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The Fair Labor Standards Act of 1938 (Pub.L. 75-718) (FLSA, ch. 676, 52 Stat. 1060, June 25, 1938, 29 U.S.C. ch.8), also called the Wages and Hours Bill, [1] is United States federal law that applies to employees engaged in interstate commerce or employed by an enterprise engaged in commerce or in the production of goods for commerce[2], unless the employer can claim an exemption from coverage. The FLSA established a national minimum wage,[3] guaranteed time and a half for overtime in certain jobs,[4] and prohibited most employment of minors in "oppressive child labor," a term defined in the statute.[5]

Contents

Amendments

History of the federal minimum wage in real and nominal dollars.

In 1946, the United States Supreme Court ruled in Anderson v. Mt. Clemens Pottery Co. that preliminary work activities, where controlled by the employer and performed entirely for the employer's benefit, are properly included as working time under the Fair Labor Standards Act. The decision is known as the "portal to portal act."

The 1947 Portal-to-Portal Act specified exactly what type of time was considered compensable work time. In general, as long as an employee is engaging in activities that benefit the employer, regardless of when they're performed, the employer has an obligation to pay the employee for his or her time. It also specified that travel to and from the work place was a normal incident of employment and shouldn't be considered paid working time.

The full effect of the FLSA of 1938 was postponed by the wartime inflation of the 1940s, which lowered wage values to below the level specified in the Act. The October 26, 1949 Fair Labor Standards Amendment (ch. 736, Pub.L. 81-393, 63 Stat. 910, 29 U.S.C. § 201) included changes to overtime compensation, defined "regular rate", redefined "produced", raised the minimum wage from 40 cents to 75 cents per hour and extended child labor coverage. It also included a few new exemptions for special worker classes.

In 1955 the FLSA was amended once again to increase minimum wage, this time to one dollar per hour.

The 1961 FLSA Amendment added another method of determining coverage called enterprise coverage. Enterprise coverage applies only when the business is involved in interstate commerce and its gross annual business volume is a minimum of $500,000. All employees working for these “enterprises” are then covered by the FLSA so long as the individual firms of the "enterprise have a revenue greater than $500,000 per year[6]. Under the original 1938 act, a worker whose work is in the channels of interstate commerce is covered as an individual. "Interstate commerce" is interpreted so broadly that practically anything fits, such as ordering, loading, or using supplies from out of state, accepting payments from customers based on credit cards issued by out-of-state banks, and so on.

The 1961 Amendment also specified that coverage is automatic for schools, hospitals, nursing homes, or other residential care facilities. Coverage is also automatic for all governmental entities at whatever level of government, no matter how big or small. Coverage does not apply to certain entities that are not organized for a business purpose, such as churches and charitable institutions. Minimum wage was again increased to $1.25 per hour. What could be considered a wage was specifically defined and entitlement to sue for back wages was granted.

The Contract Work Hours Standards Act, though not a direct amendment or modification to the FLSA, became law in 1962. It replaced with a single, comprehensive law the confusing and often ambiguous series of “Eight Hour Laws” dating back to 1892 that formerly governed hours of work for laborers.

The Equal Pay Act of 1963 was passed which amended the FLSA to make it illegal to pay workers lower wages strictly on the basis on their sex. It is often summed up with the phrase “Equal pay for equal work”. This was a major step towards closing the wage gap in women’s pay. In the past it had been generally accepted that women did not deserve to earn as much money as men because they were not heads of households. However, in many homes they were in fact the sole breadwinner, for various reasons, ranging from death or disability of a spouse to divorce or single parenthood. Regardless of roles in the family the Equal Pay Act established a single standard to apply to both sexes. The Equal Pay Act allows for unequal pay for equal work only when wages are set pursuant to a seniority system, a merit system, a system which measures earnings by quantity or quality of production, or other factors outside of sex.

The 1966 FLSA Amendment expanded coverage to some farm workers and increased the minimum wage to $1.60 in stages. This was in large part due to the efforts of labor leaders like Cesar Chavez who brought farm worker rights to national attention during this period. The 1966 FLSA amendment also gave state and local government employees coverage for the first time.

