Thompson Publishing Group 1725 K Street NW 7th Floor Washington DC 20006-1421 202 872-4000 Editorial Offices 800 677-3789 Customer Service thompson.com This publication is designed to guide you through the complex process of complying with the Fair Labor Standards Act. It is part of our comprehensive program on human resource management designed specifically to meet the needs of professionals in business and government. This program includes a combination of publications, audio conferences,Web casts and e-learning tools. For a complete list, please visit us at: thompson.com. Our approach. Our editorial approach to compliance consists of: ■ Insightful analysis from leading practitioners and our editorial staff. ■ Implementation tools we call “practice tools” to help you take action. ■ Regular updates to make sure you stay in compliance. Human Resources Series Fair Labor Standards Handbook for States, Local Governments and Schools Gilbert J. Ginsburg, Esq., Attorney and Counsel-at-Law Daniel B. Abrahams, Esq. and Shlomo D. Katz, Esq., Epstein Becker & Green Sandra J. Boyd, Esq., National Association of Manufacturers
Transcript
Thompson Publishing Group1725 K Street NW 7th FloorWashington DC 20006-1421
This publication is designed to guide you through the complex process ofcomplying with the Fair Labor Standards Act.
It is part of our comprehensive program on human resource managementdesigned specifically to meet the needs of professionals in business andgovernment. This program includes a combination of publications, audioconferences, Web casts and e-learning tools. For a complete list, pleasevisit us at: thompson.com.
Our approach.Our editorial approach to compliance consists of:
■ Insightful analysis from leading practitioners and our editorial staff.
■ Implementation tools we call “practice tools” to help you take action.
■ Regular updates to make sure you stay in compliance.
Human Resources Series
Fair Labor Standards Handbookfor States, Local Governments and Schools
Gilbert J.Ginsburg, Esq., Attorney and Counsel-at-Law
Daniel B. Abrahams, Esq. and Shlomo D. Katz, Esq., Epstein Becker & Green
Sandra J. Boyd, Esq., National Association of Manufacturers
means, electronic or mechanical, including photocopy, without written permission of the publisher.
“ This publication is designed to provide accurate and authoritativeinformation in regard to the subject matter covered. It is sold withthe understanding that the publisher is not engaged in renderinglegal, accounting or other professional service. If legal advice orother expert assistance is required, the services of a competentprofessional person should be sought.”
From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations.
Introduction to the Fair Labor Standards Act ...¶100Application of FLSA to State and
Local Governments ............................................¶101Traditional and Nontraditional
Governmental Activities ................................... ¶102Basic Purpose of the Act .......................................¶103
Minimum Wage ....................................................¶110Relationship to State Labor Standards Law .......¶111Special Subminimum Wages ...............................¶112Employment of Students at Subminimum
Wages ...................................................................¶113Apprentices and Learners Subminimum
Wages ...................................................................¶114Messengers Subminimum Wages ....................... ¶115Employment of Workers With Disabilities
Under Special Certificates ................................¶116Opportunity Wage ..................................................¶117
Coverage of the Act ..............................................¶120Working Time .......................................................¶130Overtime Compensation .....................................¶140Equal Pay Act ........................................................¶150Child Labor ...........................................................¶160Recordkeeping ......................................................¶170Enforcement ..........................................................¶180Wage and Hour Division, U.S. Department
of Labor ..............................................................¶190Department of Labor Regional and
Area Offices .........................................................¶191Sources of Information ..........................................¶192
Tab 200: Exempt andNon-Covered Employees
Exempt and Non-Covered Employees .................¶200Non-Covered Employees ......................................¶210
The Salary Basis Test ...........................................¶220Complying with the Salary Basis Test ................¶221Special Salary Test Rules for the Public Sector ¶222Effect of Improper Deductions .............................¶223
Highly Compensated Employees .........................¶224Exceptions to the Salary Basis Requirement ....¶225
Executive Employees ............................................¶230Standard Test for Executive Employees .............¶231Highly Compensated Employee Test for
Executive Employees .........................................¶232Additional Issues Related to the
Executive Exemption .........................................¶233Executive Exemption Checklists and
Decision Chart ....................................................¶234Examples of Employees Who Meet the
Executive Exemption .........................................¶235Examples of Employees Who Failed to
Meet the Executive Exemption ........................¶236State Executive Exemption Chart ........................¶237
Administrative Employees ..................................¶240Standard Test for Administrative Employees ...¶241Highly Compensated Employee Test for
Administrative Employees ...............................¶242Additional Issues Related to the
Administrative Exemption ...............................¶243Administrative Exemption Checklists and
Decision Chart ....................................................¶244Examples of Employees Who Meet the
Administrative Exemption ...............................¶245Examples of Employees Who Failed to
Meet the Administrative Exemption ..............¶246State Administrative Exemption Chart ..............¶247
Professional Employees .......................................¶250Standard Test for ‘Learned Professional’
Employees ...........................................................¶251Standard Test for ‘Creative Professional’
Employees ...........................................................¶252Highly Compensated Employee Test for
Professional Employees ....................................¶253Additional Issues Related to the
Professional Exemption ....................................¶254Application of the Professional Exemption
to Certain Specific Jobs .....................................¶255Professional Exemption Checklists and
Decision Charts ..................................................¶256Examples of Employees Found to Meet the
Professional Exemption ....................................¶257Examples of Employees Who Failed to
Meet the Professional Exemption ...................¶258State Professional Exemption Chart ...................¶259
Computer Employees ...........................................¶260Highlights of the 2004 DOL Rule Changes ........ ¶261General Rule for Computer Employees ..............¶262‘Primary Duty’ of Computer Employees ............ ¶263Compensation Requirements ...............................¶264Computer Manufacture and Repair ....................¶265Employees Whose Jobs Are Highly
Dependent on Computers .................................¶266
Table of Contents — Continued
Page iii January 2005 Fair Labor Standards Handbook
Executive and Administrative ComputerEmployees ...........................................................¶267
Help-Desk Personnel .............................................¶268State Law Provisions .............................................¶269
Outside Sales Employees .....................................¶270State Law Provisions .............................................¶271
‘White-Collar’ Exemption Status of CertainPolice and Firefighting Employees ..................¶280
Commonly Asked Questions on theClassification of Employees .............................¶299
Tab 300: More Types of Exempt Employees
More Types of Exempt Employees ......................¶300Focus on School Employees .................................¶310
Other School Employees .......................................¶311Employment of Full-Time Students at
Subminimum Wages .........................................¶312Employment of Student-Workers at
Recreational Establishment .................................¶341Seasonal Operations Test ......................................¶342Seasonal Receipts Test ..........................................¶343
Domestic Service Employees ...............................¶350Casual Babysitting .................................................¶351Companionship Service ........................................¶352Live-In Workers ......................................................¶353Third Party Employment ......................................¶354Maid/Cleaning Services ........................................¶355House Parents in Nonprofit Educational
Institutions ..........................................................¶356Nursing Homes, Hospitals, Schools and
Institutional Settings .........................................¶357Foster Parents .........................................................¶358‘Meals on Wheels’ Programs ................................¶359
Other General Exemptions From the FLSA ........¶370Partial Exemption for Unionized Employees .... ¶371Miscellaneous Exemptions ................................... ¶372
Tab 400: Hours Worked and Compensation
Introduction .........................................................¶400Historical Overview ............................................... ¶401De Minimis Rule ......................................................¶402Formula Time ..........................................................¶403Preliminary and Postliminary Activities ........... ¶404Examples of Compensable Working Time ......... ¶405Examples of Noncompensable Time ...................¶406Defining Working Time by Agreement ..............¶407
Unauthorized Work .............................................¶410Waiting Time ........................................................¶420
Defining “On” and “Off” Duty ..............................¶421Split Shifts/Layover Time .....................................¶422
On-Call Time ........................................................¶430Show-Up, Call-In or Reporting Time ...................¶431Stand-By Time .........................................................¶432
Break Periods .......................................................¶440Bona Fide Meal Periods .........................................¶441Rest Periods ............................................................¶442
Sleeping Time ......................................................¶450Sleeping Time for Less Than 24-Hour
Tours of Duty ......................................................¶451Sleeping Time for Round-the-Clock Duty ..........¶452Sleeping Time for Employees Residing
on Employer’s Premises ................................... ¶453Training Programs, Lectures and Meetings ......¶460
Time Spent Studying or Doing Homework ........ ¶461Travel Time ..........................................................¶470
Commute Time ....................................................¶471Travel During the Workday ..................................¶472Call Back or Emergency Calls ..............................¶473Out-of-Town Travel ................................................¶474Transportation Furnished by the Employer ......¶475Work While Traveling ...........................................¶476
Time Spent in Court or Other LegalProceedings .......................................................¶480
Commonly Asked Questions About HoursWorked and Compensation ..................................¶499
Tab 500: Overtime Compensation
Overtime Compensation ......................................¶500Special Rules for Occasional or Sporadic
Employment ........................................................¶501Special Rules for Substitution ................................¶502
Regular Rate of Pay ..............................................¶510Examples Included in Regular Rate ......................¶511Examples Excludable From Regular Rate ............ ¶512Wage Deductions Includable in Regular Rate .....¶513
Establishing Basic Rates of Pay byAgreement ...........................................................¶514
Special Focus on Bonuses .....................................¶515On-Call Pay and Other Pay for Nonworking
Time ......................................................................¶516
Computation of Regular Rate and OvertimeCompensation .........................................................¶520Special Rules for Multiple Jobs/Dual
Employment ........................................................¶521Special Rules for Joint Employment .....................¶522
Half-Time or Fluctuating Workweek Plansfor Salaried Employees .........................................¶530
Calculating Half-Time ..............................................¶531Belo Plans..............................................................¶5401040/2080 Plans for Unionized Employees .......¶550Compensatory Time .............................................¶560
Non-FLSA Compensatory Time ............................¶561Time-Off Plans ........................................................¶562
Part-Time and Under 40-Hour Workers ..............¶570State Overtime Laws ............................................¶580Special Compensation Problems .........................¶590
Non-Bona Fide Pay Arrangements ........................¶591The Workweek and Prepayment Plans ................¶592Method of Payment and Payroll Practices ........... ¶593Credit for Employer-Furnished Board,
Lodging or Other Facilities ...............................¶594Tip Income and Credit .............................................¶595Deductions From Employee Wages ....................... ¶596Wage Deductions for Uniforms, Tools and
Equipment ...........................................................¶597Calculating Pay for Court Reporters ...................¶598
Overtime for Police and Firefighters ..................¶600Public Agencies With Fewer
Than 5 Employees ..............................................¶601History of the Hours Set by the U.S.
Department of Labor ..........................................¶602Declaring Work Periods for Law Enforcement
and Fire Protection Personnel .........................¶603Federal Employee Practices .................................¶604
Overtime Pay for 207(k) Employees ...................¶610Computing Overtime for Section 207(k)
Employees Who Work More Than a Seven-,But Less Than a 28-Consecutive-DayWork Period ........................................................¶611
Compensatory Time Off ........................................¶612Overtime Pay Requirements ................................¶613Calculating the Regular Rate and Overtime for
Definition of Employees Covered bySection 207(k) ..................................................¶620
Fire Protection Employees ....................................¶621Law Enforcement Employees ...............................¶622Examples of Law Enforcement Employees
Exempt Under Section 207(k) ..........................¶623
Examples of Law Enforcement EmployeesNot Exempt Under Section 207(k) ..................¶624
Public Safety Employees .......................................¶625Emergency Medical Service Employees .............¶626
[Reserved.] ............................................................¶630Limitations on the Use of Section 213(b)(20
and Section 207(k) Plans ......................................¶640Bona Fide Volunteers ............................................¶641Mutual Aid Agreements ........................................¶642Special Detail Assignments ..................................¶643Substitution of Work Schedules ..........................¶644Nonexempt and Occasional or
Sporadic Work ....................................................¶645[Reserved.] ............................................................¶650[Reserved.] ............................................................¶660Compensable Hours of Work ...............................¶670
Sleep Time ...............................................................¶671Meal Time ................................................................¶672More Than One Work Period Permissible ......... ¶673Early Relief ..............................................................¶674Time Spent Caring for Canines ............................¶675On-Call Time ...........................................................¶676Fire Protection or Law Enforcement
Employees Who Perform Unrelated Work ....¶677Time Spent Testifying in Court or Other
Concerning Police and Firefighters ....................¶699
Tab 700: Equal Pay and Child Labor
Equal Pay and Child Labor ..................................¶700Equal Pay Overview .............................................¶710
Work Within an Establishment ...........................¶711Equal Pay for Equal Work .....................................¶712The EPA and Claims of Comparable Worth .......¶713The EPA’s Exceptions or Affirmative
Defenses ...............................................................¶714Additional DOL Guidance on the EPA ................¶715
Child Labor Provisions ........................................¶720Permitted Employment for Minors 14 to
16 Years of Age ...................................................¶721Hours of Work for Minors 14 to 16 Years
of Age ...................................................................¶722Prohibited Employment for Minors 14 to
16 Years of Age ...................................................¶723Prohibited Employment for Minors 16 to
18 Years of Age ...................................................¶724Driving on the Job ..................................................¶725Student Learner and Apprentice Exemptions ...¶726Certificates of Age ..................................................¶727Penalties ..................................................................¶728
Table of Contents — Continued
Page v January 2005 Fair Labor Standards Handbook
Tab 800: Recordkeeping
Recordkeeping Requirements .............................¶800Recordkeeping for Employees Subject to
the FLSA ............................................................¶810Recordkeeping for Exempt Employees and
Special Arrangements ...........................................¶820Recordkeeping for Employers That Furnish
Board, Lodging or Other Facilities ..................¶821Recordkeeping for Full-Time Students
Working at Subminimum Wages ....................¶822Preservation of Records .......................................¶830Posting of Notices .................................................¶840Recordkeeping of Compensatory Time ...............¶850
Compensatory Time Recordkeeping forSection 207(k) Employees ................................¶851
Penalty for Violation ...........................................¶860Common Recordkeeping Issues ..........................¶870
Rounding of Hours Worked ..................................¶871Accounting for Holiday, Vacation and
Leave Periods ......................................................¶872Burden of Proof in Recordkeeping Disputes ......¶880Court and Federal Agency Decisions on
Interference With Enforcement ..........................¶940Section 15(a)(3) of the Act — Discrimination/
“Retaliation” ........................................................¶941The 1985 FLSA Amendments ..............................¶942Section 218 of the Act — Reduction of Wages ...¶943
Employer Defenses ...............................................¶950Absolute Good Faith Defense: Reliance on
DOL Opinions ......................................................¶951Requesting a DOL Opinion Letter ........................ ¶952Good Faith Defense to Liquidated Damages ......¶953Statute of Limitations ............................................¶954Constitutional Immunity for States ....................¶955
Settlement of FLSA Complaints and Lawsuits ...¶960Alternative Dispute Resolution ........................... ¶961Taxation of Recoveries and Settlements ............ ¶962
Legal Considerations ............................................¶970Federal Removal .....................................................¶971Effect of Arbitration on FLSA Statutory
Remedies .............................................................¶972Commonly Asked Questions About
Enforcement of the FLSA ......................................¶999
Tab 1000: Sample Forms and Documents
Sample Forms and Documents ..........................¶1000Procurement Documents ................................. ¶1010
[Reserved.] ......................................................... ¶1020Working Time Forms ........................................ ¶1030Exemption Checklists .......................................¶1040Overtime Forms ..................................................¶1050
Half-Time Consent Form .................................. ¶1051Compensatory Time Off Agreement ............... ¶1052Belo Plan Agreement ........................................ ¶1053Computing Half-Time Overtime ...................... ¶1054
Volunteer Status Checklist ............................... ¶1060
CURRENT CONTENTSFair Labor Standards Handbook for States,
Local Governments and SchoolsCurrent Contents as of February 2005
The following is a list of all pages that make up the Handbook.Pages replaced in this supplement are indicated in boldface italic type.
