Wage and hour law—Designed for the 1920s, applied in the 21st century

The fundamental premise of the Fair Labor Standards Act (FLSA) is that all employees are covered by its base requirements. This includes being paid minimum wage for every hour worked and time and one-half for all overtime. The FLSA is a statute of inclusion, which means all employees are covered unless they fit within specific, narrowly defined exemptions. One problem is that it was designed for the Model T manufacturing plant and has grown in sometimes haphazard and inconsistent ways.

Exemptions

Various exemptions exist, but the most commonly used are executive, administrative, and professional exemptions. For any exemption to apply, however, the standard test must be met:

• All payments must be made on a salary basis.
• The amount paid annually must meet the specified minimum.
• Employees must perform duties that fit within the exemption as their primary duties.

The issue of salary basis can be very complicated for employers. To be truly paid on a salary basis, only limited deductions may be made from an employee’s pay. The U.S. Department of Labor (DOL) makes it clear employees must receive “a predetermined amount of compensation each pay period on a weekly or less frequent basis.”

Additionally, this amount can’t be reduced because of the quality or quantity of an employee’s work, and the employee “must receive the full salary for any week in which the employee performs any work, regardless of the number of days or hours worked.”