Practicing for 20+ years Austin Employment Lawyer and Houston Labor Attorney Jack Nichols fights to enforce your rights to minimum wage, overtime, equal pay, and unpaid wages, bonuses and commissions.
What is the Fair Labor Standards Act (FLSA)?**
The FLSA is a federal statute that guarantees that most hourly, non-exempt employees will be paid the prevailing minimum wage and overtime, and that most women and men will receive equal pay for equal work.
What May Not Be Required by the FLSA?**
Generally, the FLSA does not require that an employer pay an employee for time not actually worked. Accordingly, an employer may not be required to pay the employee for:
- Sick or Vacation Leave
- Additional Pay for holiday, weekend or nighttime work
- Rest or Lunch Breaks (However, if an employer provides breaks of between 5-20 minutes, such breaks should be paid, but breaks over 30 minutes are not required to be compensated.)
How Does an Employee Violate Minimum Wage Laws?** How Does an Employer Violate Overtime Laws?** What Are Common Minimum Wage and Overtime Violations?**
Subject to exceptions, the FLSA generally requires that all hourly, non-exempt employees are paid the prevailing minimum wage. Also, subject to exceptions, FLSA generally requires that all hourly, non-exempt employees are paid overtime at a rate of 1.5 times the employee’s normal hourly rate for all hours worked above 40 within a work week. However, in practice, the application of these seemingly simple requirements is more difficult than it sounds. Even when an employer agrees to pay the employee the prevailing minimum wage plus overtime, errors often occur when an employer does not count all the time an employee is working and when an employer misclassifies an employee. Common errors include the following:
- Automatically deducting the same amount of time for an employee’s lunch break everyday regardless of the amount that the employee has actually taken;
- Paying an employee, the same amount everyday regardless of the amount of time that the employee has actually worked, and regardless of when the employee actually started and stopped working;
- Not compensating an employee for time worked at home, or for time spent answering emails or phone calls during nonworking hours;
- Not compensating an employee for work performed on unpaid leave;
- Making improper deductions from an employee’s pay which reduce the employee’s pay below the minimum wage.
- Not properly determining when work related travel is compensable;
- Manipulation of the work week to avoid the employee accumulating enough hours for overtime;
- Misclassifying an employee as an exempt salaried employee;
- Misclassifying an employee as an independent contractor; and/or
- Among others
When is an Employee Improperly Characterized as an Independent Contractor?** When is a Worker and Employee?**
A worker is an employee of an alleged employer if the alleged employer has the right to control the worker. How the worker is titled, i.e., independent contractor or employee is irrelevant. Control is established if the alleged employer has the right to direct the details of when, where, and how the work is done. The alleged employer need not exercise its control over the employee, but only needs to have the right to do so. The Texas Workforce Commission uses a 20-factor test which is like those listed below to determine whether an employee has been improperly classified as an independent contractor. Depending on the business and the services to be performed, not all the factors may apply. Further, the weight assigned to any one factor depends upon the circumstances.
- INSTRUCTIONS: An Employee receives instructions regarding when, where and how the work is to be done.
An Independent Contractor controls when, where and how his work is performed with few instructions regarding the methods and details of the work.
- TRAINING: Employees may be trained by the employer and required to or take training courses.
An Independent Contractor applies his own methods and needs not training from the alleged employer.
- INTEGRATION: The Employee’s services may be merged into the firm’s operations and its success depends at least in part of the services of the Employee.
An Independent Contractor’s services may be separate from those sold by the client’s business.
- SERVICES RENDERED PERSONALLY: An Employee’s services are usually rendered personally.
An Independent Contractor may be able to hire or assign another to do all or part of the job.
- HIRING, SUPERVISING & PAYING HELPERS: An Employee may be able to hire others who will be employees of the employer but not the Employee.
An Independent Contractor may hire and pay its own employees.
- CONTINUING RELATIONSHIP: An Employee’s term of service may be indefinite.
An Independent Contractor may be hired for a specific, limited period.
- SET HOURS OF WORK: An Employee’s hours are set by the employer.
An Independent Contractor works the days and hours chosen by him or her.
- FULL TIME REQUIRED: An Employee may devote his service to his employer on a full-time basis;
An Independent Contractor may not devote his services to only one client.
- LOCATION WHERE SERVICES PERFORMED: An Employee is required to provide his services at a place which is determined by the employer.
Independent Contractors maybe able to choose where they provide their services.
- ORDER OR SEQUENCE SET: An employer sets the order or sequence of work for the Employee.An Independent Contractor sets the order or sequence of his services, and is only concerned with the final product.
- ORAL OR WRITTEN REPORTS: Employees may be required to submit written or oral reports regarding the work. An Independent Contractor may not be required to submit oral or written reports.
- PAYMENT BY THE HOUR, WEEK, OR MONTH: Employees may be paid at regular intervals. Independent Contractors may be paid by the job.