Volume ITitle page ——ii-v Jan. 2005vi-vii Feb. 2005viii-ix July 2004
Tab 1001 Nov. 19963-4 Aug. 20035-6 July 20047-9 Sept. 199913-14 April 200015-16 Jan. 200517-18 Oct. 200219-21 March 200225-26 July 200431 Nov. 200035 Jan. 199941 Feb. 199645 Feb. 199651 Feb. 199655 Feb. 199661-72 Jan. 2004
Tab 2001-2 Nov. 20043 July 200425-44 July 200465-70 July 200471-72 Sept. 200473-84 July 200485-86 Feb. 200587-91 Oct. 2004107-116 July 2004117-126 Aug. 2004127 Nov. 2004147-168 July 2004169-170 Aug. 2004171-172 July 2004173-174 Aug. 2004175-176 Nov. 2004197-220 July 2004221-222 Aug. 2004223-224 Nov. 2004245-248 July 2004249 Nov. 2004269-270 Nov. 2004289-294 July 2004315-321 Aug. 2004
Tab 3001-3 July 200423-28 July 200449-50 July 200471-76 July 200497-99 July 2004119-127 July 2004147-151 July 2004171-173 July 2004
Tab 4001-2 March 20043-8 Nov. 20039-11 May 200419-21 Sept. 200431-32 Aug. 199641-42 Feb. 200343-48 Dec. 200249-51 Feb. 200359-65 Feb. 200269-71 Aug. 199681-84 Feb. 200491-92 March 200493-94 Nov. 1996105-106 July 2004107 March 2004127-128 Aug. 1996
Tab 5001-2 Oct. 20033-4 July 20025-10 Nov. 200411-12 Feb. 200513-16 May 200017-20 July 200421-25 Nov. 200227-28 July 199729 July 200431-37 July 200039-41 Sept. 199675-76 March 199977-78 March 200379-84 Oct. 2003101-102 April 2001103 Sept. 1996
Tab 6001-2 March 200413-17 Feb. 1997
37-38 Feb. 199739-40 Sept. 200241-43 Feb. 199763-69 March 200087 Feb. 1997107-110 Feb. 1997111-112 Feb. 2005133 Feb. 1997153 Feb. 1997173-180 March 2004181-186 May 2004205 Feb. 1997225-226 Jan. 2002227-228 July 2004229 Jan. 1999
Tab 7001 Jan. 19993 June 199715-18 June 199719-20 Aug. 199831-32 April 200133-36 July 200037-38 Jan. 2002
Tab 10001-3 July 20045-6 Nov. 199115 April 200021-26 July 200441 July 200453-56 April 200057-59 Nov. 200261-62 Dec. 200465-67 April 2000
Volume IITitle page ——
Appendix I1-2 February 200411-36 Aug. 200077-80 Nov. 199681 Feb. 1997
Appendix II1-2 Feb. 200531-39 March 199871-77 March 1998111-118 Feb. 1998243-249 Feb. 1998313-321 Feb. 1998351-352 June 2004
353-366 Dec. 1997367-368 April 1998369-378 Dec. 1997379-451 June 2004453-477 June 2004479-480 June 2004481-484 Nov. 1997515-529 Nov. 1997571-595 Feb. 2005631 Jan. 2002661-663 Feb. 2005691-693 Feb. 2005801-834 Aug. 1997871-878 Aug. 1997911-914 July 1997915-916 Aug. 1997917-921 July 1997961 July 1997991-999 July 1997
Appendix IIIi-vi Sept. 2003vii-viii Oct. 2004ix Dec. 20041-218 Feb. 1996219-220 March 1996221-222 April 1996223-224 May 1996225-226 July 1996227-228 Aug. 1996229-232 Sept. 1996233-234 Oct. 1996235-236 Feb. 1997237-238 Sept. 1997
239-240 Dec. 1997241-242 March 1998243-244 Sept. 1998245-246 Dec. 1998247-248 March 1999249-250 June 1999251-254 Sept. 1999255-256 Dec. 1999257-262 March 2000263-264 June 2000265-268 Sept. 2000269-274 Dec. 2000275-276 March 2001277-278 April 2004279-280 June 2001281-292 Oct. 2001293-296 Aug. 2002297-368 April 2003369-370 March 2004371-372 May 2004373-374 Dec. 20041001-1010 Oct. 20041011-1012 Dec. 20041013 Oct. 2004
Amendment immunity. The Court found that authority to abrogate immunity exists under the 14th Amend-
ment, but not under the Interstate Commerce Clause, as had previously been established in Pennsylvania
v. Union Gas Co. (491 U.S. 1 (1989)). Because the FLSA was passed pursuant to the Interstate Commerce
Clause, the Seminole decision means that states and their agencies — but not local governments — are
protected by 11th Amendment immunity from FLSA suits brought by individuals in federal court.
Then, in 1999, three years after the Seminole decision, the Supreme Court handed down a ruling in
Alden v. Maine (119 S. Ct. 2240 (1999)) that virtually eliminated the individual right to sue states under
the FLSA. The Court held in Alden that states are protected by sovereign immunity from FLSA lawsuits
brought by their employees in state courts (see ¶955). Thus, pursuant to Alden and Seminole, state govern-
ment employees no longer can sue their (unconsenting) employers under the FLSA in state or federal
court. Nonetheless, the cases do not alter the fact that states are bound to comply with the FLSA.
Readers should note that the Seminole and Alden rulings do not appear to preclude certain suits
against state officials (as opposed to states themselves), although this option may not always be available
to employees. Nor do the rulings prevent suits brought against states by the federal government, including
DOL. Finally, the Seminole and Alden rulings do not appear to have any impact on suits brought by local
government employees against their employers.
¶102 Traditional and Nontraditional Governmental Activities
Until the 1985 amendments to the FLSA, the traditional/nontraditional governmental activities test
established in NLC v. Usery (see ¶101) was basically relegated by Garcia to the historical graveyard.
However, the 1985 amendments held off application of the FLSA until April 15, 1986, for traditional
activities only. The statute stated as follows:
(c) LIABILITY AND DEFERRED PAYMENT. — (1) No State, political subdivision of aState, or interstate governmental agency shall be liable under section 16 of the Fair Labor Stan-dards Act of 1938 for a violation of section 6 (in the case of a territory or possession of the UnitedStates), 7, or 11(c) (as it relates to section 7) of such Act occurring before April 15, 1986, withrespect to any employee of the State, political subdivision, or agency who would not have beencovered by such Act under the Secretary of Labor’s special enforcement policy on January 1,1985, and published in sections 775.2 and 775.4 of title 29 of the Code of Federal Regulations.Pub. L. No. 99-150, §2(c).
The 1985 amendments provided that:
The amendments made by this Act shall not affect whether a public agency which is a State,political subdivision of a State, or an interstate governmental agency is liable under section 16 ofthe Fair Labor Standards Act of 1938 for a violation of section 6, 7, or 11 of such Act occurringbefore April 15, 1986, with respect to any employee of such public agency who would have beencovered by such Act under the Secretary of Labor’s special enforcement policy on January 1,1985, and published in section 775.3 of title 29 of the Code of Federal Regulations.Pub. L. No. 99-150 at §7.
By virtue of these provisions, nontraditional governmental functions remained covered by the FLSA, as
Examples of traditional governmental institutions and activities include schools, hospitals, fire pre-
vention, police protection, sanitation, public health, parks and recreation, libraries and museums. (See 29
C.F.R. §775.4.)
The status of local mass transit systems, however, remained unclear. In a “U.S. Department of Labor
Investigation Policy for Determining State and Local Government Employers’ Compliance with the Fair
Labor Standards Act” issued June 14, 1985, DOL stated that:
Enforcement actions with respect to local mass transit systems are not being initiated at thistime due to the fact that the question of whether local mass transit systems were subject to FLSAhad been in litigation since November 21, 1979, and their status under FLSA was not finallyresolved until the Supreme Court decision of February 19, 1985.
Despite this DOL policy statement, since the Supreme Court ducked the traditional/nontraditional activity
issue in Garcia, it remained unclear what the status of mass transit was during the interim period before
the full effect of the act on April 15, 1986.
In the legislative history of the amendments, both the House and Senate Committees in identical
language noted as follows:
Finally, these amendments do not affect whether employees of state and local governmentswho are engaged in nontraditional functions as defined by the DOL at 29 CFR 775.3 — notablylocal mass transit systems — are covered by the FLSA prior to April 15, 1986. The Committee isaware that the question whether transit employees, prior to the decision in Garcia, were entitled toFLSA compensation for overtime hours worked is still being litigated in federal court. Theamendments are intended to protect the rights of both sides to resolve their differences throughlitigation, without taking a position on the matter. Senate Report 99-159, 99th Cong. 1st Sess. at15 (1985); House Report 99-331, 99th Cong. 1st Sess. at 27-28 (1985).
Thus, the issue of whether local mass transit systems are a traditional governmental activity had been
left to the courts to resolve in future litigation. Each local mass transit agency made its own decision
whether to take an aggressive or conservative posture toward the FLSA in this interim period until April
15, 1986, when almost all governmental activity was covered by the act, without regard to whether it is
traditional or nontraditional.
Examples of nontraditional governmental activities to which the FLSA applied in this interim period
included (29 C.F.R. §775.3):
• Alcoholic beverage stores, Ohio v. Helvering, 292 U.S. 360 (1934);
• Off-track betting corporations;
• Operation of an oil and gas company, Public Serv. Co. of North Carolina Inc. v. FERC, 587 F.2d
716 (5th Cir.), cert. denied, 444 U.S. 879 (1979);
• Generation and distribution of electric power;
• Provision of residential and commercial telephone and telegraph communications, Puerto Rico Tel.
v. FCC, 553 F.2d 694 (1st Cir. 1977);
• Bottling mineral water, New York v. United States, 326 U.S. 572 (1946);
• Production and sale of organic fertilizer as a by-product of sewage processing;
1 Minimum wage will increase to $7.00 an hour on Jan. 1, 2006.2 Minimum wage for workers who are 18 and older. Workers under the age of 18 can make no more than 50 cents less
than the requisite wage for workers who are 18 and older. There are separate minimum wage requirements for “learners.”3 Minimum wage will increase to $6.50 an hour on Oct. 1, 2005.4 $4.90 per hour if employer’s annual gross sales volume is below $500,000.5 $4.00 if employer’s annual gross sales are $110,000 or less.6 Minimum wage will increase to $6.75 an hour on Jan. 1, 2006 and to $7.15 an hour on Jan. 1, 2007.7 $3.35 if annual gross sales are between $150,000 and $500,000; $2.80 if annual gross sales are less than $150,000.
dents of institutions of higher learning may be employed at subminimum rates if the administrator of the Wage and
Hour Division finds that lower rates are necessary to prevent the curtailment of their employment opportunities (see
Fig. 112-A). The U.S. Department of Labor (DOL) in December 1997 overhauled its rules governing several types
of these workers to streamline and simplify various requirements. Few major changes were made to the rules,
although an entire regulatory section was dropped (29 C.F.R. Part 527) and several others were reorganized to
form a new 29 C.F.R. Part 520. The revised requirements are discussed in ¶¶112-116 of this Handbook. In addi-
tion, ¶313 of the Handbook provides an analysis of employing full-time students at subminimum wage rates.
Special certificates must be obtained from the Wage and Hour Division for workers to be employed at
subminimum rates (except for workers qualifying for the youth “opportunity wage”; see ¶117). Certificates
are not issued if lower wage rates curtail full-time job opportunities for others in the work force.
Fig. 112-A
ELIGIBLE SUBMINIMUM WAGE EARNERS
TYPE OF EARNER ELIGIBLE EMPLOYER % OF MINIMUM WAGE
Students
• Full-time students of institutions Institutions of higher education No less than 85 percentof higher education (See 29 C.F.R. §519.11)
• Full-time students at any level, at least Retail, service or agricultural No less than 85 percent14 years of age (See 29 C.F.R. §519.1) establishments
• Part-time student-learners, at least Accredited school, college or No less than 75 percent16 years old, working in a bona fide universityvocational training program(See 29 C.F.R. Part 520, Subpart E)
Workers With Disabilities
• Disabled or aged workers All employers No fixed percentage; rate subject to DOL(See 29 C.F.R. §524.1) approval and may be appealed by worker
Apprentices
(See 29 C.F.R. Part 520, Subpart D) Most employers, No less than the special minimum wagewith certain exceptions specified in the Apprentice Program and
Apprentice Agreement unless DOLAdministrator issues a certificate
modifying the terms
Learners
(See 29 C.F.R. Part 520, Subpart D) Most employers, No less than 95 percent; specialwith certain exceptions rules for “piece rate” wages
Messengers
(See 29 C.F.R. Part 520, Subpart D) Messenger service companies only No less than 95 percent
The FLSA contains several sets of separate provisions permitting the employment of students, under
special Labor Department certificates, at wages below the prevailing federal minimum wage rate.
If the appropriate certificate procedures are followed and regulatory requirements are met:
• Full-time students of institutions of higher education may be paid no less than 85 percent of the
federal minimum wage for work they perform for their school (see ¶313 of the Handbook);
• Full-time students at any educational level (but at least 14 years of age) may be employed by retail
or service establishments, or in agriculture, at wages no less than 85 percent of the minimum wage rate
(see 29 C.F.R. §519.1); and
• Student-learners who receive instruction at an accredited school, college or university and work
part-time in a bona fide vocational training program may be paid no less than 75 percent of the federal
minimum wage (see 29 C.F.R. Part 520, Subpart E).
DOL in 1997 amended its rules governing the employment of student-learners at subminimum wages
to simplify and consolidate existing provisions. The revised rules explain how to apply for special certifi-
cates for student-learners (29 C.F.R. §§520.201-520.503), how to appeal denial of a certificate (29 C.F.R.
§520.505), how to comply with the terms of the certificate (29 C.F.R. §520.506) and how to keep proper
employment records (29 C.F.R. §520.508).
¶114 Apprentices and Learners Subminimum Wages
The DOL has the authority under 29 U.S.C. §214 to issue special certificates to employers authorizing
the employment of apprentices in “skilled trades” at subminimum wages. As set forth at 29 C.F.R.
§520.300, a “skilled trade” is one that possesses all of the following characteristics:
(1) It is customarily learned in a practical way through a structured, systematic program of on-the-job supervised training.
(2) It is clearly identified and commonly recognized throughout an industry.(3) It involves manual, mechanical or technical skills and knowledge which require a mini-
mum of 2,000 hours of on-the-job work experience.(4) It requires related instruction to supplement the on-the-job training.(5) It is not merely part of an apprenticeable occupation and does not fall into any of the
following categories: marketing; sales administration; administrative support; executive andmanagerial; professional and semi-professional occupations (this category covers occupations forwhich entrance requirements customarily include education of college level).
Under 29 U.S.C. §214, DOL also has the authority to provide for the employment of learners under
special subminimum wage certificates. A learner is a worker “who is being trained for an occupation, which is
not customarily recognized as an apprenticeable trade, for which skill, dexterity and judgment must be learned
and who, when initially employed produces little or nothing of value” (29 C.F.R. §520.300). DOL regulations
state that barring extraordinary circumstances, an employee cannot be considered a “learner” once he or she has
acquired 240 hours of job-related and/or vocational training with the same employer or training facility during
the past three years. In addition, a qualifying “learner” may only be trained in two qualifying occupations.
Department of LaborJuliette Gordon Low Federal Bldg. Complex124 Barnard Street, Suite B-210Savannah, Ga. 31401-3648Phone: (912) 652-4221Fax: (912) 652-4992
The Fair Labor Standards Act (FLSA) provides that certain employees are not covered by the act.
While there are a number of occupational categories of such non-covered employees, only a few of these
are directly relevant to state and local governments. Non-covered employees and exempt employees are
basically treated the same under the FLSA, except for the recordkeeping requirements. Employers do not
have to keep records for FLSA purposes for non-covered employees but must keep records for exempt
employees (¶800-¶830).
Volunteers, independent contractors, prisoners and certain trainees are generally not entitled to the
protections of the FLSA. The principles which govern these areas were established first in the private
sector. By contrast, when the FLSA was extended in 1974 to encompass state and local employees, some
special provisions were crafted to identify certain persons not covered by the FLSA. These provisions
were, in turn, further supplemented in the 1985 amendments. The act (29 U.S.C. §203(e)(2)(C)) defines an
“employee” entitled to the protection of the act to include:
(C) any individual employed by a state, political subdivision of a state, or an interstate governmen-tal agency, other than such an individual—
(i) who is not subject to the civil service laws of the state, political subdivision, or agencywhich employs him; and
(ii) who—(I) holds a public elective office of that state, political subdivision, or agency;(II) is selected by the holder of such an office to be a member of his personal staff;(III) is appointed by such an office holder to serve on a policy-making level;(IV) is an immediate advisor to such an office holder with respect to the constitutional
or legal powers of his office; or(V) is an employee in the legislative branch of that state, political subdivision, or
agency and is not employed by the legislative library of such state, political subdivision, oragency.
Thus, under the act, elected officials, their personal staffs, policy-making appointees, and legal
advisors are not covered by the act, so long as they are not subject to the civil service laws of their state or
local governments (see 29 C.F.R. §553.10-§553.12).
As a practical matter many of the occupations covered by these exclusions would come within the
white-collar exemptions discussed elsewhere in this Tab. There is some basic guidance from the U.S.
Department of Labor (DOL) on some of these provisions and there is a body of sometimes conflicting case
law under other labor laws that contain similar exclusions. A discussion of each provision follows.
¶211 Elected Official Exclusion
The elected official exclusion is relatively straightforward. It is clear that an elected mayor, council
member or state legislator not under civil service laws is not covered by the minimum wage, overtime and
recordkeeping provisions of the FLSA.
A Dec. 3, 1986, Wage Hour Opinion Letter responded to a question concerning the applicability
of the FLSA to elected officials who perform work, other than their elected duties, for the jurisdiction.
According to the letter, the town supervisors are duly elected officials, not covered by any civil service
laws. In the locality, the supervisors may receive wages for performing such work as construction and
maintenance of roads, independent of the compensation received for attendance at town meetings.
According to DOL, 29 U.S.C. §203(e)(2)(c) clearly states that an individual who holds a political
office, and is not subject to any civil service laws, is not considered an “employee” under the act. There-
fore, DOL found that no matter what activities the supervisors performed in the service of their jurisdic-
tion, for purposes of the act they were not covered as employees. Even when performing road work, the
supervisors are considered non-covered employees for purposes of FLSA and are not regulated by the
FLSA’s minimum wage, overtime and recordkeeping provisions.
¶212 Personal Staff Exclusion
The Fair Labor Standards Act (29 U.S.C. §203(e)(2)(C)) excludes from the definition of employee,
and thus from coverage, certain individuals employed by public agencies. One of the exclusions is for
“personal staff members” who are selected or appointed by elected public officials. The statutory term
“personal staff member” has caused great confusion, which DOL regulations, implementing the 1985
Amendments, sought to address. In those regulations DOL narrowly construed the term personal staff
member. According to 29 C.F.R. §553.11(b), the term includes:
. . . only persons who are under the direct supervision of the selecting elected official andhave regular contact with such official. (emphasis added.)
Moreover, the term does not include individuals supervised by someone other than the official, even
if initially selected for the position by the elected official. For example, the regulations state that an
elected official’s personal secretary may fall within the exception, while the secretary’s assistant would
not (29 C.F.R. §553.11(b)). Furthermore, to qualify as a personal staff member the individual in question
must not be subject to the civil service laws of the employing agency (see ¶213 of the Handbook).
It is important to note that in the 1987 regulations implementing the 1985 Amendments, DOL aban-
doned portions of a previously proposed test that required a position to be outside a table of organization
and the source of compensation to be a specific appropriation. Based on comments received, DOL con-
cluded that such criteria were irrelevant.
