Fair Labor Standards Act (FLSA) - Paying Your Employees

Paying Your Employees Under the Fair Labor Standards Act

by Walter J. Liszka, Esq.

The Fair Labor Standards Act (FLSA) is the main Wage and Hour Law in this country. For most employers, this Law requires that you pay your employees for every hour that they work with time and one half (1 ½) to be paid to all non-exempt employees for all hours worked over forty (40) hours in a work week. The term “non-exempt employees” is used to identify an individual who is not excluded from protection of the Fair Labor Standards Act due to occupying a managerial, administrative, professional or computer science position (“White Collar Exemption). If a non-exempt employee works more than forty (40) hours in a work week (a seven (7) calendar day consecutive period of time), you are required to pay this individual time and a half (1½) for all hours worked over forty (40) hours of work in that calendar work week.

You cannot avoid the payment of time and one half by giving the non-exempt employee time off instead of the payment of overtime pay. If an individual works an hour of overtime during a work week, you cannot let him go home an hour early next week and consider the matter resolved (i.e. comp time). Time off in another work week does not compensate the employee for working overtime. Of course, if an individual were to work an extra hour on a Tuesday and you allowed that employee to leave an hour early on Thursday (i.e. in the same work week) and the employee worked only forty (40) hours in that work week, the individual would not be entitled to overtime pay.

A company also has to make absolutely certain that it is paying an individual for all hours they work. In fact, if a time clock should malfunction or an employee does not punch in when they come to work, you as the employer are not relieved of your responsibility to pay the individual for all hours they worked. Of course, if an employee is not punching in or is punching in substantially earlier than allowed, you can discipline that employee for those violations to establish compliance with time recording and to alleviate overtime payment in the future.

One of the most bedeviling and confusing issues for employers is the issue of meal periods. Meal periods must be counted as hours worked unless all three (3) of the following conditions are met:

1. The meal period is of at least thirty minutes of duration; and
2. The employee is completely relieved from all duties during the period; and
3. The employee is free to leave their duty post-it is not required that the employee be allowed leave the work site.

If all of the above three (3) conditions are not met, you must pay the individual for the meal period. For example, if an employee went on their meal period for twenty (20) minutes and was then required to work because an emergency took place, you would be required to pay that employee for the twenty (20) minute meal period because they did not have a consecutive thirty (30) minute uninterrupted meal period.

Some employees will also have to be compensated for getting ready to work. If, for example, they are required to put on special clothing (safety suits, chemical protection suits, etc.) the employer must compensate employees for the time they take in putting on the specially required work outfits. Of course, if the individual can report to work in normal clothing, and does not have to spend any time putting on special attire, they do not have to be paid for the time that they use to put on a uniform that they choose to wear.

Individuals are also entitled to payment for some types of “travel time”. People are not entitled to be paid for normal commuting to and from their home to work, but are entitled to be paid for the time they commute from one work station to another after they have commenced work. As well, if an individual is required to travel out of town, the Department of Labor takes the position that such travel may not be the ordinary home to work type of travel. If, in fact, the travel was performed at the request of the employer, it is therefore part of the principal activity of the employer and the individual must be compensated. Note that the employer does not have to compensate the individual for travel from their home to the airport or departure station. Another very complicated issue deals with overnight travel. The Department of Labor regulations provide that travel time is compensable work time when it occurs during the employees regular work hours because the employee is merely substituting travel for their other work duties. Also, if travel occurs during normal work hours on non-work days, that time is also compensable. Note that the Department of Labor does not count as working time overnight travel that occurs outside the employee's regular working hours as a passenger on an airplane, train, boat, bus where the employee is free to relax. Of course, if the employee does perform work during the travel time, that must be compensable. It should also be noted that if transportation is furnished by an employer to transport the individuals from their home to work this is not a compensable activity.

With regard to an employee who is “on-call” to respond for emergencies, the primary issue deals with the fact of how free the employee is to go about his or her own (personal) activities. If, in fact, the individual is required to remain at a specified work location for a defined period of time to answer the emergency calls, all the time spent at that location is, in fact, work time. In the alternative, if the employee who is “on-call” is allowed to perform his or her own personal activities and merely must respond when an emergency occurs, this is probably not compensable except for the time the individual actually has worked in response to the emergency. Of course, every situation of response to “on-call” scenarios is an individualized fact situation and must be studied with regard to those specific facts with respect to whether or not the activity is compensable.

In closing, every employer must make certain that its employees are paid for all hours worked. Both the Federal Agency (U.S. Department of Labor) and the State Agency (Illinois Department of Labor) have extensive investigatory and enforcement powers and they use them!

Posted 3/11/2003