Fair Labor Standards Act (FLSA)
The Fair Labor Standards Act (FLSA) is a federal law passed by Congress in 1938 that applies to most businesses in the U.S. The FLSA establishes a national minimum wage, guarantees overtime pay for hours worked in excess of 40 per week in certain jobs and prohibits employers from exploiting minors and engaging in “oppressive child labor.”
While the FLSA applies to nearly every business or organization in the U.S., it does not apply to independent contractors or volunteers because they are not considered “employees” under the FLSA.
Additionally, rules in place dictate when employees must be “on the clock” and paid for their time. This area of law applies to workers who are asked to perform certain job duties before clocking in or after clocking out. This issue is often referred to as Donning and Doffing because it frequently applies to workers who must change into and out of a uniform or protective gear when entering or leaving the workplace or job site.
Wage and hour issues also involve questions of fair and equal pay covered by the Equal Pay Act of 1963 and the Lilly Ledbetter Fair Pay Act of 2009.
Equal Pay Act of 1963
A cornerstone of wage and hour litigation is the Equal Pay Act, the “Equal Pay for Equal Work” law that prohibits sex-based wage discrimination between men and women in the same establishment performing jobs that require equal skill, effort, and responsibility under similar working conditions.
According to the Equal Employment Opportunity Commission (EEOC), wages can include more than just hourly or annual pay; they include bonuses, company cars, expense accounts, insurance, and other forms of compensation. Under the Equal Pay Act, employers cannot lower one employee’s wages to make them equal.
Employers also must pay employees equal wages in the same form. For example, an employer cannot pay a higher hourly wage to a male employee and attempt to make up the difference by paying a female employee a bonus.
In addressing the issue of “equal work,” the Equal Pay Act does not require that everyone’s jobs be identical, but only that they are “substantially equal,” according to the EEOC. Evaluating the equality of jobs should consider actual job duties — not titles, classifications, or other terminology. Equality also may be evaluated by considering whether both jobs require an equal amount of skill, effort, and responsibility.
The Equal Pay Act measures skill by factors such as the experience, ability, education, and training required to perform a job. An employee may bring additional skills to a job — for example, holding a college degree while the co-worker does not. But if the job does not require a degree or skill for successful performance, they should not be compensation factors.
The Equal Pay Act defines effort as the “amount of physical or mental exertion needed to perform” a particular job. The law defines responsibility as “the degree of accountability required in performing a job,” considering the extent to which an employee works without supervision and in a supervisory capacity and the impact of an employee’s job functions on the employer’s business.
Lilly Ledbetter Fair Pay Act of 2009
President Barack Obama signed a landmark labor law on Jan. 29, 2009, is named after an Alabama woman. The Lilly Ledbetter Fair Pay Act of 2009 was the first legislation President Obama signed into law. This Act overturned the Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber Co., Inc., 550 U.S. 618 (2007), which severely restricted the time period filing complaints of employment discrimination concerning compensation.
Ledbetter had worked for Goodyear Tire & Rubber Co. in Gadsden, Alabama, for nearly 20 years when she discovered she was being paid less than her male colleagues in the same job for the same work. She filed a complaint with the EEOC in 1998 and was initially awarded more than $3 million in back pay and punitive damages by a jury. The amount was later reduced to $300,000 by the judge, but Ledbetter appealed that decision to the U.S. Supreme Court.
In 2007, the Supreme Court ruled 5-4 to overturn the verdict, saying Ledbetter was required to file suit within 180 days of the initial act of discrimination, even though she had not found out about the pay discrepancy until it had been going on for years. Ledbetter began a campaign to change the law, taking her fight to the U.S. Senate and spearheading the legislation that now bears her name.
As a result of the Lilly Ledbetter Fair Pay Act, each unfair paycheck is considered an act of discrimination. This change makes each unfair paycheck a new unlawful employment practice that resets the statute of limitations. However, the law restricts back pay that can be collected to two years.
The Lilly Ledbetter Act allows employees to dispute employer decisions about base pay or wages, job classifications, career ladder or other non-competitive promotion denials, tenure denials, and failure to respond to requests for raises.