DOL’s narrow view of who qualifies as a personal staff member is consistent with earlier Wage Hour
Opinion Letters. For example, DOL stated in a Wage Hour Opinion Letter dated Dec. 19, 1974, that:
Among the tests to be considered with respect to members of the personal staff of an electedoffice-holder are the following:
(1) is the person’s employment entirely at the discretion of the elected officeholder;(2) is the position not subject to approval or clearance by the personnel department or division
of any part of the government;(3) is the work performed outside of any position or occupation established by a table of
organization as part of the legislative branch or committee or commission formed by an act of thelegislature;
(4) is the person’s compensation dependent upon a specific appropriation or is it paid out ofan office expense allowance provided to the officeholder?
A similar test was set forth in a Wage Hour Opinion Letter dated April 30, 1975.
In DOL’s internal guidance for its investigators, DOL elaborates on its position as follows:
. . . Thus individuals such as pages, stenographers, telephone operators, clerks, typists andothers employed by the branch or commission as a whole, may be considered “employees” under theAct. An additional example would be deputy sheriffs who, although they are selected by and workunder the direction of the Sheriff, are employed only after approval of their employment by theBoard of Commissioners. They are not employed at the sole discretion of the sheriff . . .
Generally staff includes only persons who are under the direct supervision of the electedofficial and who have almost daily contact with him. It would, for example, include the official’sprivate secretary, but not the secretary to his assistant, or the stenographers in a pool that servicesthe official’s department, or staff members in an operational unit whose head reports to the electedofficial. It would typically not include all members of an operational unit, since all the memberscould not have a personal working relationship with the elected official. DOL Field OperationsHandbook §10d05 (June 24, 1975)(emphasis supplied).
Applying this test, DOL found in a Dec. 19, 1974, Opinion Letter that an official shorthand court
reporter in Texas was authorized by a specific statutory authority, and, therefore, the worker was an
employee entitled to the benefits of the FLSA. DOL also found in a July 12, 1985, Opinion Letter that a
deputy sheriff was not a member of the personal staff of an elected sheriff because he performed a local
government function as an employee of an established unit of the county government. A March 10, 1986,
Opinion Letter responded again to the question of whether deputy sheriffs are members of an elected
sheriff’s personal staff and reached a similar conclusion, stating that the deputies were not outside the
civil service regulations of the jurisdiction, did not hold elected office, and did not serve as personal staff
members, policymakers or legal advisors to a public officeholder. Thus, under the DOL test, it is difficult
to make employees fit under the personal staff exclusion. However, deputy sheriffs and undersheriffs were
found to be personal staff of the elected sheriff in Nicholas et al. v. Hurley (L.C. 117 (CCH) ¶35,440
(10th Cir. 1990)) because they were directly accountable to the sheriff and served completely at his will
(see also Wage Hour Opinion Letters dated Jan. 9, 1990, and Feb. 14, 1990).
Court decisions on the personal staff exclusion
There has been considerable litigation of the meaning of the personal staff exemption under Title VII
of the Civil Rights Act of 1964, which may be applied by analogy to the FLSA.
Initially it should be noted that the scope of the “personal staff” exclusion is governed by federal
rather than state law, which is relevant only insofar as it describes the appointee’s position, including
duties and the way the appointee is hired, supervised and fired (Calderon v. Martin County, 639 F.2d 271
Obviously from the above discussion, opinions differ regarding the reach of the personal staff exclu-
sion. DOL has taken a restrictive view in their regulations implementing the 1985 Amendments, a much
narrower view than many courts have adopted under analogous Title VII litigation.
¶213 Policy-Making Appointees Exclusion
When a publicly elected official appoints an individual to serve on a policy-making level, such an
appointed individual who is outside the civil service is not covered by the act. For example, appointed
members of the state cabinet and directors of city and county boards and commissions are all the kinds of
workers who are not covered by the FLSA and, thus, not subject to its minimum wages and overtime
strictures.
DOL has tried to make the criteria for determining if an employee is subject to civil service laws
more objective. According to the DOL regulations (29 C.F.R. §553.11(c)), the term civil service refers to a:
personnel system established by law which is designed to protect employees from arbitraryaction, personal favoritism, and political coercion, and which uses a competitive or merit examina-tion process for selection and placement. Continued tenure of employment of employees under civilservice, except for cause, is provided.
To fall within the policy-making appointee exception, the staff member must be appointed by and
serve solely at the pleasure or discretion of the elected official.
The harder issue is what constitutes a policy-making level position. The same factors outlined in the
personal staff exclusion have been suggested by DOL in the policy-maker exclusion in a Wage Hour
Opinion Letter dated April 30, 1975 (see ¶212). Under Title VII of the Civil Rights Act of 1964, which
contains a similar exclusion, it has been suggested that this exclusion should be narrowly construed. In
accordance with this required statutory construction, the courts have generally required the same high
degree of personal accountability and immediate and personal relationship between the appointee and
the elected official as is required by the “personal staff” exemption (see Anderson v. City of Albuquerque,
690 F.2d 796, 801 (10th Cir. 1982)).
The crucial distinction is between appointees who actually make and formulate policy and appointees
who simply implement and apply policies made by others. The exemption applies only to individuals who
formulate policy (EEOC v. North Carolina, 21 E.P.D. (CCH) ¶30,441 (W.D.N.C. 1979); see also, Ander-
son v. City of Albuquerque, supra, at 801). In EEOC v. North Carolina, the court held that state magis-
trates were covered by the FLSA because they applied rather than made policy. The court applied the test
for distinguishing “policymaking” from “nonpolicymaking” employees articulated by the Supreme Court
in another context:
No clear line can be drawn between policymaking and nonpolicymaking positions. Whilenonpolicymaking individuals usually have limited responsibility, that is not to say that one with anumber of responsibilities is necessarily in a policymaking position. The nature of the responsibili-ties is critical. Employee supervisors, for example, may have many responsibilities, but those
responsibilities may have only limited and well-defined objectives. An employee with responsibili-ties that are not well defined or are of broad scope more likely functions in a policymaking position.In determining whether an employee occupies a policymaking position, consideration shouldalso be given to whether the employee acts as an advisor or formulates plans for the imple-mentation of broad goals. Elrod v. Burns, 427 U.S. 347, 367-68 (1976).
Applying this test to the particular facts facing it, the district court found that where the authority of
an appointee was strictly confined by statute, and his function was to apply regulations made by others
with limited discretion, he could not be said to make policy.
¶214 Legal Advisors Exclusion
Immediate legal advisors to elected officials are not covered by the FLSA (29 U.S.C.
§203(e)(2)(C)(V)). The definition of “immediate advisors” is limited to staff who serve as advisors on
constitutional or legal matters and who are not subject to the civil service rules of the employing agency
(29 C.F.R. §553.11(d)). (For a definition of civil service, see ¶213.)
Certain lawyers, such as some state’s attorneys, attorneys general, or county, city, or council attorneys,
are therefore outside the coverage of the minimum wage, overtime and recordkeeping provisions of the act.
The application of this exclusion, however, depends on the immediacy of the legal advisor’s contact
with the elected official. In a Wage Hour Opinion Letter dated April 30, 1975, DOL said that this category
is restricted to attorneys. A deputy district attorney in California, under a similar provision in Title VII of
the Civil Rights Act of 1964, was found to be a legal advisor in Ramirez v. San Mateo County Dist.
Attorney’s Office (639 F.2d 509 (9th Cir. 1981)). In Wall v. Coleman (393 F. Supp. 826 (S.D. Ga. 1975)),
an assistant district attorney was similarly excluded. However, an Oregon deputy legislative counsel was
not found to be within the immediate advisor exclusion in Gearhart v. Oregon (410 F. Supp. 597 (D. Ore.
1976)). The factors that figure into the analysis appear to be personal accountability to an elected official,
highly sensitive confidential legal work, and the giving of advice directly to the elected official and not
through intermediaries.
¶215 Legislative Employees
By virtue of the 1985 amendments to the FLSA, a new non-covered employee category was added to
29 U.S.C. §203(e)(2)(C)(V) of the act. That provision excluded employees not subject to civil service
laws who work in the legislative branch of a state or one of its political subdivisions. Thus, almost all
non-civil service employees in the state legislature or county or city councils or boards are excluded by
this provision. The only statutory limitation is that employees in the library of the legislative branch
remain covered employees entitled to the protections of the FLSA. The legislative exclusion is meant to
treat state and local legislative bodies the same as Congress treats itself under the FLSA. Thus, since
employees of the Library of Congress are covered by the act, so are library employees in other legislative
branches. DOL regulations (29 C.F.R. §553.12(b)) also make clear that employees of school boards, other
than elected officials and their appointees, are covered employees entitled to FLSA protection.
¶216 Bona Fide Volunteers
In 1985 Congress enacted legislation to clarify the issue of compensation for so-called “volunteers.”
The amendment to the FLSA (29 U.S.C. §203(e)(4)(A)) reads as follows:
the term “employee” does not include any individual who volunteers to perform services for apublic agency which is a state, a political subdivision of a state, or an interstate governmentalagency, if—
(i) the individual receives no compensation or is paid expenses, reasonable benefits, or anominal fee to perform the services for which the individual volunteered; and
(ii) such services are not the same type of services which the individual is employed toperform for such public agency.
A volunteer is generally defined as an individual who performs hours of service for a public agency
for civic, charitable or humanitarian reasons. Moreover, a volunteer performs these services without
promise, expectation or receipt of compensation for services rendered. If these conditions are met, an
individual will not be subject to the FLSA (29 C.F.R. §553.101(a)). If the economic reality, however,
indicates the ostensible volunteer is really an employee, dependent on the employer, then the FLSA applies
(Tony and Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290 (1985)).
Public employee volunteers
As the 1985 amendments state, an individual may not be a volunteer for a public agency when the
volunteer hours involve the same type of service which the individual is employed to perform for the same
agency. For example, in a Feb. 19, 1992, letter, a county detention officer (jailor) wanted to volunteer as a
reserve deputy sheriff. DOL concluded that a detention officer, who is engaged in public safety functions,
would be performing similar services to those performed by a deputy sheriff. Similarly, in a Feb. 22, 1992,
letter DOL also concluded that a county reserve officer could not volunteer as a law enforcement officer
for the county during off-duty hours (see also Wage and Hour Opinion Letters dated Sept. 26, 1992, July
16, 1991, April 10, 1990, Jan. 29, 1990, May 3, 1990, and April 16, 1990).
One issue that may arise under this section is determining whether two agencies of the same state or
local government constitute the same or separate public agencies. According to DOL, this issue will be
determined on a case-by-case basis. One factor that will be considered by DOL is how the agency is
treated for statistical purposes in the Census of Governments issued by the Bureau of the Census, U.S.
Department of Commerce (29 C.F.R. §553.102(b)). Since DOL has determined that such issues will be
resolved on a case-by-case basis, it would be wise for any public employer considering this issue to re-
quest a Wage and Hour Opinion Letter.
Another important issue when considering public employee volunteers is determining whether or not
the employee is providing the same type of services which the individual is employed to perform for the
same agency. Individuals may not volunteer to do what they are otherwise paid for. Among other criteria,
DOL will consider:
(1) the duties and other factors contained in the definitions of the 3-digit categories ofoccupations in the Dictionary of Occupational Titles; and (2) the facts and circumstances in aparticular case, including whether the volunteer service is closely related to the actual dutiesperformed by or responsibilities assigned to the employee. 29 C.F.R §553.103(a).
Once again, because of the vagueness of the DOL criteria, any public employer in doubt as to whether
a public employee volunteer is performing the same services which he or she is otherwise employed to do
is advised to seek a Wage and Hour Opinion Letter.
In an effort to clarify the provisions, DOL has provided examples of when services constitute the
“same type of services.” For instance, the following employees would not be considered volunteers accord-
ing to 29 C.F.R. §553.103(b):
(1) A nurse employed by a state hospital who volunteers nursing services at a state operatedclinic (which is not a separate agency).
(2) A firefighter who volunteers as a firefighter at the same public agency.
For example, in an Oct. 5, 1987, Wage and Hour Opinion Letter, a fire department wanted to know if
firetruck drivers in the same district could volunteer the same or similar work during their off-duty hours.
DOL explained that because §203(e)(4)(A)(ii) of the FLSA does not allow individuals to volunteer the
same or similar duties for the public agency that employs them, the firetruck drivers could not work addi-
tional time without the work being counted and paid for in compliance with the FLSA (see also Wage and
Hour Opinion Letters, Nov. 7, 1994, and April 9, 1995). However, in a Jan. 2, 1988, letter, DOL stated that
a firefighter may volunteer the same services for a different public agency in another jurisdiction. (See also
Wage and Hour Opinion Letters dated April 21, 1987, March 28, 1987, and Aug. 7, 1989.)
On the other hand, the following employees would not be engaged in volunteering the “same type of
services,” and thus would be considered bona fide volunteers:
(1) A city police officer who volunteers as a part-time referee in a city basketball league.(2) An employee of the city parks department who serves as a volunteer city firefighter.(3) An office employee of a city hospital who volunteers to spend time with a disabled or
elderly person in the same institution during off duty hours.
In several Wage and Hour Opinion Letters, DOL emphasized that public employees can volunteer for
the same agency that employs them if the volunteer position is substantially different from their paid
work. A May 7, 1986, Wage and Hour Opinion Letter addressed a case in which a public high school’s
full-time custodian was prohibited by the school from working as an assistant baseball coach. The Wage
and Hour Division noted that the facts in the letter clearly indicated that the custodian was volunteering
his coaching services and could continue to coach without fear of losing his volunteer status. A police
department in an Oct. 21, 1987, Wage and Hour Opinion Letter asked if civilian members (such as
switchboard operators or record clerks) of the department could volunteer their services as reserve police
officers without the public agency incurring overtime compensation liabilities. DOL, citing §553.103 of
a federal district court found in 1997 that firefighters who regularly were paid between $5.05 and $9 per
hour for their duties were employees rather than volunteers, because they “both expected and received
hourly compensation, in an amount greater than a ‘nominal’ fee” (Krause v. Cherry Hill Fire District 13,
969 F. Supp. 270 (D.N.J. 1997)).
The FLSA defines the term “employ” in a manner that includes “to suffer or permit to work”
(29 U.S.C. §203(g)). Thus, where a state or local government permits a person to work, that person gener-
ally has to be paid the minimum wage and any overtime premium. Of course, the employer must know that
the work is being performed in order to “permit” its performance. However, it is possible for the state or
local government to knowingly accept volunteer work from a civic-minded citizen; this person, however,
must be a bona fide volunteer and not an employee who is otherwise being coerced to volunteer.
DOL has provided the following statement on volunteers (U.S. Department of Labor WH Publication
1297, “Employment Relationship Under the Fair Labor Standards Act,” pp. 6-7 (Rev. 5/80)):
For example, members of civic organizations may help out in a sheltered workshop; women’sorganizations may send members or students into hospitals or nursing homes to provide certainpersonal services for the sick or the elderly; mothers may assist in a school library or cafeteria as apublic duty to maintain effective services for their children; or fathers may drive a school bus tocarry a football team or band on a trip. Similarly, individuals may volunteer to perform such tasksas driving vehicles or folding bandages for the Red Cross, working with retarded or handicappedchildren or disadvantaged youth, helping in youth programs as camp counselors, scoutmasters, denmothers, providing child care assistance for needy working mothers, soliciting contributions orparticipating in benefit programs for such organizations and volunteering other services needed tocarry out their charitable, educational, or religious programs. The fact that services are performedunder such circumstances is not sufficient to create an employee-employer relationship.
In a May 1985 publication, “State and Local Government Employees Under the Fair Labor Standards
Act,” DOL further elaborated on volunteer services:
There are also situations in which employees may volunteer their services in one capacity oranother, usually on a part-time basis, and without contemplation of pay for services rendered. Forexample, an office employee of a hospital may volunteer to sit with a sick child or elderly personduring off-duty hours as an act of charity. An employer-employee relationship will not exist withrespect to such volunteer time between the hospital and the volunteer or between the volunteer andthe person for whose benefit the service is performed. However, if an office employee volunteeredto perform office duties for the hospital by which he or she is employed, such time would beconsidered as compensable hours of work for purposes of FLSA. Similarly, a full-time paidfirefighter could not agree to identify a portion of the workweek as “volunteer time.” An employeecannot be both a “paid” employee and a “nonpaid” volunteer while performing the same type ofwork for the same employer.
In a Wage and Hour Opinion Letter dated Aug. 12, 1974, the DOL further noted as follows when
asked about city employees who devote some off-duty time to city-sponsored recreation programs:
For example, an office employee of the city may volunteer to perform nonclerical services,such as coaching a softball or basketball team in a city-sponsored program, during his or her off-duty time as a charitable or civic act. A person may not, however, be both an employee and avolunteer while performing essentially the same duties. Thus, a person employed in park activitiescannot have his or her time divided into “working hours” and “volunteer hours” while performingthe same or related duties. Accordingly, the position regarding volunteers will normally encompass
those who participate in the programs for civic or personal motives of their own, without promiseor expectation of compensation at hours that suit their own convenience, whether by schedule orotherwise and who do not replace regular employees in the performance of their normal duties.The activity may be performed on the employer’s premises, so long as it is not done during anytime the employee is required to be on the premises, and the control exercised by the employer isonly nominal.
In Wage and Hour Opinion Letter WH-281, dated Aug. 5, 1974, DOL also ruled that volunteers of a
grantee acting as an agent of the state of Nebraska under the Domestic Volunteer Services Act of 1973
were not employees under the FLSA. And in a Wage and Hour Opinion Letter dated April 1, 1991, foster
grandparents who received a fee of $2.20 an hour or $48.00 per week as teaching assistants, in addition to
expense money, were ruled to be volunteers and not employees under the FLSA. The payment of a small
salary does not affect their volunteer status, according to DOL.
Volunteerism in the areas of fire protection and law enforcement is discussed beginning at ¶641.
¶217 Independent Contractors
It is common for state and local governments to contract with private employers for portions of their
work. For example, a state government may hire a consultant on a tax reform study, a private security firm
to run prisons, a private cafeteria for state workers or a private firm for trash removal services.
As a general rule, independent contractors bid to perform government work and are evaluated based on
results rather than their day-to-day operations. Independent contractors control their own workers and must
ensure that those workers are compensated in accordance with the FLSA. State and local governments, there-
fore, need not be concerned with FLSA compliance for the employees of their independent contractors.