The Age Discrimination in Employment Act (ADEA) of 1967 prohibited employment discrimination against persons 40 years of age or older. Some older workers were being denied health benefits based on their age and denied training opportunities prior to the passage of the ADEA. This Act applies only to businesses employing more than twenty workers.

The 1974 FLSA Amendment expanded coverage to include other state and local government employees that were not previously covered. Domestic workers also became covered and the minimum wage was increased to $2.30 in stages.

The 1977 FLSA Amendment increased the minimum wage in yearly increments through 1981 to $3.35 an hour. Changes were made involving tipped employees and tip credit. Partial over time exemption was repealed in stages for certain hotel, motel and restaurant employees.

The Migrant and Seasonal Agricultural Worker Protection Act (MSPA), passed in 1983, was designed to provide migrant and seasonal farm workers with protections concerning pay, working conditions, and work-related conditions, to require farm labor contractors to register with the U.S. Department of Labor, and to assure necessary protections for farm workers, agricultural associations, and agricultural employers.

The Amendment to the FLSA enacted in 1985 permitted state and local government employers to compensate their employee’s overtime hours with paid time away from work (compensatory time or “comp time”) in lieu of overtime pay. It also included modifications to ensure that true volunteer activities were not impeded or discouraged.

The Department of Defense Authorization Act of 1986 repealed the eight-hour daily overtime requirements on all federal contracts.

The 1989 FLSA Amendments increased the minimum wage to $4.25 in stages. The distinction between retail and non-retail was eliminated. Construction and laundry or dry cleaning were no longer named as enterprises. Changes were again made to the tip credit system. A “training wage” was established at 85% of minimum wage for workers less than 20 years of age. This “training wage” could be paid for up to 90 days under certain conditions.

The 1993 Family and Medical Leave Act provided eligible employees up to 12 weeks of unpaid, job-protected leave for certain family and medical reasons. This was partly inspired by similar policies already in effect throughout most of Western Europe. The passage of this act was the fulfillment of a campaign promise made by Bill Clinton during the presidential campaign of 1992 and one of the first major bills passed during his term.

The 1996 FLSA Amendment increased the minimum wage to $5.15 an hour. However, the Small Business Job Protection Act (PL 104-188), which provided the minimum-wage increase, also detached tipped employees from future minimum-wage increases [7]. Prior to 1996, tipped employees received 50% of the prevailing minimum wage. The tipped employee minimum wage was frozen, under federal law at least, at $2.13 per hour(29 U.S.C. § 203). State laws that grant higher hourly wages remain in force.

On August 23, 2004, controversial changes to the FLSA's overtime regulations went into effect, making substantial modifications to the definition of an "exempt" employee. Low-level working supervisors throughout American industry were reclassified as “executives” and lost overtime rights. These changes were sought by business interests and the Bush administration, which claimed that the laws needed clarification and that few workers would be affected. The Bush administration called the new regulations "FairPay." But other organizations, such as the AFL-CIO, claimed the changes would make millions of additional workers ineligible to obtain relief under the FLSA for overtime pay. Attempts in Congress to overturn the new regulations were unsuccessful.

Conversely, some low-level employees (particularly administrative-support staff) that had previously been classified as exempt were now reclassified as non-exempt. Although such employees work in positions bearing titles previously used to determine exempt status (such as "executive assistant"), the 2004 amendment to the FLSA now requires that an exemption must be predicated upon actual job function and not job title. Those employees with job titles that previously allowed exemption whose job descriptions did not include managerial functions were now reclassified from exempt to non-exempt.

On May 25, 2007, President Bush signed into law a supplemental appropriation bill (H.R. 2206) which contains the Fair Minimum Wage Act of 2007. This provision amended the FLSA to provide for the increase of the federal minimum wage by an incremental plan, culminating in a minimum wage of $7.25 per hour by the summer of 2009.

Practical application

Today, in an age of global economic change and dramatic alteration of the American work force, the Fair Labor Standards Act still stands as the preeminent tool for enforcing and protecting the rights and wages of non-exempt employees.

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",[2] 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 applicable to professional, administrative and executive employees. Exemptions are narrowly construed; an employer must prove that the employees fit "plainly and unmistakenly" 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.[8] 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.

See also

References

Further reading

External links

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