Fair Labor Standards Act
• Minimum Wage Provision
– $5.15 / hr.
– Advantages - wage floor, min. standard of living
– Disadvantages - limits opportunity for unskilled, and
the youth; may encourage substitutes for labor.
– Tipped employees - $2.13 / hr.
• Overtime Provision
– 1.5 X Base Wage Rate for > 40 hours/ week
– Only non exempt ees’ (hourly) covered
– Employer Required to file non-exempt ees’ records of
work hours with Dept. of Labor
Management 4030- Managing
Employee Reward Systems
FLSA (Cont’d)
• Enforcement of FLSA
– Audits
– Investigations
– Remedies include back wages, attorney fees and court orders
to stop violating FLSA
– Fines and imprisonment for willful violators
• Exemptions
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–
–
–
Executives/ Managers
Administrative Employees
Professionals
Outside Sales Force
• Challenge: Correct Classifications of Jobs
Management 4030- Managing
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Problems Managing Under the FLSA
• Correct Classifications of Exemption Jobs
– Exs. Team leader? Telemarketers?
• Bonus Calculations - Non-discretionary bonus is
part of overtime pay calculation.
– Ex. Shift premiums, Xmas bonus, special duty pay.
• Independent Contractor or Employee?
– Set own hours, own tools, own office & work site
• Tracking hours of non-exempts - Time clocks?
• Inflexible work hours - bias to 40 hr. work week.
– 50/30 schedule --> 10 hrs. OT
• Comp Time - time off instead of pay for OT?
Management 4030- Managing
Employee Reward Systems
Managing FLSA in the work place of the
1990s: Critical thinking Questions
Overtime Provision:
• How do you manage the overtime of people who
telecommute from a home office?
• There is a negative incentive to provide
variable pay for non-exempt employees
because the “bonus” calculation becomes
very complicated for overtime. Is there a
way to avoid this problem?
Management 4030- Managing
Employee Reward Systems
Equal Pay Act (1963)
Definition: Equal Pay for Jobs of Substantially
Equal Work
• Federal law to insure that women are paid equal
to men if they are doing similar work.
Factors that Define Equal Work
• Skill
• Effort
• Responsibility
• Working Conditions
Management 4030- Managing
Employee Reward Systems
Equal Pay Act (Continued)
There are 4 Legal Exceptions to the EPA: Men
and Women’s Pay on a similar job can be Different
Due to Differences in...
1. Seniority
2. Performance or Merit ( A valid Supervisor-based
evaluation of performance)
3. Quantity or Quality of Output (such as a
piecework or sales commission plan)
4. Factor other than Gender such as Night shift
differential or hazardous duty differential.
Management 4030- Managing
Employee Reward Systems