State or local governments, however, are obviously not free to set up sham independent contractor
relationships that violate the FLSA. They cannot, for example, designate a particular worker as an indepen-
dent contractor and then violate the FLSA with regard to the worker.
The legal test that establishes a true independent contractor is called the “economic reality test.” In
Doty v. Elias, 733 F.2d 720 (10th Cir. 1984), one court characterized this test in the following terms:
The focal point in deciding whether an individual is an employee is whether the individualis economically dependent on the business to which he renders service or is, as a matter of economicfact, in business for himself. In applying this test, the courts generally focus on five factors:
(1) the degree of control exerted by the alleged employer over the worker;(2) the worker’s opportunity for profit or loss;(3) the worker’s investment in the business;(4) the permanence of the working relationship;(5) the degree of skill required to perform the work.
Thus, if a so-called independent contractor does not meet this test of economic reality, the contractor
must be treated as an employee for FLSA purposes (see also Rutherford Food Corp. v. McComb, 331 U.S.
Finally, it is important to remember that even where the employment arrangement meets the require-
ments of the FLSA, there are other federal and state standards that must be met, including standards for
withholding income taxes, paying worker’s compensation, and liability for tortious acts. An employment
arrangement can theoretically satisfy the requirements of the FLSA, yet still be deficient in these other
areas, since the tests are not necessarily the same. Accordingly, it is important to seek the advice of counsel in
classifying independent contractors under the FLSA and other laws.
¶218 Prisoners
Generally, prisoners who are required to work by or for the government are not considered employees
under the FLSA and need not be paid minimum wages or overtime. The Department of Labor’s Field
Operations Handbook states the following regarding prison laborers (at paragraph 10b29):
10b29 Prison inmates. (a) Generally, a prison inmate who, while serving a sentence, isrequired to work by or who does work for the prison, within the confines of the institution, or prisonfarms, road gangs, or other areas directly associated with the incarceration program, is not anemployee within the meaning of the act (see also, 10b03(g)). (b) A different situation exists,however, where inmates are contracted out by an institution to a private company or individual. Insuch instances an employee-employer relationship is created between the private company orindividual and the prisoners. This is true regardless of whether the work is performed within theconfines of the institution or elsewhere.
Thus, according to DOL, use of inmate labor does not violate the FLSA if the prisoner works for or is
required to work by the government. But if the inmates are contracted out, this may create an employment
relationship requiring payment of wages in accordance with the FLSA. This provision was last modified on
June 24, 1975. (The provisions of the Field Operations Handbook are for internal DOL guidance only and may
not be relied upon by employers. The Field Operations Handbook does not constitute affirmative law.)
The Field Operations Handbook restates this general rule when it comes to prisoners who perform
labor for the federal, state or local government entity. Such prison inmates are not employees within the
meaning of the FLSA (see Wentworth v. Solem, 548 F.2d 773 (8th Cir. 1977) (per curiam); Rene v.
Lindgren, Slip Op. No. 83-CIV-2191 (S.D.N.Y. 1983)). Thus, prisoners can be worked long hours by a
governmental entity without an FLSA violation arising. Moreover, this is not a violation of the Con-
stitution, since they have no right to any pay (see Woodall v. Partilla, 581 F. Supp. 1066 (N.D. Ill.
1984) and cases cited therein).
The 7th U.S. Circuit Court of Appeals found that Congress did not intend for the FLSA to dictate that
prisoners be paid the minimum wage for anything they can do in prison that can be considered work
(Vanskike v. Peters, 974 F.2d 806 (7th Cir. 1992)). The appellate court ruled that a prisoner working
within the prison and for the prison is not an employee of the prison under the FLSA. The 4th Circuit also
ruled that inmates who work for a state-run business are not employees under the act (Harker v. State Use
The 9th Circuit reversed itself in Hale v. Arizona, 993 F.2d 1387 (9th Cir. 1993) (en banc), when it
ruled that inmates in the Arizona corrections system who make products for prison industry enterprises
that sell items outside the prison are not employees under the FLSA. The appellate court resolved a contra-
diction with a previous 9th Circuit decision (Gilbreath v. Cutter Biological Inc., 931 F.2d 1320 (9th Cir.
1991)), where it held that inmates working for a private contractor are not covered by the FLSA.
The majority of courts have affirmatively held that prisoners are not covered by the FLSA even where
they are required to work by the government for private contractors. Examples of such rulings that may be
relied upon include Burleson v. California, 83 F.3d 311 (9th Cir. 1996); Reimonenq v. Foti, 72 F.3d 472
(5th Cir. 1996); McMaster v. Minnesota, 819 F. Supp. 1429 (D. Minn. 1993) aff’d. 30 F.3d 976 (8th Cir. 1994);
Alexander v. Sara Inc., 559 F. Supp. 42 (M.D. La. 1983) aff’d per curiam, 721 F.2d 149 (5th Cir. 1983);
Hudgins v. Hart, 323 F. Supp. 898 (E.D. La. 1971); and Huntley v. Gunn Furniture Co., 79 F. Supp. 110
(W.D. Mich. 1948).
These courts have reached this conclusion based on an “economic reality test” focused on two major
factors: (1) the company could not hire, fire or ultimately control the prisoners, and (2) no formal contrac-
tual relationship existed between the company and the prisoners (see Woodall, citing Sims v. Parke
Davis and Co., 334 F. Supp. 774 (E.D. Mich. 1971) aff’d per curiam, 453 F.2d 1259 (6th Cir. 1971), cert.
denied, 405 U.S. 978 (1972)). The lack of any employer control or sufficient control precludes an employ-
ment relationship. Another court (Carter v. Dutchess Community College, 735 F.2d 8 (2d Cir. 1984), citing
Bonnette v. California Health and Welfare Agency, 704 F.2d 1465 (9th Cir. 1983)), restated the economic
reality test in more detail and included inquiries into:
whether the alleged employer (1) had the power to hire and fire the employees, (2) supervisedand controlled the employee work schedules or conditions of employment, (3) determined the rateand method of payment, and (4) maintained employment records.
The 9th Circuit added additional factors to the economic reality test, including whether low inmate
wages would create unfair competition, whether the prison exercised its discretion in choosing workers and
whether the prison received labor in exchange for wages (see Gilbreath).
As the above test indicates, however, it is possible for an outside contractor to assume the role of the
employer of the prisoner by exercising too much control over the prisoner. In Carter v. Dutchess Commu-
nity College, the court stated as follows:
We hold only that an inmate may be entitled under the law to receive the federal minimumwage from an outside employer, depending on how many typical employer prerogatives are exer-cised over the inmate by the outside employer, and to what extent.
The court in Carter, like that in Woodall, reserved judgment on whether the particular outside con-
tractor in the case was liable under the FLSA. Thus, it is theoretically possible for prison contractors to be
liable under the FLSA if they form a contractual relationship with the prisoner and exercise control over
the prisoner. For example, in a work release program where the prisoner performs work outside the
institution under the control of the contractor, there would very possibly be enough of a nexus to create an
employment relationship. In such a case, the contractor, though not the state or local government, would be
responsible to pay minimum wages.
In any case, prison labor is generally prohibited where a federal government contract is involved.
As a final matter, it also should be noted that the FLSA has been ruled to cover “civilly” committed
juvenile state youth camps (King v. Carey, 405 F. Supp. 41 (W.D.N.Y. 1975)). However, the 1st U.S.
Circuit Court of Appeals has determined that “patients” incarcerated as sexually dangerous persons are not
employees and should be considered prisoners rather than patients of the facility (Miller v. Dukakis, 961
F.2d 7 (1st Cir. 1992)).
¶219 Trainees
Individuals who are not yet employees but are true “trainees” can be excluded from FLSA coverage.
Trainees, however, must be distinguished from employees who also receive training (see ¶460). The issue
of compensating individuals who are being trained without formally occupying a job is considerably
different from that of existing employees who pursue further training.
In Walling v. Portland Terminal Co., 330 U.S. 148 (1947), it was held that persons training for jobs
with railways were not employees of the railways under the act because two factors necessary for an
employment relationship were lacking: (a) a benefit to the employer, and (b) compensation or an intent
that services be paid for.
As a result of this and similar cases, the Wage and Hour Division issued the following guidelines
for determining whether trainees are “employees” covered by the act (Wage and Hour Opinion Letter,
Jan. 6, 1969):
Whether trainees are employees of an employer under the acts will depend upon all of thecircumstances surrounding their activities on the premises of the employer. If all six of thefollowing criteria apply, the trainees are not employees within the meaning of the Fair LaborStandards Act:
(1) The training, even though it includes actual operation of the facilities of theemployer, is similar to that which would be given in a vocational school.
(2) The training is for the benefit of the trainees.(3) The trainees do not displace regular employees, but work under close observation.(4) The employer that provides the training derives no immediate advantage from the
activities of the trainees, and on occasion his operations may actually be impeded.(5) The trainees are not necessarily entitled to a job at the completion of the training
period.(6) The employer and the trainees understand that the trainees are not entitled to wages
for the time spent in training.
In one of the more interesting cases dealing with the trainee question, trainees at an airline’s school
for reservation clerks and flight attendants were held not to be covered by the FLSA under certain condi-
tions. Those conditions were: (1) the trainees acknowledged in writing that they were not employees; (2)
they were informed that training was a prerequisite to employment but did not guarantee it; (3) trainees
Situations similar to some of the “safety rule” cases discussed in this section might be resolved differ-
ently in the future under the new regulation that addresses violations of workplace conduct rules. For ex-
ample, police officers who took sausage sandwiches as gratuities were found not to have violated major
safety rules in Pautlitz v. City of Naperville (781 F.Supp. 1368 (N.D. Ill. 1992)). However, under the new
‘workplace conduct’ provision, if the city has an adequate written policy sufficient to put police officers on
notice that they may be subject to an unpaid disciplinary suspension for taking gratuities, then an argument
can be made that they may be suspended from work with a corresponding deduction from salary.
What Else Can an Employer Do?
It is clear from DOL’s regulations, as well as interpretations thereof, that an employer may make disci-
plinary deductions from the pay of an exempt employee on any basis (e.g., by the day or even part of a day)
for violations of safety rules of major significance. It also is clear that the 2004 regulations allow full-day
deductions for violations of workplace conduct rules. Finally, an employer can make deductions for full-
workweek suspensions, regardless of the reason. This latter exception is permissible because the regulation
states that an employee need not be paid for a week in which he or she performs no work.
But the above rules do not cover all situations in which an employer might wish to discipline an em-
ployee. What other actions, then, can an employer take without violating the salary test?
In a Wage and Hour Opinion Letter dated March 30, 1994, DOL suggested another option for imposing
disciplinary deductions. DOL stated:
We continue to believe that employees may be appropriately disciplined in other ways. Forexample, it would appear that reducing accrued leave entitlement by a day or days for the infractioncould achieve the desired disciplinary goal. In our view, such a practice would not affect the salarybasis of payment described in 29 C.F.R. §541.118 [now 29 C.F.R. §541.602], or otherwise adverselyaffect the application of §13(a)(1).
Thus, one alternative to suspension without pay is to reduce the employee’s leave banks by a day or
days. Any employer questioned about such a practice could point to the cited opinion letter and argue that it
has a good faith defense to any challenge.
Jury Duty, Military Leave, Attendance as a Witness and Initial/Terminal Weeks of Employment
DOL’s revised FLSA exemption regulations (29 C.F.R. §541.602(b)(3)) state that, although an em-
ployer cannot make deductions from pay for absences of an exempt employee occasioned by jury duty,
attendance as a witness or temporary military leave, the employer can offset any amounts received by an
employee as jury fees, witness fees or military pay for a particular week against the salary due for that
particular week, without loss of the exemption.
DOL’s regulations make clear that deductions from the pay of exempt employees for jury duty violate
the salary basis test (see also Wage and Hour Opinion Letter, June 27, 1996). However, the regulations
also state that an exempt employee need not be paid for a week in which no work is performed. Thus, any
employer policy covering jury duty should make clear that exempt employees will not suffer deductions from
pay for jury duty in a week in which the employee performs any work. However, a policy stating that exempt
employees who serve on juries for extended periods of time will not be paid for workweeks in which they
perform no work is permissible. It should be noted that these restrictions do not apply to nonexempt employ-
ees. Employers may require nonexempt employees to take leave without pay for any time spent on jury duty
(unless prohibited by state law).
Regarding military leave, note that, as explained in a Wage and Hour Opinion Letter dated March 1,
1957, “temporary military leave” may be as long as three months. In a Wage and Hour Opinion Letter dated
Jan. 22, 1999, DOL explained further:
As used in 29 C.F.R. §541.118(a)(4) [now 29 C.F.R. §541.602(b)(3)], the words “temporarymilitary leave” refer to the usual short-term training periods for reservists or members of the NationalGuard, as distinguished from longer periods of enlistment, draft, or recall to active duty. Short-termtraining periods are generally two weeks or a month, but may include a period of as much as threemonths.
If the employee works any part of a workweek and spends the remainder of that workweek ontemporary military leave, he or she must be paid his or her full salary for that week. In such a week,however, the employer may offset the amount received by the employee as military pay for thatparticular week against the salary due for that week. However, in any workweek in which theemployee performs no work for the employer, the employer need not pay the employee any part ofhis or her salary.
The term “temporary military leave” does not include the two-year draft. A proportionateamount of the employee’s weekly salary may be paid for the partial week worked when the employeeleaves during the week for draft duty, or returns from draft duty. These weeks are considered“terminal” and “initial” weeks of employment. As stated in 29 C.F.R. §541.118(c) [now 29 C.F.R.§541.602(b)(6)], failure to pay the full salary for such workweeks is not considered inconsistent withthe salary basis of payment.
(See also Wage and Hour Opinion Letters dated Dec. 2, 1993; June 27, 1996.) Employers should note
that although military and National Guard personnel may lose some FLSA protections as a result of a
long-term call-up, returning veterans do have certain rights and protections under other federal and state laws.
Finally, with respect to “attendance as a witness,” DOL takes the position (Wage and Hour Opinion
Letter, Dec. 2, 1993) that this leave only refers to instances where an employee is under a “legal compulsion”
— for example, a subpoena — to be present in court. At least one court has noted that all of the situations
described in this section involve the “performance of a civic duty” (Shockley v. Newport News, 997 F.2d 18
(4th Cir. 1993)); therefore, it seems clear that voluntary attendance in court in a case in which the employee
is a party is not protected by the salary basis test pay-deduction prohibitions.
Initial and Terminal Weeks of Employment
DOL’s revised exemption regulations (29 C.F.R. §541.602(b)(6)) also state that an employer is not
required to pay an exempt employee’s full salary in the worker’s initial or terminal week of employment.
Rather, an employer may pay a proportionate part of an employee’s full salary for the time actually worked
in the first and last week of employment. In such weeks, the payment of an hourly or daily equivalent of the
although no case had been decided on that basis alone (see Alex v. California, 30 Wage & Hour Cas. (BNA)
1353 (E.D. Cal. 1992); Martin v. Malcolm Pirnie Inc., 949 F.2d 611 (2d Cir. 1991) (requiring exempt em-
ployees to work a fixed schedule and for a minimum number of hours is inconsistent with the salary basis
test); and Morsch v. City of Los Angeles, CV-0401 JGD (C.D. Cal. May 4, 1992)). However, in a Wage and
Hour Opinion Letter dated July 1, 1993, DOL stated that personnel policies that require employees to work
specific hours, record the number of hours worked (including compensated absences) and obtain permission
before taking time off from work are not in violation of the salary basis test and would not themselves affect
an otherwise valid salary basis method of payment. (See also Kuchinskas v. Broward County, 840 F. Supp.
1548 (S.D. Fla. 1993), aff’d, 86 F.3d 1168 (11th Cir. 1996); Douglas v. Argo-Tech Corp., 113 F.3d 67 (6th
Cir. 1997); Aaron v. City of Wichita, Kansas, 54 F.3d 652 (10th Cir. 1995).)
In the Preamble to its 2004 FLSA exemption rule revisions (69 Fed. Reg. 22,178), DOL reiterated that
employers may, without affecting their employees’ exempt status:
• require exempt employees to record and track hours;
• require exempt employees to work a specified schedule; and
• implement across-the-board changes in schedule under certain circumstances.
Beyond these, there are a host of other salary basis test issues that confront employers every day. These
include the following.
‘Operating Requirements of the Business’
Under the salary basis test, salary deductions are not permitted for absences occasioned by the employer
or by the operating requirements of the business (29 C.F.R. §541.602). Some situations present borderline
questions of whether an employee’s absence is occasioned by the operating requirements of the business. For
example, during times of severe weather or interruption of fuel sources, employers may close or cease
operations, rather than incur the expense of plowing snow from sidewalks and parking lots or heating or air
conditioning the workplace. Or, in times of severe energy crises, as happened in California in 2001, employ-
ers may close due to “rolling blackouts.”
When a place of work is closed for a full week, whatever the reason, employees need not be paid for
that week (Wage and Hour Opinion Letter dated April 30, 1975). If an exempt employee is furloughed for
less than a full work week, however, 29 C.F.R. §541.602(a) provides:
An employee is not paid on a salary basis if deductions from the employee’s predeterminedcompensation are made for absences occasioned by the employer or by the operating require-ments of the business. If the employee is ready, willing and able to work, deductions may not bemade for time when work is not available. [Emphasis added.]
Thus, salary pay may not be reduced for a partial-week furlough in the private sector (although different
special rules apply to public-sector, budget-related furloughs).
but rejected comments requesting a special rule for part-time employees. The regulations have never included
a different salary level for part-time employees, and such a rule appears unnecessary” (69 Fed. Reg. 22,171).
Thus, prorating the salary figure is not permitted for part-time workers or in job-sharing situations. (See 69
Fed. Reg. 22,202; see also Wage and Hour Opinion Letter, Feb. 27, 1997.)