- PAYMENT OF BUSINESS & TRAVEL EXPENSE: Employers usually reimburse an Employee’s business-related expenses or pay them directly. An Independent Contractor may pay all their business expenses without being reimbursed.
- FURNISHING TOOLS & EQUIPMENT: An employer may provide an Employee with the tools, materials and equipment needed for their work. Independent Contractors may provide their own tools and equipment.
- SIGNIFICANT INVESTMENT: An Employee may not invest their work as an employee. Instead, an Employee is economically dependent on the employer. An Independent Contractor may have a significant investment in his business.
- REALIZE PROFIT OR LOSS: An Employee does not realize a profit or loss from his work. Independent Contractors may realize a profit or suffer a loss depending on how they manage their income and expenses.
- WORKING FOR MORE THAN ONE FIRM AT A TIME: Employees may only work at one employer at a time. Independent Contractors may have several clients for whom they work.
- MAKING SERVICE AVAILABLE TO THE PUBLIC: Employees may only provide their services through an employer. Independent Contractors may advertise their business to the public.
- RIGHT TO DISCHARGE WITHOUT LIABILITY: An Employee may be able to be discharged by the employer without incurring contract liability. If the work is provided in accordance with the contract, an Independent Contractor may not be able to be fired without liability for breach of contract, depending on the terms of the contract.
- RIGHT TO QUIT WITHOUT LIABILITY: Employees can usually quit without incurring any contract liability. Depending on the terms of the contract an Independent Contractor may be liable for breach of contract if they “quit”.
When is an Employee Exempt from Overtime Requirements?** When is an Employee Non-Exempt from Overtime Requirements?** What is an Exempt Employee?** What is a Non-Exempt Employee**
Certain types of jobs may be excluded from FLSA overtime requirements, including, for example, movie theater employees, many agricultural workers, most railroad workers and many truck drivers.
Jobs covered by the FLSA are classified as either “exempt” or “nonexempt.” However, because only non-exempt employees are entitled to overtime (time and a half) pay, the proper classification of an employee as either exempt or non-exempt is crucial. Employers are motivated to classify as many of their employees as possible as exempt to avoid paying overtime because by paying an allegedly exempt employee a salary, the employer can require that the employee work much longer than 40 hours per week without any additional pay. Whereas a non-exempt employee would be entitled to overtime.
To be properly classified as exempt from the FLSA overtime requirements, a job must (a) pay at least $23,600 per year ($455 per week); (b) pay on a salary basis; and (c) require the performance of exempt job duties.
(a)How Much an Employee is Paid. Currently is an employee is paid less than $23,600 per year ($455 per week) they are non-exempt. On the contrary, an employee who is paid more than $100,000 a year is most likely exempt.
(b)Salary Basis Test. Generally, an employee is paid on a salary basis if he is paid a guaranteed minimum amount of money for each work week in which he performs any work. Usually, subject to exceptions, this amount is not subject to reduction because of the employee’s production. For example, salary cannot be reduced for partial day absences or work shortages, but there are permissible reductions, such as for full day absences after an employee has exhausted all their sick leave pursuant to their benefit plan. And impermissible reduction can cause a job to lose its exempt status, and the employer will be required to pay the employee overtime. However, an employer may be permitted to cure the violation and maintain the job’s exempt status.
Some jobs are automatically exempt regardless of whether the employee is paid hourly, for example, doctors, lawyers and schoolteachers are exempt.
(c) The Job Duties Tests.
A position which meets tests (a) and (b) above are exempt only if the employee performs exempt job duties. FLSA exemptions are generally limited to high-level work. Job titles are relatively meaningless to this determination. The employee’s actual duties in relations to the employer’s operations must be analyzed. The following are the most frequent exempt duties:
Executive Exemption. Executive job duties are exempt if the employee:
- regularly supervises two fulltime, or an equivalent number of part-time, or more other employees, and
- has management as the primary duty of the position, and
- has some genuine input into the job status of other employees (such as hiring, firing, promotions, or assignments).
The following is a list of common management duties, in addition to the supervision, and hiring and firing of other employees:
- interviewing, selecting, and training employees;
- setting rates of pay and hours of work;
- maintaining production or sales records (beyond the merely clerical);
- appraising productivity; handling employee grievances or complaints, or disciplining employees;
- determining work techniques;
- planning the work;
- apportioning work among employees;
- determining the types of equipment to be used in performing work, or materials needed;
- planning budgets for work;
- monitoring work for legal or regulatory compliance; and
- providing for safety and security of the workplace.
An executive is usually in charge of a department or subdivision of the employer’s company, and is given genuine input into personnel matters, i.e., their recommendations are given “particular weight”.