Overtime pay is one of the most abused areas of employment law, usually because some employers misclassify employees to avoid paying overtime. There are specific criteria that must be met for an employee to be exempt from receiving overtime. All states are subject to federal laws governing overtime pay, and if you feel you are being denied overtime pay, you should seek legal counsel.
Fair Labor Standards Act (FLSA) laws require overtime compensation to be paid (at time and one-half) for all hours worked over a prescribed threshold — typically 40 hours per week – for all “non-exempt” employees.
On August 23, 2004, controversial changes to the FLSA’s overtime regulations went into effect, making substantial modifications to the definition of an “exempt” employee. Low-level working supervisors throughout the American industry were reclassified as “executives” and lost overtime rights. Attempts in Congress to overturn the new regulations have been unsuccessful.
U.S. labor laws allow several exemptions to relieve an employer from meeting the statutory overtime, minimum wage, and record-keeping requirements. The largest of these are executive exemptions, which apply to professional, administrative, and executive employees. Legal exemptions are narrowly defined, and an employer must prove that its employees fit plainly and unmistakably within the exemption’s terms.
For instance, the executive exemption under the FLSA allows companies to pay store managers a set salary and avoid paying when they work more than 40 hours in one week. But the exemption also mandates that managers actually do management duties as their “primary duty” instead of “manual labor,” such as stocking shelves and running a cash register.
Likewise, an employer cannot simply exempt workers from the FLSA by calling them, independent contractors. Many employers have illegally misclassified their workers as independent contractors to avoid paying overtime because the FLSA doesn’t require employers to pay non-employees (independent contractors and volunteers) overtime.
FLSA lawsuits typically seek recovery for unpaid or underpaid back wages, plus double damages (called “liquidated damages”) and attorneys’ fees. FLSA cases seeking to recover unpaid overtime and damages are commonly filed as “collective actions” on behalf of a group of employees with the same or similar complaints.
In addition to the FLSA, many states have their own causes of action that mirror the protections provided under the federal scheme. In some instances, state labor laws offer greater protections than those afforded by the federal government.
Donning and Doffing of Personal Protective Equipment (PPE)
Another area of the FLSA in which we are litigating involves what is known as “donning and doffing.” These cases involve industries where employees must put on and take off protective gear, clothing, or uniforms as a prerequisite for doing their job.
Many companies do not pay employees for the time spent donning the protective gear and/or doffing the gear at the beginning and end of a shift or during break periods throughout the workday.
Most of the time the protective clothing is not only required; it is often an essential part of the production process that guarantees the quality of the product. Industries where we typically see donning and doffing cases include electronic manufacturing facilities with clean rooms, chicken processing facilities; beef packing facilities; and other agricultural industries.
Additionally, we have seen litigation in industries where protective clothing is essentially safety gear for hazardous activities.
One of the most abused areas we have seen is the misclassification of employees as independent contractors.
The FLSA only applies to “employees.” Companies have tried to completely avoid their FLSA responsibilities by claiming that their workers are not employees at all but instead are independent contractors. Another reason companies attempt to misclassify employees as independent contractors are because of the enormous benefits of savings.
When classified as an independent contractor, these companies are relieved of their legal duty to pay payroll taxes, workers compensation premiums, administer workers compensation claims, pay unemployment insurance, etc. Similarly, since the individuals are not employees, these companies do not have to provide benefits under the Family Medical Leave Act or protections under a host of other federal discriminatory laws. Many of these companies face that although they claim an individual is an independent contractor, they attempt to control all the major aspects of the person’s job.
Presently, we have seen the misclassification of employees as independent contractors in many service-related industries. For example, many companies are outsourcing their customer service functions to individuals working from their homes or at remote locations. These individuals typically get paid a per-minute rate that often results in them making less than the minimum wage. Additionally, many of these individuals are required to spend hours training on certain products and services, yet they do not get paid for any time.
Other service industry jobs where we have identified independent contractor misclassifications include:
- the construction industry
- delivery/courier services
- stocking vendors
- maintenance crews
- food processing plants
- dental assistants
- nail salons
- landscaping crews
Wages and Hours Lawsuit
If you feel your employer has violated your rights under federal and/or state employment and labor laws, your best first move is to contact a labor and employment lawyer. You can be confident knowing Beasley Allen’s team of experienced workplace lawyers have your back and will work to get you the compensation you deserve.