Salary Paid by Joint Employers
According to the FOH, when an otherwise exempt employee is jointly employed by two or more em-
ployers, each of whom pays him or her on a salary basis, the salaries may be combined for purposes of
meeting the minimum salary requirement (FOH §22b02). Note that this is not true if an employee holds two
entirely separate jobs with two completely unconnected employers.
Recovery of Salary Advances
In the Preamble to the 2004 exemption rule revisions, DOL states that recovery of salary advances
would not affect an employee’s exempt status, because it is not a deduction based on variations in the quality
or quantity of the work performed. Recovery of partial-day leave advances, however, essentially are deduc-
tions for personal absences and would constitute an impermissible deduction. Whether recovery for a full-day
leave is permissible depends on whether such leave is covered by one of the exceptions established under 29
C.F.R. §541.602(b) (69 Fed. Reg. 22,178).
In a Wage and Hour Opinion Letter dated March 20, 1998, DOL discussed the case of an employer that
had inadvertently overpaid one of its employees and wanted to recoup the money by deducting it from his
paychecks. The employee was overpaid because the employer’s payroll department had him incorrectly listed
as having a higher compensation rate. By the time the error was discovered, the company had overpaid the
employee approximately $18,000 over the course of 27 pay periods. The employee had never informed the
payroll department that he had been overpaid. (He claimed that, because his paychecks were directly depos-
ited into his bank account, he never noticed the overpayment of approximately $650.00 per pay period.) The
employee refused to return the money, and the employer asked if it was entitled to recover the money by
deducting it from his paychecks.
In response, DOL stated that:
It has been our longstanding position that where an employer makes a loan or an advance ofwages to an employee, the principal may be deducted from the employee’s earnings even if suchdeduction cuts into the minimum wage or overtime pay due the employee under the FLSA. Thus, thepercentage that [the employer] may deduct to recoup the money owed to it would be at its owndiscretion or per agreement with employee.
Moreover, DOL said in the letter, such deductions would not affect the employee’s exempt status.
¶222 Special Salary Test Rules for the Public Sector (Effective Aug. 23, 2004)
In response to numerous court cases in the 1980s and early 1990s — and the resulting claim by public
employers that judicial rulings would saddle taxpayers with multi-billion dollar back wage liabilities — the
U.S. Department of Labor (DOL) in 1992 issued Fair Labor Standards Act (FLSA) regulations that modified
the salary basis test as applied to state and local governments. Those rules — as of Aug. 23, 2004, codified in
29 C.F.R. §541.710 — state:
Employees of public agencies.
(a) An employee of a public agency who otherwise meets the salary basis requirements of 29C.F.R. §541.602 shall not be disqualified from exemption under 29 C.F.R. §§541.100, 541.200,541.300 or 541.400 on the basis that such employee is paid according to a pay system established bystatute, ordinance or regulation, or by a policy or practice established pursuant to principles of publicaccountability, under which the employee accrues personal leave and sick leave and which requiresthe public agency employee’s pay to be reduced or such employee to be placed on leave without payfor absences for personal reasons or because of illness or injury of less than one work-day whenaccrued leave is not used by an employee because:
(1) Permission for its use has not been sought or has been sought and denied;
(2) Accrued leave has been exhausted; or
(3) The employee chooses to use leave without pay.
(b) Deductions from the pay of an employee of a public agency for absences due to a budget-required furlough shall not disqualify the employee from being paid on a salary basis except in theworkweek in which the furlough occurs and for which the employee’s pay is accordingly reduced.
As a result of this rule, public-sector employers are permitted to make certain types of deductions from
salary that would eviscerate white-collar exemptions if made by a private-sector employer. These include
deductions for partial-day absences when leave was not used or has been exhausted. The regulation also
allows exempt employees to be furloughed for budget-required reasons without affecting their exempt status,
except for the workweek in which the furlough occurs.
This special treatment for public agencies has alleviated many of the FLSA compliance problems
experienced by public-sector employers whose pay systems allow or require deductions for absences of less
than a day. However, the exception applies only if the pay systems are established by statute, ordinance,
regulation, policy or practice (as opposed to ad hoc deductions).
‘Principles of Public Accountability’
As 29 C.F.R. §541.710 states, the special pay-deduction rule for public-sector employers is based on
principles of public accountability. What does this mean? DOL has explained that:
Public accountability embodies the concept that elected officials and public agencies are held toa higher level of responsibility under the public trust that demands effective and efficient use ofpublic funds in order to serve the public interest. It includes the notion that the use of public fundsshould always be in the public interest and not for individual or private gain, including the view thatpublic employees should not be paid for time they do not work that is not otherwise guaranteed tothem under the pertinent civil service employment agreement (such as personal or sick leave), and thepublic interest does not tolerate wasteful and abusive excesses such as padded payrolls or “phantom”employees. [57 Fed. Reg. 37,676 (Aug. 19, 1992)]
The Fair Labor Standards Act (FLSA) is a federal law which requires that most employees in the United States be paid atleast the federal minimum wage for all hours worked and overtime pay at time and one-half the regular rate of pay for allhours worked over 40 hours in a workweek.
However, Section 13(a)(1) of the FLSA provides an exemption from both minimum wage and overtime pay for employeesemployed as bona fide executive, administrative, professional and outside sales employees. Section 13(a)(1) and Section13(a)(17) also exempt certain computer employees. To qualify for exemption, employees generally must meet certain testsregarding their job duties and be paid on a salary basis at not less than $455 per week. Job titles do not determine exemptstatus. In order for an exemption to apply, an employee’s specific job duties and salary must meet all the requirements of theDepartment’s regulations.
Salary Basis RequirementTo qualify for exemption, employees generally must be paid at not less than $455 per week on a salary basis. Thesesalary requirements do not apply to outside sales employees, teachers, and employees practicing law or medicine.Exempt computer employees may be paid at least $455 on a salary basis or on an hourly basis at a rate not less than$27.63 an hour.
Being paid on a “salary basis” means an employee regularly receives a predetermined amount of compensation each payperiod on a weekly, or less frequent, basis. The predetermined amount cannot be reduced because of variations in the qual-ity or quantity of the employee’s work. Subject to exceptions listed below, an exempt employee must receive the full salaryfor any workweek in which the employee performs any work, regardless of the number of days or hours worked. Exempt em-ployees do not need to be paid for any workweek in which they perform no work. If the employer makes deductions from anemployee’s predetermined salary, i.e., because of the operating requirements of the business, that employee is not paid on a“salary basis.” If the employee is ready, willing and able to work, deductions may not be made for time when work is notavailable.
Circumstances in Which the Employer May Make Deductions from PayDeductions from pay are permissible when an exempt employee: is absent from work for one or more full days for personalreasons other than sickness or disability; for absences of one or more full days due to sickness or disability if the deduction ismade in accordance with a bona fide plan, policy or practice of providing compensation for salary lost due to illness; to offsetamounts employees receive as jury or witness fees, or for military pay; or for unpaid disciplinary suspensions of one or morefull days imposed in good faith for workplace conduct rule infractions (see Company Policy on penalties for workplace con-duct rule infractions).
Also, an employer is not required to pay the full salary in the initial or terminal week of employment; for penalties imposed ingood faith for infractions of safety rules of major significance, or for weeks in which an exempt employee takes unpaid leaveunder the Family and Medical Leave Act. In these circumstances, either partial day or full day deductions may be made.
Company Policy
It is our policy to comply with the salary basis requirements of the FLSA. Therefore, we prohibit all company managers from
making any improper deductions from the salaries of exempt employees. We want employees to be aware of this policy and that
the company does not allow deductions that violate the FLSA.
What To Do If An Improper Deduction OccursIf you believe that an improper deduction has been made to your salary, you should immediately report this information to your
direct supervisor, or to [insert alternative complaint mechanism(s)].
Reports of improper deductions will be promptly investigated. If it is determined that an improper deduction has occurred, you will
be promptly reimbursed for any improper deduction made.
It is the employer’s policy to comply with applicable wage and hour laws and regulations. The improper pay deductions speci-fied in Title 29 of the Code of Federal Regulations §541.602(a) may not be made from the pay of employees who are subjectto the salary basis test under the Fair Labor Standards Act.
If you believe that any deduction has been made from your pay that is inconsistent with your salaried status, you should im-mediately contact __________ at ___________.
Any complaint will be resolved within a reasonable time given all the facts and circumstances. If an investigation reveals thatyou were subjected to an improper deduction from pay, you will be reimbursed and the employer will take whatever action itdeems necessary to ensure compliance with the salary basis test in the future.
Fig. 223-C
Expanded Sample Salary Basis Policy
It is the employer’s policy to comply with applicable wage and hour laws and regulations. Accordingly, the employer intendsthat deductions be made from your pay only in circumstances permitted by the Fair Labor Standards Act and the U.S. De-partment of Labor’s rules governing the salary basis of pay for exempt employees. The improper pay deductions specified inTitle 29 of the Code of Federal Regulations §541.602(a) may not be made from the pay of employees who are subject to thesalary basis test.
If you have any questions or concerns about your salaried status or you believe that any deduction has been made from yourpay that is inconsistent with your salaried status, you should immediately raise the matter with your immediate supervisor. Ifyou have raised the matter with your supervisor and it is not resolved within ten (10) business days, or if, for any reason, youare uncomfortable discussing the matter with your supervisor, you must submit your question, concern or complaint to[Name] in the [HR, Payroll, Other] Department at: [Insert at least two of the following: room number, telephone number, faxnumber, email address].
To ensure that the employer understands your concern or complaint (hereinafter, both referred to as “complaint”) and is ableto conduct a proper investigation, the employer requires that any complaint that seeks the payment of money or requests achange in policy be submitted in writing. No particular form is required, but each such complaint must include the employee’sname, ID number and a brief description of the issue. You also must identify the pay period(s) to which the complaint relates.If you are unable for any reason to submit your complaint in writing, the employer representative named in the previous para-graph (or his/her representative) will take a statement from you. You then will be asked to review and sign the statement toensure it accurately reflects your complaint.
The employer is committed to investigating and resolving all complaints as promptly, but also as accurately, as possible.Consistent with the U.S. Department of Labor’s policy, any complaint will be resolved within a reasonable time given all thefacts and circumstances. If an investigation reveals that you were subjected to an improper deduction from pay, you will bereimbursed and the employer will take whatever action it deems necessary to ensure compliance with the salary basis test inthe future.
To determine whether the fee payment meets the minimum amount of salary required forexemption under these regulations, the amount paid to the employee will be tested by determining thetime worked on the job and whether the fee payment is at a rate that would amount to at least $455per week if the employee worked 40 hours.
Thus, the regulations provide, an artist paid $250 for a picture that took 20 hours to complete meets the
minimum salary requirement for exemption since earnings at this rate would yield the artist $500 if 40 hours
were worked.
Business Owners
Employees who own at least a bona fide 20 percent equity interest in the enterprise in which they are
employed may qualify as an exempt executive employee without meeting the FLSA’s salary basis test (29
C.F.R. §541.101). (Application of the executive exemption to business owners is discussed in ¶233 of the
Handbook.)
To qualify for the executive exemption, it makes no difference how the business owner is compensated.
The reason for this, according to DOL, is that the salary requirements are not necessary, given the likelihood
that an employee who owns a bona fide 20 percent equity interest in the enterprise will share in its profits.
Additionally, business owners at this level are able to receive compensation in other ways and have sufficient
control over the business to prevent abuse (69 Fed. Reg. 22,132). Thus, a 20 percent ownership interest is an
adequate substitute for the salary requirements, DOL states.
¶230 Executive Employees (Effective Aug. 23, 2004)
To be exempt as an executive from the overtime and minimum wage requirements of the Fair Labor
Standards Act (FLSA), an employee must meet the criteria of either the “standard test” (see ¶231) or the
“highly compensated employee test” (see ¶232) for the executive exemption. The standard test must be used
if the employee receives a total annual compensation of less than $100,000.
All of the relevant factors must be considered when determining whether an employee in a managerial
position is exempt. It cannot be assumed that merely because one employee in a particular job classification
is exempt, a second employee with a similar job title or even some of the same duties also is exempt. The
decision must be made on a case-by-case basis. The regulations (29 C.F.R. §541.2) expressly state:
Job titles insufficient.
A job title alone is insufficient to establish the exempt status of an employee. The exempt ornonexempt status of any particular employee must be determined on the basis of whether theemployee’s salary and duties meet the requirements of the regulations in this part.
An employer must be able to show that each exempt executive employee meets every requirement of the
executive exemption test (see also Pezzillo v. Gen. Tel. & Electron. Inform. Sys. Inc., 414 F. Supp. 1257
(M.D. Tenn. 1976)).
One of the hallmarks of exempt executive employees is that they generally are responsible for the
success or failure of business operations under their management. Other critical elements in determining
whether an employee is exempt as an executive under the standard test are:
• whether management is the employee’s primary duty;
• whether the employee directs the work of two or more employees; and
• whether the employee has the authority to hire or fire other employees or, alternatively, whether the
employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or other
change of status of other employees are given particular weight.
Each of these requirements is discussed in this tab.
Employers should keep in mind that exemptions from the FLSA overtime and minimum wage provi-
sions are very narrowly construed by the courts, and employers bear the burden of proving that each em-
ployee claimed as exempt meets each and every requirement set out in the regulations.
Highlights of the 2004 DOL Rule Changes
The following are the major changes that were made to the rules, effective Aug. 23, 2004, governing the
executive exemption.
• An exempt executive must earn a salary of at least $455 per week, up from as low as $155 under the
(4) Compensation: Must be compensated on a salary basis at a rate of not less than $455 per week (or
$380 per week, if employed in American Samoa by employers other than the federal government), exclusive
of board, lodging or other facilities.
DOL’s regulations give guidance on how each of the above requirements is defined.
Primary Duty
To qualify as an exempt executive under the standard test, an employee must have as his or her primary
duty the management of the enterprise in which the employee is employed or of a customarily recognized
department or subdivision. The regulations (29 C.F.R. §541.700(a)) define “primary duty” as follows:
The term ‘primary duty’ means the principal, main, major or most important duty that theemployee performs. Determination of an employee’s primary duty must be based on all the facts in aparticular case, with the major emphasis on the character of the employee’s job as a whole. Factors toconsider when determining the primary duty of an employee include, but are not limited to, therelative importance of the exempt duties as compared with other types of duties; the amount of timespent performing exempt work; the employee’s relative freedom from direct supervision; and therelationship between the employee’s salary and the wages paid to other employees for the kind ofnonexempt work performed by the employee.
(See ¶233 for the definitions of “exempt work” and “nonexempt work.”)
The regulations (29 C.F.R. §541.700(b)) further state that the amount of time spent performing exempt
work can be a useful guide in determining whether exempt work is the primary duty of an employee, but it is
not conclusive. Employees who spend more than 50 percent of their time performing exempt work will
generally satisfy the primary duty requirement. However, the regulations state expressly that nothing in the
rules requires that exempt employees spend more than 50 percent of their time performing exempt work.
Employees who do not spend more than 50 percent of their time performing exempt duties may nonetheless
meet the primary duty requirement of the executive exemption if other factors support such a conclusion.
Management
DOL’s regulations also define what is meant by “management.” Section 541.102 of the regulations
states that “management” generally includes, but is not limited to, activities such as the following:
• interviewing, selecting, and training employees;
• setting and adjusting their rates of pay and hours of work;
• directing the work of employees;
• maintaining production or sales records for use in supervision or control;
• appraising employees’ productivity and efficiency for the purpose of recommending promotions or
• coaching employees in proper job performance techniques and procedures.
Employers should bear in mind that no specific function is always an exempt “management” duty. DOL
also explains in the Preamble to its 2004 exemption regulations that management activities are not limited to
supervisory functions.
Department or Subdivision
Determining whether an employee manages a “department or subdivision” also can be difficult with
respect to executive employees. DOL’s regulations give the following guidance at 29 C.F.R. §541.103:
(a) The phrase “a customarily recognized department or subdivision” is intended to distinguishbetween a mere collection of employees assigned from time to time to a specific job or series of jobsand a unit with permanent status and function. A customarily recognized department or subdivisionmust have a permanent status and a continuing function. For example, a large employer’s humanresources department might have subdivisions for labor relations, pensions and other benefits, equalemployment opportunity, and personnel management, each of which has a permanent status andfunction.
(b) When an enterprise has more than one establishment, the employee in charge of eachestablishment may be considered in charge of a recognized subdivision of the enterprise.
(c) A recognized department or subdivision need not be physically within the employer’sestablishment and may move from place to place. The mere fact that the employee works in morethan one location does not invalidate the exemption if other factors show that the employee isactually in charge of a recognized unit with a continuing function in the organization.
(d) Continuity of the same subordinate personnel is not essential to the existence of a recog-nized unit with a continuing function. An otherwise exempt employee will not lose the exemptionmerely because the employee draws and supervises workers from a pool or supervises a team ofworkers drawn from other recognized units, if other factors are present that indicate that the employeeis in charge of a recognized unit with a continuing function.
In the Preamble to the “white-collar” exemption regulations issued by DOL in April 2004, the depart-
ment expressly endorsed the holdings in a number of judicial decisions that interpret the term “department or
subdivision” (69 Fed. Reg. 22,134). Thus, a work shift can constitute a department or subdivision. (See West
v. Anne Arundel County, Md., 137 F.3d 752 (4th Cir. 1998); Joiner v. City of Macon, 647 F. Supp. 718 (M.D.
Ga. 1986); Molina v. Sea Land Services Inc., 2 F. Supp. 2d 185 (D.P.R. 1998).) Also, the “front of the house”
in a store constitutes a department or subdivision (see Debartolo v. Butera Finer Foods, 1995 WL 516990
(N.D. Ill. 1995)). Finally, “groupings” or “teams” may constitute a department or subdivision, but a case-by-
case analysis is required. (See Gorman v. Continental Can Co., 1985 WL 5208 (N.D. Ill. 1985) (department
or subdivision can “include small groups of employees working on a related project within a larger depart-
ment, such as a group leader of four draftsmen in the gauge section of a much larger department”).)
