Fair Labor Standards Act - Practical Application

Practical Application

The Fair Labor Standards Act applies to "employees who are engaged in interstate commerce or in the production of goods for commerce, or who are employed by an enterprise engaged in commerce or in the production of goods for commerce", unless the employer can claim an exemption from coverage. Generally, an employer who does at least $500,000 of business or gross sales in a year satisfies the commerce requirements of the FLSA, and therefore that employer's workers will be subject to the FLSA's protections if none of the other exemptions apply. Several exemptions exist that relieve an employer from having to meet the statutory minimum wage, overtime, and record-keeping requirements. The largest exceptions apply to the so-called "white collar" exemptions that are applicable to professional, administrative and executive employees. Exemptions are narrowly construed; an employer must prove that the employees fit "plainly and unmistakeably" within the exemption's terms.

The FLSA applies to "any individual employed by an employer" but not to independent contractors or volunteers because they are not considered "employees" under the FLSA. Still, an employer cannot simply exempt workers from the FLSA by calling them independent contractors, and many employers have illegally misclassified their workers as independent contractors. Some employers similarly mislabel employees as volunteers. Courts will look at the "economic reality" of the relationship between the putative employer and the worker to determine whether the worker is, in fact, an independent contractor. Courts use a similar test to determine whether a worker was concurrently employed by more than one person or entity; commonly referred to as "joint employers." For example, a farm worker may be considered jointly employed by a labor contractor (who is in charge of recruitment, transportation, payroll, and keeping track of hours) and a grower (who generally monitors the quality of the work performed, determines where to place workers, controls the volume of work available, has quality control requirements, and has the power to fire, discipline, or provide work instructions to workers).

Presuming an employee is not exempt from overtime, there are many instances in which overtime is not paid properly, including when an employee is not paid for travel time between job sites, activities before their shift starts or after it ends, and activities to prepare for work that are central to work activities.

If an employee is entitled to overtime they must be paid one and a half times the employee's "regular rate of pay" for all hours worked over 40 in the same work week.

Employees who are employed in a ministerial role by a religiously affiliated employer are not entitled to overtime under the Act.