Explain the Legal Requirement of the Fair Labor Standards Act Used to Regulate Employee Compensation
The U.S. Fair Labor Standards Act affords employees certain compensation requirements. Though the act, sometimes known as simply FLSA, sets a minimum hourly compensation, it also allows a number of exemptions for managers, professionals, farm employees and those working in certain American territories.
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General Requirements
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As of January 2011, the Fair Labor Standards Act requires that most employees working in the U.S. earn a minimum of $7.25 per hour. In addition, employees must earn at least one and one half times their base hourly pay for any hours worked in excess of 40 hours per week; this premium for extra time worked is typically known as overtime pay. Though the Fair Labor Standards Act sets a minimum hourly wage at the federal level, the U.S. Department of Labor notes that many states have set higher minimum wage levels for employees working in those states.
Tipped Employees
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Despite the federal minimum wage requirements under the FLSA, employees who earn tips may receive hourly compensation at a rate lower than the minimum wage. According to the U.S. Department of Labor's interpretation of the act, organizations with employees who earn tips may pay a base hourly wage of $2.13 as of January 2011. If the employee does not earn enough tips to reach an average wage at least equal to the minimum hourly wage, though, the employer must make up any shortage.
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Exemptions
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The Fair Labor Standards Act allows exemptions for employees who work in certain types of jobs. According to the business reference website Business and Legal Resources, organizations may declare employees in certain "white collar" roles exempt from the FLSA. These employees, often known as exempt or salaried employees, typically earn a specific annual salary regardless of how many hours they work. The official website for the Fair Labor Standards Act notes that employees must meet certain qualifications for exemption. According to the FLSA website, exempt employees must earn at least $455 per week or $23,600 per year as of January 2011, and the employer must pay this wage regardless of the number of hours worked. In addition, exempt employees must regularly supervise others, have a primary duty of management or fill a primary job role considered professional or administrative. As long as an employee meets these criteria, an organization may declare the employee exempt from FLSA protection.
Considerations
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In addition to exempt and tipped employees, certain other employees may not have legal compensation protection under the Fair Labor Standards Act. Farm workers are exempt from both minimum wage and minimum age requirements, according to the Department of Labor. Employees working in U.S. territories such as American Samoa and the Northern Mariana Islands fall under special provisions of the FLSA. Finally, employers may pay those under age 20 a minimum wage of $4.25, as of January 2011, during their first 90 days of employment.
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