Congress has amended the Fair Labor Standards Act (FLSA) many times. Courts have chimed in with their interpretations of the law, as well. The Department of Labor, on the other hand, hasn’t been as quick to amend the FLSA regulations.
Final regulations, effective May 5, 2011, now clarify and conform the regs to the current law. While most of the changes the final regs make are technical, employers that pay based on the fluctuating workweek method and employers that take the tip credit are specifically affected. (76 F.R. 18831, 4-5-11)
Get the guide that keeps you always in compliance with this complicated law — The FLSA Compliance Guide: A Practical Reference Tool on Wage-and-Hour Law
In 1996, the Portal Act was amended to exclude from the definition of working time the time employees spend commuting in their employers’ vehicles, and the time they spend at the start or end of a workday performing activities incidental to using those vehicles (e.g., obtaining the next day’s work assignments, reporting work done that day). The final regs incorporate this amendment.
Careful: The regs also carry over, without defining, the limitations on this no-pay commuting rule—that the travel must be within the normal commuting area for the employer’s business and that the parties agree to this arrangement.
The FLSA Compliance Guide has saved many confused and frustrated workers from expensive, unnecessary lawsuits. It can do the same for you. What you don’t know about FLSA regulations could land you in the middle of a costly, time-consuming lawsuit or audit. The FLSA Compliance Guide can help you stay on top of those regulations and protect your business. Learn How...
Fluctuating workweek arrangements
Under the fluctuating workweek method, salaried nonexempt employees who routinely work irregular hours receive a straight-time salary for all hours worked during a week. Overtime is then paid at one-half their regular rates for all hours worked over 40 in the week. There are two main drawbacks to this plan:
- Pay deductions can’t be made if employees work fewer than 40 hours in a week (e.g., they can’t be subject to an unpaid suspension)
- The more overtime hours they work, the lower their regular rates.
The final regs prohibit employers from paying bonuses or premiums (e.g., night-shift premiums) to employees who are paid based on this method. Exception: Overtime premiums may continue to be paid. The regs restate all the current requirements that apply to this payment method:
- It applies only to employees who truly work irregular hours.
- There is a clear, mutual understanding between the parties of how it works.
- Employees’ salaries can’t be reduced to below the minimum wage.
- Their overtime rate can’t be less than one-half their regular rates.
Yes, Congress has tinkered with the FLSA over the years. Yes, the Labor Department has issued pages of regulations, interpretations and examples. Yes, these changes are often confusing for employers and workers alike.
Is that an excuse for misunderstanding the law? No.
The FLSA is complicated and full of traps for unwary employers. And attorneys who represent unhappy workers are ready to take advantage of any misstep you take. Your best protection is awareness.
Make sure you understand the fine points of the law, and work to ensure that your business is in compliance.
Start Here with the FLSA Compliance Guide: A Practical Reference Tool on Wage-and-Hour Law
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