minimum wage exceptions can be confusing, and many of them come with strings attached. It is impossible to discuss them all, so here we highlight those involving students and youth.
For employees under the age of 20, the FLSA makes a clear distinction under their Youth Minimum Wage Program. Under this program, an employer can pay an employee under the age of 20 years old a rate of $4.25 per hour, but only for the first 90 consecutive calendar days. Once the 90 days has passed, the employee then must be paid the federal or state minimum wage, whichever is higher.

Another exception to the federal minimum wage rule is the FLSA’s Full-Time Student Program. Under this program, employers can obtain a certificate from the WHD that allows them to pay a full-time student “not less than 85% of a minimum wage”. The certificate also limits the number of hours a student can work, however. The maximum hours a full-time student can work under this program when school is in session is 8 hours per day and 20 hours per week. The student can work a full 40 hour week when school is not in session.

For high school students aged 16+ who are enrolled in vocational courses, the certificate allows an employer to pay no less than 75% of the minimum wage rate for the duration of the student’s enrollment. Keep in mind that some states do set a higher minimum wage requirement than the federal government, so research that information beforehand to ensure that you’re also in compliance with state laws.

What the FLSA Does Not Cover

While the FLSA seems to cover quite a bit of ground related to the do’s and don’ts of employee wages, there are a few areas that it does not delve into. For example, the FLSA does not have guidelines for how to issue breaks (with the exception of nursing mothers), holidays or vacations. Additionally, it doesn’t cover sick pay or severance packages, or regulate pay raises or final checks paid to terminated employees.

As evidenced by the example of exceptions that pertain to hiring youth, it’s clear that the minimum wage piece of the FLSA is complex. However, in order to avoid employees filing complaints with the WHD, as well as the subsequent fall out, it is important to familiarize yourself with the FLSA and stay informed about any changes to the Act. The WHD offers a handy, but thorough, reference guide to the FLSA. Of course, if you have questions, it’s best to contact them directly.

Workplace Safety and Notice Requirements

work-safetyRegardless of whether your business is a startup or long established in the community, or if it’s a sole proprietorship or a multinational corporation, there are federal business laws that you must follow. Not every federal business law applies to every business, however. Knowing which laws apply to you and your business will prevent you from enduring the stress and frustration of wasting money and time paying penalties and correcting any issues. Two basic, but critical areas of federal business law are the requirement of nearly every business to post specific notices, and the laws regarding workplace safety.

Posted Information

Beginning with the basics, federal law requires most businesses to prominently display certain official notices in common areas of the workplace, such as break rooms or kitchens. Ranging from OSHA notices to posters regarding minimum wage, the posting requirements vary from business to business. If you are unsure about which notices your business is required by law to post, consult the United States Department of Labor (DOL) FirstStep Poster Advisor. Some states also require additional notices, so check with your state’s labor department if you aren’t sure about local requirements.

Workplace Safety Laws

Focusing on the safety of your employees protects them, but it also protects you from lawsuits and government penalties for breaking the law, as well as violating OSHA standards. All businesses are required to adhere to federal safety laws, and the best and most convenient place to start is on OSHA’s Compliance Assistance webpage. The site is not comprehensive, as your business may need to meet additional requirements. But, it does offer guidance for every industry, including construction, health care, and general industries (retail, wholesale, manufacturing). It even offers assistance for employers who have a predominantly Spanish-speaking workforce.

In order to be certain that your business is in full compliance with federal safety laws, OSHA also offers a free on-site consultation program designed for small and medium-sized businesses. According to their website, in 2013, this OSHA program conducted about 30,000 workplace assessments.

In addition to federal workplace safety laws, each state may have its own set of additional requirements. Contact your state for further information, and to ensure that your business is also in compliance with state safety laws, should they be more stringent than those prescribed by the federal government.

Federal business laws can be complex and confusing given that not every law applies to every business. However, there are areas of law that every business must adhere to, regardless of size, as evidenced by the examples of the laws related to workplace safety and the requirement to post important notices. The question you need to answer is ‘which of those laws pertain to my specific business?’

If you are uncertain about which federal business laws may apply to you, complete the U.S. Department of Labor’s FirstStep Employment Law Advisor survey for clarity. While it doesn’t cover every federal business law, it does cover the major Department of Labor laws. If you have further questions, contact the Department of Labor. By ensuring that you and your business are in compliance with federal business laws you will avoid wasting time and money tangling with the government, and instead use those resources toward something more useful – growing your business.