Supervision
To qualify as an exempt executive, the employee must customarily and regularly direct the work of two
or more other employees (29 C.F.R. §541.104(a)). The phrase “two or more other employees” means two
full-time employees or their equivalent. One full-time and two half-time employees, for example, are equiva-
lent to two full-time employees. Four half-time employees are also equivalent to two full-time employees.
Generally, an exempt executive must direct a total of 80 employee-hours of work each week. However,
as DOL’s Wage and Hour Division Field Operations Handbook (FOH) states, circumstances might justify
lower standards. For example, some employers have standard workweeks of 37 hours or 35 hours for their
full-time employees. In such cases, supervision of employees working a total of 70 or 75 hours in a work-
week will constitute the equivalent of two full-time employees (FOH §22c00).
DOL’s FLSA regulations at 29 C.F.R. §541.104(b) provide that supervision can be distributed among
two, three or more employees so long as each manager customarily and regularly directs the work of two or
more other full-time employees or the equivalent.
Customarily and Regularly
The phrase “customarily and regularly” means a frequency that is greater than occasional but which may
be less than constant. Tasks or work performed “customarily and regularly” include work normally and
recurrently performed every workweek, but not isolated or one-time tasks (29 C.F.R. §541.701). DOL’s
Preamble to the revised white-collar exemption regulations (69 Fed. Reg. 22,187) states that:
The term ‘customarily and regularly’ requires a case-by-case determination, based on all thefacts and circumstances, over a time period of sufficient duration to exclude anomalies. See, e.g.,Wage and Hour Opinion Letter of Aug. 20, 1992, 1992 WL 845098 (analysis should be “over asignificant time span, especially in smaller organizations … to eliminate the possibility of significantcycles in work requirements and to support that there are sufficient exempt duties on a week-in-week-out basis to support the exemption claimed”); Wage and Hour Field Operations Handbook, section22c00(d) (“The determination as to whether an employee customarily and regularly supervises otheremployees … depends on all the facts and circumstances”).
In Secretary of Labor v. Daylight Dairy Products Inc., 779 F.2d 784 (1st Cir. 1985), the court stated
that a manager who meets the 80-hour rule only 76 percent of the time falls short of the requirement to
customarily and regularly supervise 80 employee-hours of work.
Occasional Tasks
Occasional, infrequently recurring tasks that cannot practicably be performed by nonexempt em-
ployees — but are the means for an exempt employee to properly carry out exempt functions and re-
sponsibilities — are considered exempt work (29 C.F.R. §541.707). DOL’s revised white-collar exemp-
tion regulations provide that the following factors should be considered in determining whether such
work is exempt work:
• whether the same work is performed by any of the exempt employee’s subordinates;
• the practicability of delegating the work to a nonexempt employee;
• whether the exempt employee performs the task frequently or occasionally; and
• the existence of an industry practice for the exempt employee to perform the task.
Authority to Hire or Fire
An exempt executive employee must have the authority to hire or fire other employees. Alternatively,
the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any
other change of status of other employees must be given particular weight (29 C.F.R. §541.100(a)(4)).
“Particular weight” is defined in 29 C.F.R. §541.105, which states:
To determine whether an employee’s suggestions and recommendations are given “particularweight,” factors to be considered include, but are not limited to, whether it is part of the employee’sjob duties to make such suggestions and recommendations; the frequency with which such suggestionsand recommendations are made or requested; and the frequency with which the employee’s sugges-tions and recommendations are relied upon. Generally, an executive’s suggestions and recommenda-tions must pertain to employees whom the executive customarily and regularly directs. It does notinclude an occasional suggestion with regard to the change in status of a co-worker. An employee’ssuggestions and recommendations may still be deemed to have “particular weight” even if a higher-level manager’s recommendation has more importance and even if the employee does not haveauthority to make the ultimate decision as to the employee’s change in status.
A high level of compensation is a strong indicator of an employee’s exempt status, thuseliminating the need for a detailed analysis of the employee’s job duties. Thus, a highly compensatedemployee will qualify for exemption if the employee customarily and regularly performs any one ormore of the exempt duties or responsibilities of an executive, administrative or professional employeeidentified in subparts B, C or D of this part. An employee may qualify as a highly compensatedexecutive employee, for example, if the employee customarily and regularly directs the work of twoor more other employees, even though the employee does not meet all of the other requirements forthe executive exemption under §541.100.
Thus, a highly compensated manager can be an exempt executive even without having the power to hire
or fire or make recommendations as to personnel matters that are given significant weight. (See ¶231 for the
definition of “customarily and regularly.”)
Calculating ‘Total Annual Compensation’
DOL’s regulations (29 C.F.R. §541.601(a)) define a “highly compensated” employee as one having a
“total annual compensation of at least $100,000.” That total may include several forms of compensation
provided that at least $455 per week is paid on a salary or fee basis (29 C.F.R. §541.601(b)(1)). The cited
provision states:
“Total annual compensation” must include at least $455 per week paid on a salary or fee basis.Total annual compensation may also include commissions, nondiscretionary bonuses and othernondiscretionary compensation earned during a 52-week period. Total annual compensation does notinclude board, lodging and other facilities as defined in §541.606, and does not include payments formedical insurance, payments for life insurance, contributions to retirement plans and the cost of otherfringe benefits.
Note that discretionary bonuses are not included in the definition of total annual compensation (69 Fed.
Reg. 22,175).
In some cases, an employee who was thought to be highly compensated under DOL’s revised exemption
rules (effective Aug. 23, 2004) may turn out at year’s end to have received a lesser amount of compensation.
Accordingly, the regulations (29 C.F.R. §541.601(b)(2)) allow a “catch-up” payment to reach the $100,000
If an employee’s total annual compensation does not total at least [$100,000] by the last payperiod of the 52-week period, the employer may, during the last pay period or within one month afterthe end of the 52-week period, make one final payment sufficient to achieve the required level.
For example, the regulations state, an employee may earn $80,000 in base salary, and the employer may
anticipate based upon past sales that the employee also will earn $20,000 in commissions. However, due to
poor sales in the final quarter of the year, the employee actually earns only $10,000 in commissions. In this
situation, the regulations state that the employer may make a payment of at least $10,000 to the employee
within one month after the end of the year to preserve the employee’s highly compensated status.
An employee who does not work a full year for the employer, either because the employee is newly
hired after the beginning of the year or ends the employment before the end of the year, may qualify for
exemption under this section if the employee receives a pro rata portion of the required $100,000 minimum
based upon the number of weeks that the employee will be or has been employed (29 C.F.R. §541.601(b)(3)).
‘Office or Nonmanual Work’
Finally, DOL’s exemption regulations (29 C.F.R. §541.601(d)) state that the highly compensated em-
ployee test is applicable only to employees whose primary duty includes performing office or nonmanual
work. Thus, for example, nonmanagement production-line workers and nonmanagement employees in main-
tenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron
workers, craftsmen, operating engineers, longshoremen, construction workers, laborers and other employees
who perform work involving repetitive operations with their hands, physical skill and energy cannot be
exempt as “highly compensated employees,” no matter how highly paid they are.
¶233 Additional Issues Related to the Executive Exemption
Employers may encounter a variety of compliance issues when attempting to apply the Fair Labor
Standards Act’s (FLSA) executive exemption. The U.S. Department of Labor’s (DOL) revised “white-collar”
exemption regulations, effective Aug. 23, 2004, address many of these issues specifically. Below, we exam-
ine the most common issues likely to arise.
Exempt Work and Directly and Closely Related Duties
Determining whether an employee is an exempt executive sometimes requires comparing the relative
importance of the employee’s exempt duties versus other types of duties and the amount of time spent
performing exempt work versus nonexempt work (see 29 C.F.R. §541.700; see ¶231). Accordingly, it is
necessary to define the term “exempt work.”
DOL’s “white-collar” exemption regulations (29 C.F.R. §541.702), revised Aug. 23, 2004, contain a
somewhat circular definition of exempt work, which states:
The term “exempt work” means all work described in §§541.100, 541.101, 541.200, 541.300,541.301, 541.302, 541.303, 541.304, 541.400 and 541.500, and the activities directly and closelyrelated to such work. All other work is considered “nonexempt.”
The first part of the first sentence simply means that exempt work is work that meets one of the five
white-collar exemption tests. What is most significant about the second part of the first sentence, however, is
the statement that “activities directly and closely related” to exempt work also are exempt work. DOL’s
regulations (29 C.F.R. §541.703) include a detailed definition of “directly and closely related” that states:
(a) Work that is “directly and closely related” to the performance of exempt work is alsoconsidered exempt work. The phrase “directly and closely related” means tasks that are related toexempt duties and that contribute to or facilitate performance of exempt work. Thus, “directly andclosely related” work may include physical tasks and menial tasks that arise out of exempt duties, andthe routine work without which the exempt employee’s exempt work cannot be performed properly.Work “directly and closely related” to the performance of exempt duties may also includerecordkeeping; monitoring and adjusting machinery; taking notes; using the computer to createdocuments or presentations; opening the mail for the purpose of reading it and making decisions; andusing a photocopier or fax machine. Work is not “directly and closely related” if the work is remotelyrelated or completely unrelated to exempt duties.
DOL’s regulations (29 C.F.R. §541.703(b)) include several examples of activities that are “directly and
closely related” to exempt executive work. For example:
• Keeping time, production or sales records for subordinates is work directly and closely related to an
exempt executive’s function of managing a department and supervising employees.
• The distribution of materials, merchandise or supplies to maintain control of the flow of and expendi-
tures for such items is directly and closely related to the performance of exempt duties.
• A supervisor who spot checks and examines the work of subordinates to determine whether they are
performing their duties properly, and whether the product is satisfactory, is performing work which is di-
rectly and closely related to managerial and supervisory functions, so long as the checking is distinguishable
from the work ordinarily performed by a nonexempt inspector.
• A department manager in a retail or service establishment who walks about the sales floor observing
the work of sales personnel under the employee’s supervision to determine the effectiveness of their sales
techniques, checks on the quality of customer service being given, or observes customer preferences is
performing work which is directly and closely related to managerial and supervisory functions.
Concurrent Duties
For many employers, among the most difficult job positions to classify have been the so-called “work-
ing foremen” and the retail supervisor who also makes sales. The 2004 white-collar exemption regulations
state expressly that concurrent performance of exempt and nonexempt work does not disqualify an employee
from the executive exemption if the requirements of the salary and duties tests are otherwise met (29 C.F.R.
541.106(a)). Rather, whether an employee meets the requirements of the executive exemption when the
employee performs concurrent duties must be determined on a case-by-case basis and based on the factors set
forth in 29 C.F.R. §541.700 (i.e., based on his or her “primary duty” (see ¶231)). Generally, the regulations
state, exempt executives make the decision regarding when to perform nonexempt duties and remain
responsible for the success or failure of business operations under their management while performing the
Nevada No Yes Nev. Rev. Stat. §§608.018(2)(e), 608.250
New Hampshire No No N.H. Rev. Stat. §279:21
New Jersey Yes Yes N.J. Stat. §34:11-56a4
New Mexico Yes Yes N.M. Stat. §50-4-21(C)(2)
New York Yes Yes N.Y. State Consolidated Laws, c.31, art.18, §651;N.Y. Dept. of Labor Wage Orders; N.Y. Comp.Codes R & Regs. Tit. 12, §142-2.16(c)(4) (1990)
North Carolina Yes Yes N.C. Gen Stat. §95-25.14(b)(4)
North Dakota No Yes N.D. Century Code §34-06-03; N.D. Admin. Code§§46-02-07-01, 46-02-07-02(4)(a)
¶240 Administrative Employees (Effective Aug. 23, 2004)
To be exempt from the overtime and minimum wage requirements of the Fair Labor Standards Act
(FLSA) as an administrative employee, a worker must meet the criteria of either the “standard test” (see
¶241) or the “highly compensated employee test” (see ¶242) for the administrative exemption. The standard
test must be used if the employee receives total annual compensation of less than $100,000.
In essence, the duties portion of the administrative exemption test establishes a two-part inquiry for
determining whether an employee performs exempt administrative duties. First, what type of work is per-
formed by the employee? Is the employee’s primary duty the performance of work directly related to man-
agement or general business operations? Second, what is the level or nature of the work performed? Does the
employee’s primary duty include the exercise of discretion and independent judgment with respect to matters
of significance? (69 Fed. Reg. 22,144). In addition, the employee must be paid on a salary or fee basis. Each
of these requirements is discussed separately in the pages that follow.
All of the relevant factors must be considered when determining whether an employee in an administra-
tive position is exempt. As with any other exemption, the employer cannot assume that merely because one
employee in a particular job classification is exempt, a second employee with a similar job title or even some
of the same duties also is exempt. The decision must be made on a case-by-case basis. The U.S. Department
of Labor’s (DOL) revised FLSA exemption regulations (29 C.F.R. §541.2), issued in 2004, state expressly:
Job titles insufficient.
A job title alone is insufficient to establish the exempt status of an employee. The exempt ornonexempt status of any particular employee must be determined on the basis of whether theemployee’s salary and duties meet the requirements of the regulations in this part.
(See also Reeves v. International Tel. & Tel. Corp., 357 F. Supp. 295 (D. La. 1975)). Under the standard
test, an employer must be able to show that each exempt administrative employee meets every requirement of
the administrative employee exemption test (see Ramos v. National Biscuit Co., 324 F. Supp. 1310 (D.P.R.
1971); Pezzillo v. Gen. Tel. & Electron. Inform. Sys. Inc., 414 F. Supp. 1257 (M.D. Tenn. 1976) (both apply-
ing DOL’s pre-2004 exemption test)). Employers should note that there are numerous job titles that are
frequently given to both exempt and nonexempt personnel. Whether such employees are exempt depends
solely on their job functions. Job titles that frequently have been subject to dispute include accountant,
executive secretary and account executive, among others.
Employers also should be mindful that exemptions from the FLSA overtime and minimum wage provi-
sions are very narrowly construed by the courts, and employers bear the burden of proving that each em-
ployee claimed as exempt meets each and every requirement set out in the regulations.
To qualify as an exempt administrative employee under the standard test, an employee must have as his
or her primary duty the performance of office or nonmanual work directly related to the management or
general business operations of the employer or the employer’s customers. DOL’s revised exemption regula-
tions (29 C.F.R. §541.700(a)) define “primary duty” as follows:
The term “primary duty” means the principal, main, major or most important duty that theemployee performs. Determination of an employee’s primary duty must be based on all the facts in aparticular case, with the major emphasis on the character of the employee’s job as a whole. Factors toconsider when determining the primary duty of an employee include, but are not limited to, therelative importance of the exempt duties as compared with other types of duties; the amount of timespent performing exempt work; the employee’s relative freedom from direct supervision; and therelationship between the employee’s salary and the wages paid to other employees for the kind ofnonexempt work performed by the employee.
See ¶243 for the definitions of “exempt work” and “nonexempt work” and for some additional consider-
ations in distinguishing exempt from nonexempt work.
In the Preamble to its revised exemption regulations, DOL notes that some federal courts, relying
primarily on dictionary definitions, have defined the term “primary” to mean “most important,” “principal”
or “chief” (see 69 Fed. Reg. 22,185).
DOL’s revised exemption regulations (29 C.F.R. §541.700(b)) state that the amount of time spent
performing exempt work can be a useful guide in determining whether exempt work is the primary duty of an
employee, but it is not conclusive. Employees who spend more than 50 percent of their time performing
exempt work will generally satisfy the primary duty requirement. However, the regulations state expressly
that nothing in the rules requires that exempt employees spend more than 50 percent of their time performing
exempt work. Employees who do not spend more than 50 percent of their time performing exempt duties may
nonetheless meet the primary duty requirement of the administrative exemption if other factors support such
a conclusion.
In the Preamble to its revised exemption regulations, DOL cites several court cases in which federal
courts found employees to be exempt despite their spending less than 50 percent of their time performing
exempt work (69 Fed. Reg. 22,186). Although those other cases all dealt with the executive exemption (see
¶230), the principle that a “primary duty” can be one that amounts to less than 50 percent of the worker’s
time is equally applicable to the administrative exemption, as the new rules make clear. Indeed, in the right
circumstances, an employee’s “primary duty” can be as little as 10 percent to 20 percent of the worker’s total
job duties. In other words, the test is not empirical, but rather involves an individualized balancing of factors.
This nuanced “change” in the revised regulations DOL issued in 2004 may make it easier to exempt adminis-
trative employees who also perform nonexempt duties.
The requirement that the work performed by an FLSA-exempt administrative employee be office or
nonmanual work necessarily restricts the exemption to “white-collar” employees. Indeed, the regulations
state expressly that the exemptions —
do not apply to manual laborers or other “blue-collar” workers who perform work involvingrepetitive operations with their hands, physical skill and energy. Such nonexempt “blue-collar”employees gain the skills and knowledge required for performance of their routine manual andphysical work through apprenticeships and on-the-job training, not through the prolonged course ofspecialized intellectual instruction required for exempt learned professional employees such as medicaldoctors, architects and archeologists. Thus, for example, nonmanagement production-line employeesand nonmanagement employees in maintenance, construction and similar occupations such as carpen-ters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen,construction workers and laborers are entitled to minimum wage and overtime premium pay under theFair Labor Standards Act, and are not exempt under the regulations in this part no matter how highlypaid they might be.
(29 C.F.R. §541.3(a); see also Adam v. United States, 26 Cl. Ct. 782 (1992) (“dictionary definition of
‘manual’ is ‘requiring or using physical skill and energy’”).) Employees who use tools to perform their work
are normally blue-collar workers.
Directly Related to Management or General Business Operations
To qualify for the FLSA’s administrative exemption, an employee’s primary duty must be performing
work directly related to the management or general business operations of the employer or the employer’s
customers (29 C.F.R. §541.201(a)). To meet this requirement, an employee must perform work directly
related to assisting with the running or servicing of the business, as distinguished, for example, from working
on a manufacturing production line or selling a product in a retail or service establishment. The word “di-
rectly” is intended to ensure that the administrative exemption is not applied to employees whose primary
duty is only remotely or tangentially related to exempt work (69 Fed. Reg. 22,137). (See also ¶243 regarding
“production workers.”)
