Fair Labor Standards Act

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21 Aug, 2024

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The Fair Labor Standards Act (FLSA) is a law that was passed in the United States in 1938 that sought to protect employees from unfair compensation practices and safeguard the interests of the workers in the economy. The FLSA regulations distinguish employees as either exempt or nonexempt.

The FLSA regulations establish when employees are considered on the clock when they deserve to be compensated for additional hours and the minimum wage they are entitled to. The FLSA had initially prohibited child labor. However, it was subsequently expanded to incorporate prohibitions against wage discrimination based on gender and age.

Fair Labor Standards Act (FLSA) Meaning

The Fair Labor Standards Act is a law implemented in the United States in 1938 aimed to safeguard employees from unfair remuneration practices while also protecting employees' economic well-being.
It establishes laws and regulations addressing minimum wage, overtime status, maintaining records, and child labor. It extends to all full- and part-time staff in the public and private industries.
The legislation prohibits corporations from compensating employees differently for the same work based on their gender. It encourages wage equality among employees.

Fair Labor Standards Act Explained

The Fair Labor Standards Act establishes rules and regulations for minimum pay, overtime eligibility, recordkeeping, and child labor. It is applicable to all full-time and part-time employees in the public and private sectors. The Act was first introduced in 1938 by President Franklin D. Roosevelt and had a significant impact on the United States.

The FLSA is applicable to individuals who have an occupation involved in interstate commerce or the manufacture of products for commerce. It also includes employees hired by a business engaged in commerce or the manufacturing of goods for commerce. The FLSA laws also cover domestic service workers such as cooks, housekeepers, and full-time babysitters. The law also protects employees of hospitals, educational organizations of all levels, and government agencies.

History

On June 25, 1938, President Franklin D. Roosevelt passed the Fair Labor Standards Act into law. It applied to businesses that employed only approximately one-fifth of the labor force at the time. However, the bill faced opposition in both the House of Representatives and the Senate.

The Act, drafted primarily by Secretary of Labor Frances Perkins, initially prohibited any labor for children under the age of 14 and hazardous labor for those aged between fourteen and eighteen. It also established a minimum hourly salary of twenty-five cents and a maximum workweek of forty-four hours.

The FLSA has developed into a complex regulation that has been revised multiple times. The majority of updates either increased the scope of the law or raised the minimum wage to account for inflation.

Common Violations

Some common Fair Labor Standards Act violations are:

Businesses may incorrectly classify employees. Exempt and nonexempt classifications are based on work functions and, to some degree, wage levels instead of job titles.
Employees paid on a salary and an hourly basis are often misled. Some businesses claim that employees who are paid a fixed weekly or monthly income are not subject to overtime pay, whereas those paid hourly are not.
Employers may fail to compensate for work done "off the clock." If an employee performs work-related duties, training, or meetings outside of standard working hours, it qualifies as work.
Employees may not be compensated for working during breaks or being on call. If an employee was supposed to be on break or having lunch but is instead responding to company messages or sending work emails, this qualifies as work and must be compensated.

Exemptions

The Fair Labor Standards Act regulations exemptions include the following:

Exempt employees include systems analysts, software engineers, programmers, designers, and developers who earn at least $684 per week or $27.63 per hour.
Independent contractors and volunteers are not considered employees and are, therefore, exempt.
Even within organizations covered by the FLSA, many full-time office workers, such as administrators, executives, and professionals, are not covered by FLSA regulations.
External salespeople are exempt. They are employees who frequently work away from their employer's office and are compensated mainly through commissions.
Certain occupations are exempt from specific FLSA provisions. It includes those who work for seasonal amusement or recreational businesses, small farm employees, apprentices, workers on foreign vessels, employees of newspapers with a circulation of less than 4,000, personal companions, caretakers for elderly individuals, and casual babysitters.

Examples

Let us study the following examples to understand this act:

Example #1

Suppose Sam is an employee of Panache Ltd. In a particular week, he worked for 50 hours. The company refused to pay Sam the overtime compensation. As a result, Sam reached out to FLSA authorities and initiated a complaint against the company to seek redress. The authorities intervened and ensured that Sam received his due compensation. They also warned the company against future actions if they fail to comply with the FSLA rules.

Example #2

Decades after the United States government banned children from the workforce, there have been attempts to weaken the prohibitions on child labor. The Republicans are primarily leading these initiatives. The FLSA of 1938 protects child labor rights, which include making several types of employment illegal for children under the age of fourteen and limiting the number of hours that teenagers under the age of eighteen can work. In addition, teenagers aged sixteen and seventeen are not considered adults under the laws of the United States. The federal government considers several occupations to be too dangerous for anyone under the age of eighteen.

Importance

The importance of the Fair Labour Standards Act is as follows:

The FLSA establishes the minimum wage businesses must pay their nonexempt employees. These regulations are crucial because they ensure the employees understand the minimum wage that they are entitled to earn.
The law also outlines the acceptable hours of duty for employees. If employees work over forty hours per week, the employers must provide them overtime pay for the extra hours they work.
Employers have to adhere to the FLSA and other employment standards. It would be challenging to deal with unfair employment practices without the FLSA. The law compels employers to maintain records and abide by the regulations it establishes.
The law specifies that businesses are prohibited from paying employees different compensation for the same work depending on their gender. It promotes pay parity among workers.

Frequently Asked Questions (FAQs)

How does the Fair Labor Standards Act affect tipped employees?

The FLSA prohibits employers from retaining any portion of employee tips for any reason. It includes taking tips directly or through a tip pool, irrespective of whether they receive a tip credit. Employers are not permitted to demand that a tipped employee give up their tips to the employers, their supervisors, or their managers. Even in scenarios where the tipped worker may get paid the federal minimum wage per hour directly, the employers must refrain from deducting the tip from their pay.

How did the Fair Labor Standards Act affect the economy?

The law improved compensation for several hundred thousand workers at the time it was passed. However, it also specifically excluded several types of industries that employed a significant number of people of color and women. Certain exclusions continue to have a negative impact on specific communities and their opportunities even to this day.

Who opposed the Fair Labor Standards Act?

The business sector primarily opposed the bill. The Southern Democrats often sided with the Republicans in their disapproval of this law. However, in spite of all the opposition, the FLSA was ultimately passed due to the overwhelming efforts of its supporters.