Welcome back. This video, we're giving an overview of one particular piece of legislation, the Fair Labor Standards Act, or the FLSA for short. So what is the Fair Labor Standards Act? Remember, the Fair Labor Standards Act determines the minimum wage, determines overtime pay. In particular, it says that if you at the federal level, if you work for more than 40 hours per week, any traditional hour must be compensated at 150%. And then also it establishes recordkeeping requirements. Employers are allowed to keep records however they want. However, if they're being paid hourly, then that means that they have to have, that method that they use to keep track of hours, has to be accurate. And lastly it establishes youth employment standards. But these protections don't apply for all jobs. And so let's zoom onto what's at stake. So the Fair Labor Standards Act includes both exempt and non-exempt employees. Those are jobs that are exempt from the Fair Labor Standards Act, meaning the Fair Labor Standards Act applies to them, and those that are not exempt, meaning the Fair Labor Standards Act's protections do not apply to them. So the Fair Labor Standards Act says that these exempt jobs are going to be jobs that have passed the salary test, and also, they pass the job duties test, meaning that more than 50% of their job fall under one of these exempt classifications. We'll zoom into these in the next set of slides, but for now just know that there are some jobs that pass these two tests. And there are some jobs that do not pass these two tests, or only pass one of these tests, and so are considered non-exempt. So those jobs that are exempt from the Fair Labor Standards Act, due to the salary test, no job duties test, that means that they are allowed to be paid by the hour, and moreover, they're also allowed to be paid a salary. And moreover, those jobs that are paid a salary, you are allowed to pay a salary, and moreover, the Fair Labor Standards Act protections don't apply. That means you don't have to pay a minimum wage, you don't have to be paid in overtime. And moreover, you don't have to keep track of those working hours for those jobs that are considered exempt. Now let's switch over to those jobs that are non-exempt. The non-exempt jobs, they can be paid by the hour. And in fact, those are the jobs that the Fair Labor Standards Act is really targeting. Those jobs that are non-exempt must be paid at least the minimum wage, they must be paid overtime. They must keep accurate records of working hours, and they must follow the Fair Labor Standards Act rules on child labor. And so where you really have to be careful has to do with when you want to pay these non-exempt jobs as salary. So for these non-exempt jobs, these non-exempt jobs are sometimes called hourly jobs, because the must be paid by the hour, or the regular salary must be consistent or greater than what you would make under an hourly rate. So, for these non-exempt jobs, you can pay a salary for regular hours, as long as it's at least as much as they'd be making as an hourly worker with the minimum wage and overtime. What you can't do for these non-exempt jobs is to simply pay a salary that's less than a minimum wage with overtime. And you're not allowed to pay a salary without still keeping track of those working hours. This makes these non-exempt jobs that are paid a salary quite different from those exempt jobs that are paid a salary. And so as you can see, the stakes for these, for whether a job is exempt or non-exempt, is high. And so what I'm going to do now is, we're going to zoom in onto the Fair Labor Standards Act. And we're going to zoom in onto which employers and which employees are covered by the Fair Labor Standards Act, and moreover among employees, which jobs are exempt and not exempt. So the first question is whether you're at a covered employer. And so for most workers, the answer is probably yes. There's only a few employers that are not covered by the Fair Labor Standards Act. For example, farms, seasonal amusement employers, and some small employers. So one example might be, for example, an amusement park or a ski resort that gets most of their revenues in a very short span of time, when it's in season. In this case, that employer might not be covered by the Fair Labor Standards Act. And one of the implications is that they actually wouldn't need to pay overtime, they don't need to pay an hourly wage, for example. The next question is, okay ,well, suppose that you're at a covered employer, now are you a covered employee? So the question here is whether you're a trainee or a contractor, or whether you're an employee. So, trainees, to be a trainee, that means that you have to provide no immediate benefit to the employer. You cannot displace regular employees as part of your work and the primary beneficiary of that work relationship needs to be the trainee, as opposed to the employer. And so, those could be pretty high standards to cross unless that person is truly primarily a trainee. The other question is whether they're a contractor, and contractors typically work for several different companies that employ their services, they own their own tools, and so on. And so we'll go a little bit more into the definition of who's a contractor versus who's an employee later. But suppose you are a regular employee, and you are at a covered employer. That means that we now go to the question of whether you're exempt or a non-exempt employee, or an exempt employee under the Fair Labor Standards Act. So the first question pertains to the salary test. So to be considered exempt from the Fair Labor Standards Act, you have to be making at least $455 per week. So if your regular pay, not including incentives or benefits, is less than $455 per week, that means that you're probably covered by the FLSA. And so most workers in the United States passed the so called salary test, which means we get to the question of whether the job is specifically exempted. And this is called the job duties test. So under the job duties test, a worker has to be spending more than half of their time doing the job duties associated with exempt job classifications. And those job classifications include executives, supervisors, administrators, professionals, computer workers and outside sales people. And under the FLSA, there are very specific definitions for the job duties that constitutes any of those specific jobs. And if the majority of one's time is spent doing those duties, and they also pass the salary test, and there also at a covered employer, and they are so are indeed an employee, that means that they are exempt from the FLSA and again that means that they be paid a salary. Another way to be considered exempt from the FLSA is if you're a so-called highly compensated employee. Those are employees who make over $100,000 in salary. Next is also, the FLSA also determines unpaid time. So under the FLSA, short breaks, maybe 15 minute breaks, if the employer has them, must be paid. The FLSA at the federal level does not require that the employer offer short breaks. However, it says that if the employer does offer them, they must be paid. In some states such as, for example, Minnesota, Minnesota requires that employers offer short breaks. And since at the federal level, the federal law says these short breaks must be paid, that means together that employers must offer and pay for these short breaks. Second, long lunch breaks under the federal FLSA does not need to be paid. And as long as the employees are allowed to actually take their lunch as opposed to doing work while eating. Furthermore, under the FSLA, travel time, if the travel is a principle work activity, must be paid. So for example, if you are a truck driver and that is your, as an employee, then that would have to be a paid under the FLSA. However, if you, say, are working for a restaurant and you simply have to drive to the restaurant, but driving to your work site is not a principal job duty, then that would not need to be paid. Also, time waiting to be engaged must be paid. For example, at a small restaurant, if, say, a waiter is working, and they're at the job but there is simply no one at the restaurant at the time, they're waiting to be engaged and that time would need to be compensated. And then lastly, on call and at the convenience of the employer typically must be paid. In these situations where a worker is on call, they must be close to the work site. And would typically not be able to do things on their own leisure, or for themselves, then these would typically qualify as time that would need to be paid and compensated under the FLSA. And again, for each of these, there's many exceptions and specific rules that apply to these. So next up, we're going to ask, what jobs are exempted under the FLSA? And we're going to be going more into detail about exactly what are those job duties that allow someone, if they pass the salary test, to be exempted under FLSA, and therefore paid a salary. See you next time.