Note that, under DOL’s 2004 exemption rule revisions, an exempt administrative employee’s primary
duty need only relate to the “management” of the employer’s business, rather than the “management policies” of
the employer’s business. This is a change from the pre-2004 FLSA white-collar exemption regulations. DOL
explained in the Preamble to the revised regulations that:
while management policies are one component of management, there are many other adminis-trative functions that support managing a business. . . . [T]he administrative operations of the businessinclude the work of employees “servicing” the business, such as, for example, advising the manage-ment, planning, negotiating, representing the company, purchasing, promoting sales, and businessresearch and control. . . . [E]xempt administrative work includes not only those who participate in theformulation of management policies or in the operation of the business as a whole, but it alsoincludes a wide variety of persons who either carry out major assignments in conducting the opera-tions of the business, or whose work affects business operations to a substantial degree, even thoughtheir assignments are tasks related to the operation of a particular segment of the business. [69 Fed.Reg. 22,138]
A high level of compensation is a strong indicator of an employee’s exempt status, thuseliminating the need for a detailed analysis of the employee’s job duties. Thus, a highly compensatedemployee will qualify for exemption if the employee customarily and regularly performs any one ormore of the exempt duties or responsibilities of an executive, administrative or professional employeeidentified in subparts B, C or D of this part.
The impact of the highly compensated employee test is to streamline the application of the exemption
and make it easier to exempt highly compensated workers. A highly compensated employee has to perform
only one — presumably, any one — of the exempt duties or responsibilities set forth in the administrative
exemption test. DOL states that that duties test has two discrete prongs. First, what type of work is performed
by the employee? Is the employee’s primary duty the performance of work directly related to management or
general business operations? Second, what is the level or nature of the work performed? Does the employee’s
primary duty include the exercise of discretion and independent judgment with respect to matters of signifi-
cance? (69 Fed. Reg. 22,144). Since only one administrative responsibility is required for highly compen-
sated workers to be exempt, such workers would appear to be exempt if they meet just the first prong. Ac-
cordingly, the highly compensated employee likely would need to exercise discretion and independent
judgment in order to be exempt. Of course, DOL and the courts will need to flesh out exactly what this
exemption means. (It is clear that, to be an exempt administrator — even under the highly compensated
employee test — it is not enough to meet only the second prong, because workers performing manual “blue-
collar” jobs cannot be exempt as administrative employees.)
‘Customarily and Regularly’
In terms of the FLSA’s administrative exemption, the phrase “customarily and regularly” means a
frequency that is greater than occasional but that may be less than constant. Tasks or work performed
“customarily and regularly” include work normally and recurrently performed every workweek, but not
isolated or one-time tasks (29 C.F.R. §541.701). DOL’s Preamble to the 2004 exemption rule revisions (69
Fed. Reg. 22,187) states that:
The term “customarily and regularly” requires a case-by-case determination, based on all thefacts and circumstances, over a time period of sufficient duration to exclude anomalies. See, e.g.,Wage and Hour Opinion Letter of Aug. 20, 1992, 1992 WL 845098 (analysis should be “over asignificant time span, especially in smaller organizations … to eliminate the possibility of significantcycles in work requirements and to support that there are sufficient exempt duties on a week-in-week-out basis to support the exemption claimed”); Wage and Hour Field Operations Handbook, §22c00(d)(“The determination as to whether an employee customarily and regularly supervises other employees… depends on all the facts and circumstances”).
as one having a “total annual compensation of at least $100,000.” That total may include several forms of
compensation provided that at least $455 per week is paid on a salary or fee basis (29 C.F.R.
§541.601(b)(1)). The cited provision states:
“Total annual compensation” must include at least $455 per week paid on a salary or fee basis.Total annual compensation may also include commissions, nondiscretionary bonuses and othernondiscretionary compensation earned during a 52-week period. Total annual compensation does notinclude board, lodging and other facilities as defined in 29 C.F.R. §541.606, and does not includepayments for medical insurance, payments for life insurance, contributions to retirement plans and thecost of other fringe benefits.
Fringe benefits do not count toward the $100,000 threshold. Note that discretionary bonuses also are
not included in the definition of total annual compensation (69 Fed. Reg. 22,175).
In some cases, an employee who was thought to be highly compensated may at year’s end have received
a lesser amount of compensation. Accordingly, DOL’s exemption regulations (29 C.F.R. §541.601(b)(2))
allow employers to make a “catch-up” payment as follows:
If an employee’s total annual compensation does not total at least [$100,000] by the last payperiod of the 52-week period, the employer may, during the last pay period or within one month afterthe end of the 52-week period, make one final payment sufficient to achieve the required level.
For example, DOL’s regulations state, an employee may earn $80,000 in base salary, and the employer
may anticipate based upon past sales that the employee also will earn $20,000 in commissions. However, due
to poor sales in the final quarter of the year, the employee actually earns only $10,000 in commissions. In
this situation, the regulations state that the employer may make a payment of at least $10,000 to the em-
ployee within one month after the end of the year to preserve the employee’s highly compensated status.
An employee who does not work a full year for the employer, either because the employee is newly
hired after the beginning of the year or ends the employment before the end of the year, may qualify for
exemption under this section if the employee receives a pro rata portion of the required $100,000 minimum
based upon the number of weeks that the employee will be or has been employed (29 C.F.R. §541.601(b)(3)).
Finally, DOL’s revised exemption regulations (29 C.F.R. §541.601(d)) state that the highly compen-
sated employee test is applicable only to employees whose primary duty includes performing office or
nonmanual work. Thus, for example, nonmanagement production-line workers and nonmanagement employ-
ees in maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumb-
ers, iron workers, craftsmen, operating engineers, longshoremen, construction workers, laborers and other
employees who perform work involving repetitive operations with their hands, physical skill and energy are
not exempt under this section no matter how highly paid they are. (See also ¶241.)
¶243 Additional Issues Related to the Administrative Exemption (Effective Aug. 23, 2004)
There are several troublesome issues that commonly confront employers as they attempt to weigh the
exempt status of their administrative workers. Some of these issues relate to the workers’ job duties. Others
stem from the nature of the employing organization — as in the case of educational institutions. Still others
stem from a particular worker’s job status (as a trainee, for example).
The Production Worker Problem
For many years under the U.S. Department of Labor’s (DOL) Fair Labor Standards Act (FLSA) “white-
collar” exemption regulations in place prior to 2004, one of the most litigated issues relating to the adminis-
trative exemption was whether the employee’s work was “directly related to management policies or the
general business operations of the employer” — an element of both the “short” and “long” tests that existed
then. Numerous court rulings addressing the proper use of the administrative exemption concluded that
employees were not exempt even if they exercised discretion and judgment and met the requirements of the
salary basis test because the employees were not involved in running the organization; rather, they were
“production” workers.
In 2003, DOL in proposed FLSA rule revisions offered suggestions to reduce the importance of the so-
called “production worker problem” (68 Fed. Reg. 15,566 (March 31, 2003)). However, the final FLSA
exemption rule revisions adopted in 2004 retained essentially the same language that caused so many prob-
lems for employers before 2004. Specifically, the revised regulations (29 C.F.R. §541.201) state:
The phrase “directly related to the management or general business operations” refers to thetype of work performed by the employee. To meet this requirement, an employee must perform workdirectly related to assisting with the running or servicing of the business, as distinguished, forexample, from working on a manufacturing production line or selling a product in a retail or serviceestablishment.
Despite the absence of any meaningful change in the revised administrative exemption regulations, DOL
attempted in the Preamble to the 2004 rule revisions to downplay the importance of the production worker
the dichotomy [between staff and production workers] has never been or should be a dispositivetest for exemption. The department believes that the dichotomy is still a relevant and useful tool inappropriate cases to identify employees who should be excluded from the exemption.
(69 Fed. Reg. 22,141.) DOL further asserts in the Preamble that “the ‘production versus staff’ dichotomy has
always been illustrative, but not dispositive, of exempt status.”
DOL’s assertion that production worker status has never been dispositive of whether an employee is
exempt is questionable. Clearly, however, DOL intends production worker status to be less important in the
future. In the Preamble to the revised exemption regulations, DOL cites with approval the holding of the 9th
U.S. Circuit Court of Appeals in Bothell v. Phase Metrics, Inc. (299 F.3d 1120 (9th Cir. 2002)), where the
court found the dichotomy “useful only to the extent that it helps clarify the phrase ‘work directly related to
the management policies or general business operations’.” The court in that case further stated:
The other pertinent cases from our sister circuits similarly regard the administration/productiondichotomy as but one piece of the larger inquiry, recognizing that a court must ‘construe the statutesand applicable regulations as a whole.’ Indeed, some cases analyze the primary duty test withoutreferencing the dichotomy at all. This approach is sometimes appropriate because, as we have said,the dichotomy is but one analytical tool, to be used only to the extent that it clarifies the analysis.Only when work falls ‘squarely on the production side of the line,’ has the administration/productiondichotomy been determinative. . . . Moreover, the distinction should only be employed as a tooltoward answering the ultimate question, whether work is ‘directly related to management policies orgeneral business operations,’ not as an end in itself.
In short, the production worker problem has not gone away, but DOL has attempted to lessen its signifi-
cance as a factor in determining an administrative employee’s exempt or nonexempt status. Nevertheless,
employers should continue to pay particular attention to administrative positions to ensure that employees are
not performing “production” work. In addition, because the law on this subject is likely to continue evolving,
forthcoming court cases addressing the administrative exemption should be carefully followed.
Use of Manuals
Closely related to whether an employee exercises “discretion and independent judgment” for purposes
of applying the administrative exemption is whether the employee’s decision-making ability is limited by
manuals or standard operating procedures. DOL’s revised exemption regulations (29 C.F.R. §541.704) state:
The use of manuals, guidelines or other established procedures containing or relating to highlytechnical, scientific, legal, financial or other similarly complex matters that can be understood orinterpreted only by those with advanced or specialized knowledge or skills does not preclude exemp-tion under section 13(a)(1) of the act or the regulations in this part. Such manuals and proceduresprovide guidance in addressing difficult or novel circumstances and thus use of such referencematerial would not affect an employee’s exempt status. The section 13(a)(1) exemptions are notavailable, however, for employees who simply apply well-established techniques or proceduresdescribed in manuals or other sources within closely prescribed limits to determine the correctresponse to an inquiry or set of circumstances.
DOL explains in the Preamble to its 2004 exemption rule revisions that 29 C.F.R. §541.704 is intended “to
avoid the absurd result” reached in Hashop v. Rockwell Space Operations Co., 867 F.Supp. 1287 (S.D. Tex. 1994)
(see 69 Fed. Reg. 22,188-89). The plaintiffs in the Rockwell Space Operations case were instructors who trained
space shuttle ground control personnel during simulated missions. The plaintiffs were responsible for assisting in
The term “exempt work” means all work described in §§541.100, 541.101, 541.200, 541.300,541.301, 541.302, 541.303, 541.304, 541.400 and 541.500, and the activities directly and closelyrelated to such work. All other work is considered “nonexempt.”
The first part of the first sentence simply means that exempt work is work that meets one of the five
white-collar exemption tests. What is most significant about this definition, however, is the statement in the
second part of the first sentence that “activities directly and closely related” to exempt work also are exempt
work. The regulations (29 C.F.R. §541.703) include a detailed definition of “directly and closely related.” It
states:
(a) Work that is “directly and closely related” to the performance of exempt work is alsoconsidered exempt work. The phrase “directly and closely related” means tasks that are related toexempt duties and that contribute to or facilitate performance of exempt work. Thus, “directly andclosely related” work may include physical tasks and menial tasks that arise out of exempt duties, andthe routine work without which the exempt employee’s exempt work cannot be performed properly.Work “directly and closely related” to the performance of exempt duties may also includerecordkeeping; monitoring and adjusting machinery; taking notes; using the computer to createdocuments or presentations; opening the mail for the purpose of reading it and making decisions; andusing a photocopier or fax machine. Work is not “directly and closely related” if the work is remotelyrelated or completely unrelated to exempt duties.
The revised exemption regulations (29 C.F.R. §541.703(b)) include several examples of activities that
are “directly and closely related” to exempt administrative work. For example:
• The distribution of materials, merchandise or supplies to maintain control of the flow of and expendi-
tures for such items is directly and closely related to the performance of exempt duties.
• A business consultant may take extensive notes recording the flow of work and materials through the
office or plant of the client; after returning to the office of the employer, the consultant may personally use
the computer to type a report and create a proposed table of organization. Standing alone, or separated from
An “emergency” does not include occurrences that are not beyond control. Emergencies also do not
include occurrences for which the employer can reasonably provide in the normal course of business (29
C.F.R. §541.706(b)). Emergencies generally occur only rarely, and are events that the employer cannot
reasonably anticipate.
DOL’s regulations (29 C.F.R. §541.706(c)) provide examples to illustrate the distinction between
emergency work considered exempt work and routine work that is not exempt work.
Administrative Trainees
According to 29 C.F.R. §541.705, the administrative exemption does not apply to employees training
for employment in an administrative capacity who are not actually performing the duties of an exempt
employee. (This rule applies likewise to the other white-collar exemptions.) Accordingly, for new workers, it
is prudent to identify the period of time when the training is ongoing, and in that time, the trainees will not
be deemed exempt administrative employees. Only when the training has progressed to such a level that the
worker exercises discretion and independent judgment regarding matters of significance and otherwise meets
the administrative duties test will the employee qualify for the exemption.
Administrative Employees in Educational Establishments
In addition to administrative employees working in ordinary businesses and other entities, the term
“employee employed in a bona fide administrative capacity” in 29 U.S.C. §213(a)(1) of the FLSA also
includes certain employees in educational establishments. This exemption applies to employees who are:
(1) compensated for services on a salary or fee basis at a rate of not less than $455 per week (or $380
per week, if employed in American Samoa by employers other than the federal government) exclusive of
board, lodging or other facilities, or on a salary basis which is at least equal to the entrance salary for teach-
ers in the educational establishment by which they are employed; and
(2) whose primary duty is performing administrative functions directly related to academic instruction
or training in an educational establishment or department or subdivision thereof.
(29 C.F.R. §541.204(a).) Paragraph (b) of that section defines the term “educational establishment” to mean:
an elementary or secondary school system, an institution of higher education or other educa-tional institution. Sections 3(v) and 3(w) of the act define elementary and secondary schools as thoseday or residential schools that provide elementary or secondary education, as determined under statelaw. Under the laws of most states, such education includes the curriculums in grades one through 12;under many it includes also the introductory programs in kindergarten. Such education in some statesmay also include nursery school programs in elementary education and junior college curriculums insecondary education. The term “other educational establishment” includes special schools for mentallyor physically disabled or gifted children, regardless of any classification of such schools as elemen-tary, secondary or higher. Factors relevant in determining whether postsecondary career programs areeducational institutions include whether the school is licensed by a state agency responsible for thestate’s educational system or accredited by a nationally recognized accrediting organization for careerschools. Also, for purposes of the exemption, no distinction is drawn between public and privateschools, or between those operated for profit and those that are not for profit.
Nevada No Yes Nev. Rev. Stat. §§608.018(2)(e), 608.250
New Hampshire No No N.H. Rev. Stat. §279:21
New Jersey Yes Yes N.J. Stat. §34:11-56a4
New Mexico Yes Yes N.M. Stat. §50-4-21(C)(2)
New York Yes Yes N.Y. State Consolidated Laws, c.31, art.18, §651;N.Y. Dept. of Labor Wage Orders; N.Y. Comp.Codes R & Regs. Tit. 12, §142-2.16(c)(4) (1990)
North Carolina Yes Yes N.C. Gen Stat. §95-25.14(b)(4)
North Dakota No Yes N.D. Century Code §34-06-03; N.D. Admin. Code§§46-02-07-01, 46-02-07-02(4)(a)
¶250 Professional Employees (Effective Aug. 23, 2004)
The professional exemption from the overtime and minimum wage requirements of the Fair Labor
Standards Act (FLSA) actually encompasses two exemptions — one for “learned professionals” and one for
“creative professionals.” To qualify for either exemption, a worker must meet the criteria of either the
appropriate “standard test” (see ¶251) or the “highly compensated employee test” (see ¶253). The standard
test must be used if the employee receives total annual compensation of less than $100,000.
To qualify for the professional exemption, most employees must be paid on a salary or fee basis. Re-
garding duties, to be an exempt learned professional employee under the standard test, an employee must
have a primary duty that satisfies three separate elements:
• the employee must perform work requiring knowledge of an advanced type;
• the advanced knowledge must be in a field of science or learning; and
• the advanced knowledge must be customarily acquired by a prolonged course of specialized intellec-
tual instruction.
Included within these requirements is a criterion that the employee’s primary duty include the consistent
exercise of discretion and judgment. Each of these requirements is discussed in detail in this tab.
To meet the duties test for the creative professional exemption — formerly known as the artistic profes-
sional exemption — an employee must have a primary duty that involves the performance of work requiring
invention, imagination, originality or talent in a recognized field of artistic or creative endeavor. This re-
quirement also is discussed below.
All of the relevant factors must be considered when determining whether an employee is an exempt
professional. As with any other FLSA exemption, it cannot be assumed that merely because one employee in
a particular job classification is exempt, a second employee with a similar job title or even some of the same
duties also is exempt. The decision must be made on a case-by-case basis. The U.S. Department of Labor’s
(DOL) revised “white-collar” exemption regulations (29 C.F.R. §541.2) state expressly:
Job titles insufficient.
A job title alone is insufficient to establish the exempt status of an employee. The exempt ornonexempt status of any particular employee must be determined on the basis of whether theemployee’s salary and duties meet the requirements of the regulations in this part.
(See also Reeves v. International Tel. & Tel. Corp., 357 F. Supp. 295 (D. La. 1975)). Under the regula-
tions’ standard tests for exempt professionals, an employer must be able to show that each putatively exempt
professional employee meets every requirement (see Ramos v. National Biscuit Co., 324 F. Supp. 1310
(D.P.R. 1971); Pezzillo v. Gen. Tel. & Electron. Inform. Sys. Inc., 414 F. Supp. 1257 (M.D. Tenn. 1976)
(both applying the DOL exemption regulations in place prior to the 2004 revisions)).
