Menu
Home
Log in / Register
 
Home arrow Law arrow The handy law answer book

EMPLOYEE COMPENSATION

What is the major federal law regulating compensation for employees?

The major federal law regulating wages for employees is the Fair Labor Standards Act (FLSA), passed by Congress in 1938 as part of the New Deal legislation. The purpose was to establish a minimum wage below which employers could not pay employees. The law also dealt with overtime pay and the regulation of child labor. The FLSA applies to states but states are free to pass legislation that provides even greater protections to employees than the federal law. When a state law conflicts with FLSA, the employer must provide the employee with the benefits of the law that provides greater protection. In other words, the FLSA sets a floor, not a ceiling.

What does FLSA say about overtime pay?

FLSA requires employers to pay at least time and a half wages (1.5 times the normal rate of pay) when a worker labors more than 40 hours in a week. However, not all employees are covered under the overtime pay provisions. In other words, many employees—for example professionals—are not subject to the overtime pay provision. For more information about overtime pay, review the Department of Labor's "Fact Sheet" about overtime pay under FLSA at dol.gov/esa/whd/regs/compliance/whdfs23.pdf.

The Fair Labor Standards Act established a minimum wage in 1938, so that low-skilled laborer could better earn a livable income (iStock).

The Fair Labor Standards Act established a minimum wage in 1938, so that low-skilled laborer could better earn a livable income (iStock).

What is the minimum wage required by the FLSA?

Beginning on July 24, 2009, the minimum wage was raised to $7.25 per hour. The previous rate was $6.55 per hour. See the U.S. Department of Labor's website at dol.gov/esa/whd/flsa/ for updates on FLSA pay.

History of Minimum Wage*

Year

Wage

Year

Wage

1938

$0.25

1978

$2.65

1939

$0.30

1979

$2.90

1945

$0.45

1980

$3.10

1956

$0.75

1981

$3.35

1961

$1.15

1990

$3.80

1963

$1.25

1991

$4.25

1967

$1.40

1996

$4.75

1968

$1.60

1997

$5.15

1974

$2.00

2007

$5.85

1975

$2.10

2008

$6.55

1976

$2.30

2009

$7.25

*Source: Department of Labor at dol.gov/esa/minwage/chart.htm.

Do all states have separate laws dealing with minimum wages?

No, five states have no state law mandating minimum wages. These states are Louisiana, Alabama, Mississippi, Tennessee, and South Carolina.

What state has the highest minimum wage law?

Washington has the highest minimum wage law at $8.55 per hour. Oregon has the next highest minimum wage law at $8.40 per hour. California, Illinois, Massachusetts, Vermont, and Connecticut have the next highest minimum wage laws, providing for at least $8.00 per hour. However, the Connecticut and Illinois laws already provide for an increase to $8.25 in 2010.

What are some of the exceptions to the overtime pay requirement?

Some exceptions to the overtime pay provision are executives, administrative employees, professionals and outside sales persons. Executives—those employees with managerial responsibilities—must be paid on a salary basis. Executives are determined more by their actual job duties than their official job title. Administrative employees include those who are treasurers, public relation directors, human resources employ-

LegalSpeak: FLSA Exemption Law—29 U.S.C. § 213

(a) Minimum wage and maximum hour requirements

The provisions of sections 206 (except subsection (d) in the case of paragraph (1) of this subsection) and 207 of this title shall not apply with respect to—

(1) any employee employed in a bona fide executive, administrative, or professional capacity (including any employee employed in the capacity of academic administrative personnel or teacher in elementary or secondary schools), or in the capacity of outside salesman (as such terms are defined and delimited from time to time by regulations of the Secretary, subject to the provisions of subchapter II of chapter 5 of title 5, except that an employee of a retail or service establishment shall not be excluded from the definition of employee employed in a bona fide executive or administrative capacity because of the number of hours in his workweek which he devotes to activities not directly or closely related to the performance of executive or administrative activities, if less than 40 per centum of his hours worked in the workweek are devoted to such activities)....

ees and personnel directors. Administrative employees regularly exercise discretion and independent judgment in their jobs.

Professionals are those who have advanced knowledge or learning. They often have advanced educational degrees in their areas of expertise. Educators, architects and attorneys, for example, fall within the professional exemption to the overtime pay requirements. Outside sales persons must regularly work outside the employer's main place of business.

 
Found a mistake? Please highlight the word and press Shift + Enter  
< Prev   CONTENTS   Next >
 
Subjects
Accounting
Business & Finance
Communication
Computer Science
Economics
Education
Engineering
Environment
Geography
Health
History
Language & Literature
Law
Management
Marketing
Mathematics
Political science
Philosophy
Psychology
Religion
Sociology
Travel