Fair Labor Standards Act of 1938

Question 1

What 8 main catgories does the FLSA cover?

Answer 1

1) Payment of Minimum Wage ($7.25 federal and $2.13 for tipped employees)
2) In minimum wage provision - Amendment EQUAL PAY ACT - prohibiting discrimination on the basis of sex
3) FLSA also prohibits employment discrimination against employees who exercise their rights under the Act or who participate in proceedings under the Act
4) Premium Pay (Overtime pay) (1 1/2 times the employer’s regular rate for working hours in excess of 40 hours in any work week)
5) Restricts employment of “homeworkers” and “children”
6) Regulate certain industries and occupations including Agriculture, Reailers of Goods & Services, Motor Carriers, Seamen, and Fishing and Aquatic occupations
7) Record Keeping
8) Youth Employment Standards

Question 2

THRESHOLD: What two ways can an employee be covered by the FLSA?

Answer 2

1) Enterprise Coverage

Employees who work for certain businesses or organizations (or “enterprises”) are covered by the FLSA. These enterprises

i) have at least 2 employees
ii) those that have an annual dollar volume of sales or business done of at least $500,0000
iii) hospitals, businesses providing medical or nursing care for residents, schools and preschools, and government agencies
2) Individual Coverage

Employees are protected if their work

i) regularly involves them in interstate commerce

Question 3

Does FLSA cover Federal, State and local government employers?

Answer 3

Yes.

BUT a limited 11th Amendment immunity exists for Federal and State Employers. NO IMMUNITY for local government employers.

Question 4

Does FLSA cover Unions or Union Representatives?

Answer 4

No, they are not considered an “Employer” under the FLSA definitions unless they are acting as an employer.

(Similar to Equal Pay Act and ADEA also follows Unions not to be employers)

Question 5

How does the FLSA define employee?

Answer 5

Under the FLSA,

An “employee” is any individual whom an employer suffers, permits, or otherwise employs to work

Question 6

How does the FLSA determine whether an individual is an employee or independent contractor?

Answer 6

****NEED TO FINISH ANSWER

Most modern statements of the common law test borrow many factors of the “economic realities” test. See Reich v. Circle C Investments, Inc., 998 F.2d 324 (5th Cir. 1993)

Question 7

Can more than one party be an employer under the FLSA?

Answer 7

Yes, under “Joint Employment.”

***Under certain circumstances, even an individual or owner of an employer-business may be one of the “employers” liable for the business’s wage and hour violations.

Question 8

Fact Scenario: Massage students performed massages for members of public, for which school charged and collected discounted rates.

Are the massage students employees under the FLSA?

STATE THE IRAC

Answer 8

STATE THE IRAC (Issue, Rule, Application, Conclusion)

Issue: Are students (and interns) covered by FLSA when money is received from the school?

Rule: Apply the Primary Beneficiary Test- to determine which party is the “primary beneficiary” of the relationship - Courts have identified 7 factors: (1) Extent intern and employer understand there is no expectation of compensation (express or implied), (2) Exent to which internship provides training similar to educational environment, including clinical and hands-on training provided by educational institutions, (3) Extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit, (4) Extent to which the internship accomodates the intern’s academic commitments by corrsponding to the academic calendar, (5) The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning, (6) Extent to which the intern’s work compliments, rather than displaces, the work of paid employees while providing significant educational benefits to the intern, (7) Extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

Application: The work was primarily for the students benefit by obtaining experience with oversight, and fulfilling clinical requirements for professional licensing.

Conclusion: No, not employees. Nesbitt v. FCNH, Inc. (10th Cir. 2018)

Question 9

What is the FLSA exemption regarding individuals working in fire protection or law enforcement activities.

Answer 9

Exemption Exists: Any employee of a public agency who in any workweek is employed in fire protection activities or any employee of a public agency who in any workweek is employed in law enforcement activities (including security personnel in correctional institutions), if the public agency employs during the workweek less than 5 employees in fire protection or law enforcement activities

Question 10

What is the statute of limitations for a claim under the FLSA?

Answer 10

Rule: The statute of limitations is 2 years.

Exception: If there is determined to be a willful violation, then it will be extended to 3 years. Wilfull violation is where the employer either knew or showed reckless disregard for the matter of whether its conduct was prohibited by the statute.

(Court may limit the amount of liquidated damages if it finds a good faith defense by employer)

Question 11

What is the worst that can happen to employer violating FLSA?

(Name all potential issues)

Answer 11

Failure to comply with the FLSA could result in any of the following:

• payment of liquidated damages (double back pay);
• payment of attorney’s fees;
• civil money penalties;
• fines and jail terms for cases of repeated willfull violations; and
• other injunctive and equitable relief.

