Rules on Compensation for Hourly Employees
If you pay your employees based on the number of hours they work, you are subject to the federal government's regulations for the compensation of hourly employees as described in the Fair Labor Standards Act. The FLSA mandates the minimum hourly wage, overtime pay requirements and exemptions from the law.
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Minimum Wage Requirements
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At the time of publication, the FLSA requires employers to pay employees age 20 or older a minimum of $7.25 per hour. Employers must pay employees under age 20 a minimum of $4.25 per hour during their first 90 days of employment. After 90 days, employees under age 20 must receive the standard minimum wage.
Minimum Wage Exemptions
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Employers may compensate an employee with less than the minimum wage if the employee is a student learner, or if he is a full-time student employed by a university or in a retail, service or agricultural position. Employees whose productive capabilities are impaired because of physical or mental handicaps may also receive less than the minimum wage. Other employees exempt from minimum wage requirements include those in executive, administrative or outside sales positions, certain professionals, employees of seasonal establishments, fishermen, newspaper delivery employees, casual babysitters, workers on small farms, switchboard operators for small telephone companies and seamen who work on foreign vessels.
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Overtime Pay
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Hourly employees work overtime when they work more than 40 hours in one week. Under the FLSA, employers must compensate an hourly employee at a rate of at least 1.5 times his normal hourly rate when he works overtime. Federal law doesn't prohibit employers from requiring employees to work overtime, nor does it limit the number of hours employees over age 16 can work during one week.
Overtime Exemptions
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Employees who are exempt from minimum wage laws are typically exempt from overtime pay laws as well. Other workers exempt from overtime pay laws include farm workers, employees of movie theaters, live-in domestic service workers, employees of certain rural broadcasting stations, certain salespersons or mechanics working for non-manufacturing establishments and certain retail or service personnel who earn commission. Employees who perform certain agricultural jobs, employees of certain petroleum companies and employees of medical care establishments who agree to altered schedules may be partially exempt from overtime pay laws.
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References
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