Professional Exemption. Jobs which require duties of the traditional “learned professions” may be exempt such as doctors, teachers, registered nurses, accountants, engineers, lawyers, pharmacists and other employees whose work requires an “advanced knowledge” historically associated with the traditional learned professions.
The work must be predominantly intellectual, must require a specialized education, and involve the exercise of discretion and judgment. The employee’s education must be beyond high school, and typically beyond college, in fields that are academic as opposed to mechanical or a skilled trade.
“Creative professional” jobs may also be exempt, including, actors, musicians and other employees whose job involves invention, imagination, originality or talent or who contribute a unique interpretation or analysis.
Administrative Exemption. Most misclassification issues involve this exemption. Job duties are exempt if the employee’s duties are:
- office or nonmanual work, which is
- directly related to management or general business operations of the employer or the employer’s customers, and
- a primary component of which involves the exercise of independent judgment and discretion about
- matters of significance.
The administrative exemption applies to higher level employees whose duties include keep the business running. As opposed to administrative employees, operational or production employees who make what the business sells are not administrative employees. Administrative employees provide support to production and operational employees. Administrative work must be office based, not involve manual labor, and must involve matters of significance. Clerical employees performing nonmanual or office tasks (making travel arrangements, ordering supplies, filing, answering the phone, preparing forms and similar work) are not administrative employees. Administrative employees exercise discretion and judgment, have the authority to make independent decisions which affect the business as a whole. Administrative employs may: create company policies; have the authority to violate the employer’s policies without approval; have the authority to bind the company in matters of financial significance; and perform work which is of major significance to the overall business. Administrative duties may include human resources employees, accounting, advertising, legal, planners, buyers for retail stores and some computer-related jobs.
What is the Equal Pay Act?**
The Equal Pay Act is a part of the FLSA requires that men and women be given equal pay for equal work in the same workplace. The jobs need only be substantially equal but not identical. Job duties, not titles, are more determinative as to whether jobs are substantially equal. Wages, salary, commissions, benefits, vacation, stock, profit sharing, allowances and reimbursements, among other types of pay may be covered by the act.
Someone who has a claim under the Equal pay act may also have a claim for Sex Discrimination under Title VII. Please visit our Sex and Gender Discrimination page for more information.
How do I Complain About an FLSA Violation?**
- Employer’s Internal Complaint Process.** An employee of a private employer may complain to the employer using the employer’s internal complaint procedures.
- Filing a Lawsuit.** An employee who is the victim of an FLSA violation is not required to file a Charge of Discrimination with the EEOC charge beforehand. The time limit for bringing a lawsuit for violations of the FLSA is generally two years of the alleged violation. However, when an employee is also complaining about an Equal Pay Act Violation, the employee should file a Charge of Discrimination with the EEOC to protect his or her Sex Discrimination claim under Title VII, which is nearly identical.
- Filing a Charge of Discrimination with the EEOC (“Exhausting Administrative Remedies”).** Timely filing an Equal Employment Opportunity Commission (“EEOC”) or the Texas Workforce Commission, Human Rights Division (“TWC”), is a prerequisite (an act which is required to be performed before the lawsuit is filed) to an employee bringing a lawsuit for discrimination under certain statutes, including, but not limited to: Title VII(Race, National Origin, Color,Sex,Religion, etc.), the ADA (Disability), the ADEA (Age) and the PDA (Pregnancy). Properly filing a Charge of Discrimination and raising all an employee’s claims of discrimination and other unlawful conduct is known as “Exhaustion of (or Exhausting) Administrative Remedies.” Accordingly, any employee who believes that they have be subjected to unlawful discrimination should consult an attorney immediately. Please visit our EEOC & TWC Charge of Discrimination & Representation page for more information.
What Damages can and Employee Recover for a Violation of the FLSA?**
If an employee is successful in suing and employer for a violation of the FLSA, depending on the circumstances, an employee may recover the following damages:
- Backpay – the unpaid wages and overtime.
- Liquidated Damages – 2 times the Backpay if the employer cannot show that they acted in good faith by making a specific investigation of the application of the FLSA to particular types of employees
- Attorney’s Fees
Is it Illegal for an Employer to Retaliate Against me for Complaining about a FLSA Violation?**
The FLSA provides that it is a violation for any person to discharge or in any other manner discriminate against any employee because such employee has engaged in Protected Activity. Protected Activity under the FLSA includes: filing any complaint or instituting or causing to be instituted any proceeding under or related to the FLSA, or testifying or being about to testify in any such proceeding, or serving or being about to serve on an industry committee. The FLSA covers employees who engaged in protected activity even if their job position is not covered by the FLSA, and when the employee is no longer employed by the employer.
An employee who is fired or discriminated against for engaging in FMLA related Protected Activity may file a lawsuit seeking remedies which include but are not limited to:
- Lost Wages
- Liquidated Damages
- Attorney’s Fees
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