Question 12

What should be done about labor agreements that contain provisions that are in noncompliance with the FLSA?

Answer 12

The jurisdiction should seek to renegotiate the labor agreements to come into compliance with the act. Provisions allowing comp time are valid, but employers must still give the leave at time and one-half, regardless of the labor agreement provisions.

Question 13

How is the FLSA enforced?

Answer 13

DOL’s Wage and Hour Division initiates investigations when complaints are filed or when particular industries are targeted for investigation. The solicitor of labor can bring a lawsuit on an employee’s behalf in appropriate cases where the Wage and Hour Division finds that FLSA violations have occurred. Additionally, the U.S. Department of Justice can criminally prosecute persons who commit willful violations of the act

Question 14

What is minimum wage and what is the rule on paying tipped employees?

Answer 14

The FLSA requires employers to pay non-exempt employees minimum wage (currently, $7.25 an hour), but treats “tipped employees” — those who customarily and regularly receive at least $30 a month in tips — differently. Because tipped employees receive substantial compensation through tips, the FLSA permits employers to pay them a direct wage of $2.13 an hour and take a “credit” for the tips received by the employee to satisfy the remaining portion ($5.12 an hour) of the minimum wage. If the combined direct wage and total tips received by an employee is less than the minimum wage for all hours worked in a given workweek, the employer must make up the difference. Usually, though, servers receive tips well in excess of the minimum wage and, in fact, often earn far more than traditionally non-tipped workers, such as kitchen staff, particularly at fine-dining establishments.

Question 15

A new proposed rule by the DOL seeks to implement changes on tip pooling. What is the current rule?

Answer 15

NPR seeks to implement changes on tip pooling, made by the Consolidated Appropriations Act (CAA) of 2018.

That Act prohibits employers, managers, or supervisors from keeping employee tips, including those from a tip pool, regardless of whether the employer takes a tip credit under the FLSA.

The Act, however, would allow employers to mandate a tip pool that includes traditionally tipped (e.g., servers and bartenders) and non-tipped (e.g., cooks and dishwashers) positions if the employer does not pay the tipped employees using a tip credit (that is, the employee is paid the full minimum wage without any credit for tips).

Question 16

In November 2018, what did the DOL do to the 80/20 rule regarding tips?

Answer 16

The DOL has now reissued the 2009 Opinion Letter (designated as FLSA2018-27). That opinion letter states, contrary to the 20% Rule, “We do not intend to place a limitation on the amount of duties related to a tip-producing occupation that may be performed, so long as they are performed contemporaneously with direct customer-service duties and all other requirements of the Act are met.” The Opinion Letter also provides guidance regarding which duties are related to tipped work and which are not, stating, “We also believe that guidance is necessary for an employer to determine on the front end which duties are related and unrelated to a tip-producing occupation so that it can take necessary steps to comply with the Act.”

To that end, the Opinion Letter explains that the “[d]uties listed as core or supplemental for the appropriate tip-producing occupation in the Tasks section of the Details report in the Occupational Information Network (O*NET), … shall be considered directly related to the tip-producing duties of that occupation[,] … as long as they are performed contemporaneously with the duties involving direct service to customers or for a reasonable time immediately before or after performing such direct-service duties.” Conversely, employers may not take a tip credit for any duties not listed in the relevant O*NET task list. Thus, now employers have guidance regarding what work its tipped workers may perform without losing the tip credit.

This does not mean, of course, that tipped employees are allowed to spend an unlimited amount of time performing so-called non-tip-generating work. If they do, they arguably will no longer be performing only a tipped occupation, but instead may be found to be performing dual jobs.

Question 17

What is the fluctuating work week under the FLSA?

Answer 17

The FLSA regulations permit employers to pay nonexempt employees a fixed salary for a fluctuating workweek and to compensate them for their overtime hours on a “half-time” basis (29 C.F.R. §778.114). Under this method of compensation, an employee is paid a fixed salary covering whatever number of hours the job demands in a given week. With straight-time already compensated in the salary, only ½ the basic rate (called “half-time”) must be paid for overtime. The amount of the half-time payment necessarily varies depending on the number of hours worked in excess of 40 during the workweek.

An employer may use the half-time method of calculating overtime compensation only if:

1. The employee understands that his or her salary is meant to cover all hours worked;

2. The parties have a clear understanding that the fixed salary (apart from the half-time payments) will not fluctuate even though the job demands that the employee work more or less than 40 hours in a given week; and

3. The salary is large enough to assure that the average hourly wage never falls below the FLSA minimum wage.

In some instances, the DOL may require that the employee’s workweek necessarily fluctuates so that the employee’s hours of work do not follow a regular schedule but instead vary from week to week.

In most cases, however, it appears that the only fluctuation required is that the hours of work ““fluctuate” over 40 hours per week.