June 17, 2019 | Payroll Software | Posted by Ascentis
How Well Do You Know Your Wage and Hour Law Basics?
Any HR professional can tell you that there is no shortage of laws and regulations governing day-to-day HR functions. The combination of local, state, and federal laws impacting HR make for a complex web that people could — and do — spend years studying and parsing out. Before delving too deeply into those complicated specifics, though, it’s important to understand the basics. Let’s take a look at some of the most important things to know about current wage and hour laws under the Fair Labor Standards Act (FLSA).
Minimum wageDo you know what the current minimum wage is? It’s kind of a trick question, as the answer varies depending on where you are. The federal minimum wage has stood at $7.25 per hour since 2009, but states and even counties and municipalities are allowed to set minimum standards that can be higher or lower than the federal wage.
As of 2019, 29 states and the District of Columbia maintain higher minimum wages than the federal standard, with two setting a lower rate, 14 standing equal, and five opting not to set a state minimum wage at all. That means that a minimum wage worker in Wyoming or Georgia might make $5.15 an hour (the lowest minimum in the U.S.) while someone doing the same job in Emeryville, California earns $15.69 per hour (the country’s highest rate), and workers in many other states could be making the federal standard of $7.25.
On top of those disparities, there are also several key exceptions to consider. If a worker receives at least $30 a month in tips, for instance, those tips can be counted toward their wage, and the employer is only required to pay a cash wage of $2.13 per hour. In certain circumstances, an employer can also provide room and board for an employee as part of their regular wages. And in some cases, an employee under 20 years old working their first job may be paid a “youth wage” of $4.25 per hour.
OvertimeUnder FLSA, an hourly worker logging more than 40 hours in a week is entitled to one-and-a-half times their standard rate of pay for each hour worked beyond 40. As long as that overtime rate is met, there is no limit to the number of hours an employee can work in a week. This rule applies even if a worker is paid on a biweekly basis—an employee who works 42 hours one week and 38 the next would still receive overtime pay for those two additional hours, for example. The exceptions here are Alaska, California, and Nevada, which all provide overtime for workers putting in more than eight hours in a workday, and Oregon, which provides overtime for certain employees putting in more than 10 hours in a workday.
Rate of payThe phrase “rate of pay” comes up a lot in FLSA conversations, but its exact meaning is a bit nebulous. The term isn’t expressly defined in the FLSA language, largely because there are so many factors contributing to an employee’s rate of pay. Basically, it can be looked at as a worker’s regular salary or hourly wage plus any bonuses, promotions, shift differentials, or other forms of remuneration. There are also several key exemptions that specifically do not fall under the blanket of “rate of pay,” including:
- Gifts and rewards, including discretionary bonuses
- Paid nonworking hours such as holiday time or sick leave
- Reimbursable expenses such as travel allowances
- Profit-sharing plans
- Health or life insurance contributions
- “Premium pay” periods such as holidays or weekends when employees earn at least the equivalent of the overtime pay rate
What doesn’t FLSA cover?While FLSA covers a lot of ground, there are also a number of notable areas that are left up to the states to decide. As both employers and employees often mistakenly assume that these areas are covered by federal law, it’s all the more important to know what state regulations apply to your business. Here are a few frequently misunderstood non-FLSA considerations:
Meals and rest periods
While most employers do set aside time for workers to take breaks and eat, it is not a federal requirement. 20 states have laws requiring a certain amount of employee meal time, while only nine mandate rest periods.
Employers are not federally required to provide pay records to their workers. However, 41 states plus the District of Columbia do set some requirements for providing pay stubs. The amount of information they are required to provide varies from state to state.
Frequency of payment
Most employers provide weekly or biweekly payments, but that’s not because they’re required to. Some states allow monthly or semimonthly payments, while others set no specific requirements for frequency of payment.
FLSA guidelines cover much more than we have room to discuss here, obviously, and there are many other regulations that factor into a given company’s wage and hour law requirements. Still, getting a handle on these basics should give any employer a strong grounding on which to expand their knowledge of what is and isn’t required when it comes to paying employees.
Download our white paper on wage and hour laws today for a more in-depth look.