Frequently Asked Questions About the FLSA
The Fair Labor Standards Act (FLSA) establishes standards for fair wages, overtime pay, recordkeeping, and child labor requirements to protect full and part-time employees from low wages and unjust working hours. Federal, state, and local courts use the act to protect workers who may lack the power to protect themselves from harmful employers and their practices. The act also protects employees from illegal pay practices including immigrant workers.
Standards set in the Fair Labor Standards Act do not include:
- Vacation, severance, holiday, or sick pay
- Meal and rest break periods, holidays off, or vacations
- Premium pay for holidays and weekends
- Pay raises
- Discharge notices including reasons for discharge or immediate payment of final wages for terminated employees
The FLSA covers most employees and applies only to employers whose annual dollar amount of sales or business done is $500,000 or more. The act also covers businesses that engage in interstate commerce. Courts typically interpret the FLSA loosely, considering correspondences through letters, mail, and phone calls between states as grounds for coverage.
There are some exemptions for particular types of businesses and specific types of work in the FLSA. Employment practices the FLSA does not regulate include:
- The Motor Carrier Act Exemption (for employees who are interstate and long haul drivers)
- Exemptions for Farmworkers
- Exemption for Commissioned Outside Sales employees
- Exemptions for highly paid Executive, Administrative, or Professional employees
- Exemptions for Computer Professional
- Exemptions for Seasonal or Recreational Establishments
For more information on FLSA exemptions, visit https://webapps.dol.gov/elaws/whd/flsa/screen75.asp
The FLSA sets standards for minimum wages and overtime bonuses. Nonexempt workers covered under the FLSA are entitled to a national minimum wage of $7.26 an hour as of July 24, 2009.
Nonexempt workers must be paid overtime premiums at a rate of no less than 1.5 times their regular rate of pay for any hour worked in excess of 40 hours in a single workweek.
Frequently Asked Questions About the NCWHA
The North Carolina Wage and Hour Act (NCWHA) and its amendments cover standards for minimum wages, overtime, wage payments, payments of promised wages and benefits (including vacation, holiday, and sick pay), and youth employment in the state of North Carolina.
Minimum wage and overtime provisions of the NCWHA typically apply to all North Carolina businesses that are not covered by the FLSA. Wage payment provisions cover all North Carolina employees, except for federal, state, or local government employees.
The basic requirements of the NCWHA are:
- Payments of minimum wages
- Overtime premiums for time worked over 40 hours in a workweek
- Wage payment provisions
- Record-Keeping regulations for business’ employment records
The NCWHA sets standards for minimum wages and overtime bonuses in North Carolina. Employers covered under the FLSA are exempt from NCWHA minimum wage provisions.
The NCWHA sets the current minimum wage rate at $7.25 per hour for all hours worked in a workweek, including time spent on pre-and post-shift responsibilities if they are required by the employer. Unless exempt, employers must ensure all employees receive a minimum wage for all hours worked during a workweek.
If workers work in excess of 40 hours during a workweek, the NCWHA regulates wage rates for overtime pay. Employees must be paid time and a half based on the employee’s regular pay rate. When calculating overtime, employers must use the regular rate of pay, not minimum wage rates.
Season and recreational establishments begin overtime after 45 hours during a workweek. For tipped employees, the regular rate of pay is minimum wage. Employees paid salary or commission’s pay is converted to an hourly rate – dividing the pay for the week by the number of hours worked in a workweek. If the rate is less than minimum wage, the employer must bring the rate up to minimum wage. Salary compensates for all hours worked, thus only half-time premium is used on overtime hours.
The Wage and Hour Act applies on a workweek basis. Employers are not permitted to average hours for 2 or more weeks, regardless of pay periods.
The NCWHA sets standards for wage payment and collection for promised wages.
- Here are some of the requirements the NCWHA includes on timely payment of wages:
Wages are to be paid on a regular basis. Paydays are set by the employer and can be daily, weekly, biweekly, semimonthly, or monthly.
- Final paychecks must be mailed if requested.
- If the amount of an employee’s wages are in dispute, the employer must pay the undisputed amount on the regular payday. Employers cannot restrict undisputed portions of wages or the right of the employee to pursue their claims.
- At the time of hiring, employees must be informed of their pay rate, paydays, and all policies regarding promised wages including vacation, sick leave, commissions, bonuses, and other payments. Employment policies and practices must be made continuously available to employees, either in writing or posted noticed.
- Employers must notify employees in writing or accessible posted notice to employees if any changes are made to their promised wages prior to the effective change date. Retroactive increases to wages do not require notification.
- All deductions from pay must be authorized (unless provided for by law) and a statement of deductions must be given with each payment received.
Common North Carolina Employment Law Questions
The FLSA’s minimum wage and overtime provisions apply to employees of the employer. In other words, workers are economically dependent on the business of the employer, regardless of skill level. Most workers are employees, however, independent contractors are workers with economic independence and are in business with themselves.
The FLSA uses the following factors to determine whether a worker is an employee or independent contractor:
- The extent of work performed, skill, and initiative, and how integral it is to the employer’s business
- How the worker’s managerial skills affect their opportunity for profit/loss
- Investments in facilities and equipment by the worker and employer
- The degree of control by the employer
- The length of time of the worker’s relationship with the employer
For more information on independent contractors, visit https://www.dol.gov/whd/regs/compliance/whdfs13.htm
There are different legal obligations for employees in occupations that regularly receive more than $30 in tips per month. Employers can consider tips a part of wages, but employers are still obligated to pay at least $2.13 an hour in paid wages.
Employers who use the tip credit provision must inform employees in advance, and must show through recordkeeping that the employee receives at least the minimum wage. When an employee’s tips are combined with direct wages, the employer must make up the difference.
Employees are entitled to keep all of their tips unless they participate in a valid tip pooling or sharing arrangement. Valid agreements must consist of other tipped employees and cannot include individuals such as owners, managers, or back-of-house- staff.
For more information on tipped employees, visit https://www.dol.gov/whd/regs/compliance/whdfs15.htm
Hours worked are classified for covered employees who must be paid for all hours worked in a workweek. A workweek is a period of 168 hours during seven consecutive 24-hour days. In general, hours worked includes all time employees are on duty, on-premises, or at prescribed job sites. Hours worked starting at the first activity of the workday and end at the last work activity of the workday.
For more information on the FLSAs coverage of hours worked, visit https://www.dol.gov/whd/regs/compliance/whdfs22.htm
The FLSA protects employees from retaliation after they complain about their compensation or wages. Employees cannot be discriminated against or discharged from such complaints. If negative action is taken against an employee after engaging in protected activity, the employee or the Secretary of Labor can file a suit of relief to reinstate them at their job and receive payment of lost wages and damages.
For more information on retaliation coverage under the FLSA, visit https://www.dol.gov/whd/regs/compliance/whdfs77A.htm
The NCWHA’s wage payment provisions may include sick leave, vacation and holiday pay, severance pay, commissions, bonuses, and other amounts promised by the employer if they have a policy or practice of making such payments.
Employers who provide such wages to employees should pay such wages as required by company policy or practice on the regular payday. Employees must be notified in writing or posted notice if any company policy changes and results in loss of promised wages such as commissions and bonuses. Sick leave pay is excluded from this requirement and employers are not required to notify employees.