Employers also should be mindful that exemptions from the FLSA overtime and minimum wage provi-
sions are very narrowly construed by the courts, and employers bear the burden of proving that each em-
ployee claimed as exempt meets each and every requirement set out in the regulations.
Highlights of the 2004 DOL Rule Changes
The following are the major changes that were made to the rules, effective Aug. 23, 2004, governing the
professional exemption.
An exempt professional employee must earn a salary of at least $455 per week, up from as low as $170
under the “long test” in the old regulations.
The rules provide a slightly more helpful definition of what it means to acquire and utilize “advanced
knowledge.”
The rules clarify the availability of the exemption vis-à-vis several frequently disputed jobs.
As may be seen, the changes are relatively moderate in comparison to changes that DOL made to the
administrative and executive exemptions in 2004.
¶251 Standard Test for ‘Learned Professional’ Employees (Effective Aug. 23, 2004)
A learned professional employee generally must meet the following requirements to be exempt from the
Fair Labor Standards Act (FLSA) minimum wage and overtime provisions:
(1) Duties: Must have a primary duty that is the performance of work requiring knowledge of an ad-
vanced type — including the consistent exercise of discretion and judgment — in a field of science or learn-
ing, customarily acquired by a prolonged course of specialized intellectual instruction; and
(2) Compensation: Must be compensated on a salary or fee basis at a rate of not less than $455 per week
(or $380 per week, if employed in American Samoa by employers other than the federal government), exclu-
sive of board, lodging, or other facilities. However, some professionals do not have to be paid on a salary or
fee basis. (See ¶225).
The U.S. Department of Labor’s revised FLSA exemption regulations give guidance on how each of the
above requirements is defined.
Primary Duty
To qualify as an exempt learned professional employee under the standard test, an employee must have
a primary duty that requires knowledge of an advanced type in a field of science or learning customarily
acquired by a prolonged course of specialized intellectual instruction. DOL’s revised exemption regulations
(29 C.F.R. §541.700(a)) define “primary duty” as follows:
The term “primary duty” means the principal, main, major or most important duty that theemployee performs. Determination of an employee’s primary duty must be based on all the facts in aparticular case, with the major emphasis on the character of the employee’s job as a whole. Factors toconsider when determining the primary duty of an employee include, but are not limited to, the
relative importance of the exempt duties as compared with other types of duties; the amount of timespent performing exempt work; the employee’s relative freedom from direct supervision; and therelationship between the employee’s salary and the wages paid to other employees for the kind ofnonexempt work performed by the employee.
(See ¶254 for the definitions of “exempt work” and “nonexempt work.”)
In the Preamble to DOL’s FLSA exemption regulations, which took effect Aug. 23, 2004, the depart-
ment notes that some federal courts, relying primarily on dictionary definitions, have defined the term “pri-
mary” to mean “most important,” “principal” or “chief” (see 69 Fed. Reg. 22,185).
The revised exemption regulations (29 C.F.R. §541.700(b)) state that the amount of time spent perform-
ing exempt work can be a useful guide in determining whether exempt work is the primary duty of an em-
ployee, but it is not conclusive. Employees who spend more than 50 percent of their time performing exempt
work generally will satisfy the primary duty requirement. However, the regulations state expressly that
nothing in the rules requires that exempt employees spend more than 50 percent of their time performing
exempt work. Employees who do not spend more than 50 percent of their time performing exempt duties may
nonetheless meet the primary duty requirement of the professional exemption if other factors support such a
conclusion.
‘Knowledge of an Advanced Type’
DOL’s revised exemption regulations (29 C.F.R. §541.301(b)) state that the phrase “work requiring
knowledge of an advanced type” means work that is predominantly intellectual in character, and that includes
work requiring the consistent exercise of discretion and judgment. Work that is intellectual in character is to
be distinguished from the performance of routine mental, manual, mechanical or physical work. Advanced
knowledge cannot be attained at the high-school level (29 C.F.R. §541.301(b)).
Note that an employee cannot be exempt as a learned professional unless the employee’s work requires
knowledge of an advanced type. Thus, an employee who has an advanced degree, but whose work does not
require that level of education, will not qualify for the exemption.
‘Consistent Exercise of Discretion and Judgment’
To qualify as “work requiring knowledge of an advanced type,” an employee’s primary duty must
include the consistent exercise of discretion and judgment (29 C.F.R. §541.301(b)). The regulations do not
define “discretion and judgment” as applied to the professional exemption, except to say that an exempt
learned professional generally uses his or her advanced knowledge to analyze, interpret or make deductions
from varying facts or circumstances. In contrast, clerical and bookkeeping work, recording and tabulating
data, and performing other mechanical, repetitive, recurrent or routine work is not work involving the consis-
tent exercise of discretion and judgment. Thus, a bookkeeper who simply tabulates data is not exempt, even
In the Preamble to its 2004 exemption regulations, DOL notes that the “exercise of discretion and
judgment” standard under the learned professional exemption is less stringent than the “exercise of discretion
and independent judgment” standard under the administrative exemption (69 Fed. Reg. 22,151, citing De
Jesus Rentas v. Baxter Pharmacy Services Corp., 286 F. Supp. 2d 235 (D.P.R. 2003); see also Piscione v.
Ernst & Young, L.L.P. 171 F.3d 527 (7th Cir. 1999) (noting that the administrative test is more stringent, but
not discussing the difference between the two because the court found that the employee met both tests)).
Note that the above distinction between administrative and professional employees refers to the level of
“judgment” that a professional must exercise. On the other hand, a professional’s primary duty must include
the “consistent exercise of discretion and judgment,” while the administrative test does not include the
“consistent” requirement.
As discussed in ¶241, the revised exemption regulations issued by DOL in 2004 contain an extensive
list of factors to consider in determining whether an administrative employee exercises discretion and inde-
pendent judgment. There is no similar list in the subpart of the 2004 regulations relating to the professional
exemption.
‘Field of Science or Learning’
DOL’s revised exemption regulations (29 C.F.R. §541.301(c)) define the phrase “field of science or
learning” in a circuitous manner as “occupations that have a recognized professional status as distinguished
from the mechanical arts or skilled trades where in some instances the knowledge is of a fairly advanced
type, but is not in a field of science or learning.” Specifically, DOL identifies the following “traditional
professions” as fields of science or learning:
• law;
• medicine;
• theology;
• accounting;
• actuarial computation;
• engineering;
• architecture;
• teaching;
• various types of physical, chemical and biological sciences; and
• pharmacy.
This list is not intended to be exclusive. DOL in 29 C.F.R. §541.301(f) acknowledges that:
The areas in which the professional exemption may be available are expanding. As knowledgeis developed, academic training is broadened and specialized degrees are offered in new and diversefields, thus creating new specialists in particular fields of science or learning. When an advancedspecialized degree has become a standard requirement for a particular occupation, that occupation mayhave acquired the characteristics of a learned profession.
A high level of compensation is a strong indicator of an employee’s exempt status, thuseliminating the need for a detailed analysis of the employee’s job duties. Thus, a highly compensatedemployee will qualify for exemption if the employee customarily and regularly performs any one ormore of the exempt duties or responsibilities of an executive, administrative or professional employeeidentified in subparts B, C or D of this part.
The intent of the highly compensated employee test is to streamline application of the Fair Labor
Standards Act (FLSA) professional exemption and make it easier to exempt highly compensated workers. It
remains to be seen what the impact of the highly compensated employee test will be, since the professional
exemption test arguably includes only one “duties” prong. It is possible, for instance, that a court might
divide the professional duties test into its subparts and conclude that an employee who possesses an advanced
degree, but who does not consistently exercise discretion and judgment, is exempt as a highly compensated
employee. (For a full discussion of the highly compensated employee test, see ¶242.)
It should be noted, however, that DOL’s revised exemption regulations contain what appears to be an
unintentional impediment to applying the highly compensated employee test to some professionals. Specifi-
cally, the regulations (29 C.F.R. §541.601(d)) state that the highly compensated employee test is applicable
only to employees whose primary duty includes performing office or nonmanual work. As DOL notes in the
Preamble to its 2004 exemption rule revisions, some clearly exempt professional employees — for example,
surgeons — have a primary duty that does involve manual work (see 69 Fed. Reg. 22,148). Likewise, exempt
chefs have a primary duty that does not involve office or nonmanual work. For this very reason, DOL
dropped a 2003 proposed exemption rule change that would have required an exempt professional employee
to perform office or nonmanual work. In this sense, the duties test for the highly compensated test is stricter
than the duties test for the standard test.
¶254 Additional Issues Related to the Professional Exemption (Effective Aug. 23, 2004)
A number of other issues can arise when determining whether an employee is an exempt professional.
These may include the employee’s use of manuals to perform the job; defining “exempt work” and “directly
and closely related” duties; and handling trainees and so-called “combination” exemptions. Each of these
issues is addressed below.
Use of Manuals
Closely related to whether an employee exercises “discretion and judgment” is whether the employee’s
decisionmaking ability is limited by manuals or standard operating procedures. The U.S. Department of
The use of manuals, guidelines or other established procedures containing or relating to highlytechnical, scientific, legal, financial or other similarly complex matters that can be understood orinterpreted only by those with advanced or specialized knowledge or skills does not preclude exemp-tion under section 13(a)(1) of the act or the regulations in this part. Such manuals and proceduresprovide guidance in addressing difficult or novel circumstances and thus use of such referencematerial would not affect an employee’s exempt status. The section 13(a)(1) exemptions are notavailable, however, for employees who simply apply well-established techniques or proceduresdescribed in manuals or other sources within closely prescribed limits to determine the correctresponse to an inquiry or set of circumstances.
DOL states in the revised exemption regulations’ Preamble that 29 C.F.R. §541.704 reflects the
department’s view that an engineer or physicist’s reliance on a manual outlining appropriate responses to a
space shuttle emergency (or a problem in a nuclear reactor, as another example) should not transform a
learned professional scientist into a nonexempt technician (69 Fed. Reg. 22,188-89). DOL further explains
that 29 C.F.R. §541.704 properly distinguishes between manuals that provide specific directions on routine
and recurring circumstances and those that provide general guidance on addressing open-ended or novel
circumstances.
Note that this regulation allows the use of manuals, guidelines and other procedures only if they relate
to highly technical, scientific, legal, financial and other similarly complex matters. It does not authorize
exempt employees to use standard operating procedures for more routine matters.
Exempt Work and ‘Directly and Closely Related’ Duties
Many, if not most, exempt employees also perform some nonexempt work incidental to their exempt
duties. For example, a research chemist may have to wash lab equipment before or after using it. Thus,
determining whether an employee is an exempt professional worker sometimes requires comparing the
relative importance of the employee’s exempt duties with other types of duties and the amount of time spent
performing exempt work versus nonexempt work (see 29 C.F.R. §541.700; ¶251). This, in turn, makes it
necessary to define the term “exempt work.”
DOL’s revised exemption regulations (29 C.F.R. §541.702), effective Aug. 23, 2004, contain a some-
what circular definition, which states:
The term “exempt work” means all work described in §§541.100, 541.101, 541.200, 541.300,541.301, 541.302, 541.303, 541.304, 541.400 and 541.500, and the activities directly and closelyrelated to such work. All other work is considered “nonexempt.”
The first part of the first sentence simply means that exempt work is work that meets one of the five
white-collar exemption tests. What is most significant about the first sentence of this definition, however, is
the statement that “activities directly and closely related” to exempt work also are deemed to constitute
exempt work. DOL’s revised exemption regulations (29 C.F.R. §541.703) include a detailed definition of
“directly and closely related,” which states:
(a) Work that is “directly and closely related” to the performance of exempt work is alsoconsidered exempt work. The phrase “directly and closely related” means tasks that are related toexempt duties and that contribute to or facilitate performance of exempt work. Thus, “directly andclosely related” work may include physical tasks and menial tasks that arise out of exempt duties, and
the routine work without which the exempt employee’s exempt work cannot be performed properly.Work “directly and closely related” to the performance of exempt duties may also includerecordkeeping; monitoring and adjusting machinery; taking notes; using the computer to createdocuments or presentations; opening the mail for the purpose of reading it and making decisions; andusing a photocopier or fax machine. Work is not “directly and closely related” if the work is remotelyrelated or completely unrelated to exempt duties.
DOL’s revised exemption regulations (29 C.F.R. §541.703(b)) include several examples of activities
that are “directly and closely related” to exempt work, but all in the context of the executive and administra-
tive exemptions. But, presumably, the same principles apply to the professional exemption. For example,
lawyers who type their own pleadings or do their own special subject-matter filing may still be performing
duties closely and directly related to their exempt duties.
Professional Trainees
According to 29 C.F.R. §541.705, the professional exemption does not apply to employees training for
employment in a professional capacity who are not actually performing the duties of an exempt employee.
(This rule applies likewise to the other white-collar exemptions.) Accordingly, for new workers, it is prudent
to identify the period of time when their training is ongoing, and during that time, the trainees will not be
exempt employees. Only when the training has progressed to such a level that the worker consistently exer-
cises discretion and judgment (in the case of learned professionals) and otherwise meets the professional
duties test will the employee qualify for the exemption.
Combination Exemptions
DOL’s revised exemption regulations (29 C.F.R. §541.708) state that employees who perform a combi-
nation of exempt duties, as set forth for executive, administrative, professional, outside sales and computer
employees, may qualify for exemption. Thus, for example, an employee whose primary duty involves a
combination of exempt administrative and exempt professional work may qualify for exemption.
¶255 Application of the Professional Exemption to Certain Specific Jobs (Effective Aug. 23, 2004)
In the Preamble to and the body of its 2004 revised exemption regulations, the U.S. Department of
Labor (DOL) discusses the exempt status of approximately a dozen specific occupations. These are examined
below.
Note that several such jobs are deemed to be exempt if they meet the certification requirements of
specifically named accrediting bodies. DOL’s revised exemption regulations recognize that accrediting and
certifying organizations similar to those listed may be created in the future. Such organizations may develop
similar specialized curriculums and certification programs which, if they become a standard requirement for
a particular occupation, may indicate that the occupation has acquired the characteristics of a learned profes-
instruction,” as required under 29 C.F.R. §541.301 of the revised regulations. The paramedic plaintiffs in
Vela v. City of Houston, 276 F.3d 659 (5th Cir. 2001), for example, were required to complete only 880 hours
of classroom training, clinical experience and a field internship. In addition, the EMT plaintiffs were re-
quired to complete only 200 hours of classroom training, clinical experience and a field internship. The court
in that case held that the paramedics and EMTs were not exempt professionals because they were not re-
quired to have a college degree. (See also Quirk v. Baltimore County, Md., 895 F. Supp. 773 (D. Md. 1995)
(certified paramedics required to have a high school education and less than a year of specialized training
were not exempt professionals).
Pharmacists
In DOL’s view, pharmacists can qualify as professionals under the FLSA exemption if they are paid on
a salary basis (69 Fed. Reg. 22,172). In the Preamble to its 2004 exemption rule revisions, DOL notes that
many pharmacists graduating today complete a doctoral program before they are licensed to practice.
Nevertheless, as with any position, whether a pharmacist is exempt depends on the specificemployee’s responsibilities — i.e., whether the individual pharmacist manufactures medicines orsimply counts and dispenses pills. Under California law, for example, a pharmacist may “manufacture,compound, sell [and] dispense” drugs (Cal. Bus. & Prof. Code §4050).
On the other hand, to a casual observer at a typical urban chain-store pharmacy, it certainly appears that
pharmacists in this day and age do little more than count pills from prepackaged wholesale containers and
print the accompanying warning and drug interaction labels from the store computer. Indeed, one of the only
reported court cases to address the subject found that the pharmacist in that case did exactly that, and thus
was not exempt. (Gustafson v. Nichols, 24 Wage and Hour Cas. (BNA) 1182 (E.D.N.C. 1979), rev’d without
opinion, 634 F.2d 622 (4th Cir. 1980).) Since the decision was reversed without a published opinion, and
apparently settled, there is no binding legal precedent on the subject.)
Teachers
DOL’s revised exemption regulations (29 C.F.R. §541.303(a)), effective Aug. 23, 2004, state that the
term “employee employed in a bona fide professional capacity” in 29 U.S.C. §213(a)(1) of the FLSA also
means any employee with a primary duty of teaching, tutoring, instructing or lecturing in the activity of
imparting knowledge and who is employed and engaged in this activity as a teacher in an educational estab-
lishment by which the employee is employed.” The term “educational establishment” is defined in 29 C.F.R.
§541.204(b).
Under the revised exemption regulations (29 C.F.R. §541.303(b)), exempt teachers include, but are not
limited to:
• regular academic teachers;
• teachers of kindergarten or nursery school pupils;
available to cooks who perform predominantly routine mental, manual, mechanical or physical work. (See
also Wage and Hour Opinion Letter dated Feb. 18, 1983 (cooks and bakers are not considered executive,
administrative, or professional employees within the meaning of the regulations regardless of how highly
skilled or paid such employees may be).)
Chefs also can qualify as creative professionals (69 Fed. Reg. 22,154). However, there is a wide varia-
tion in the duties of chefs, and the creative professional exemption must be applied on a case-by-case basis
with particular focus on the creative duties and abilities of the particular chef at issue.
Paralegals
Few, if any, job positions have been as disputed in FLSA exemption court cases and Wage and Hour
opinion letters as paralegals. In its 2004 exemption rule revisions, DOL essentially adheres to its
longstanding position that most paralegals are not exempt. DOL states (29 C.F.R. §541.301(e)(7)):
Paralegals and legal assistants generally do not qualify as exempt learned professionals becausean advanced specialized academic degree is not a standard prerequisite for entry into the field.Although many paralegals possess general four-year advanced degrees, most specialized paralegalprograms are two-year associate degree programs from a community college or equivalent institution.However, the learned professional exemption is available for paralegals who possess advancedspecialized degrees in other professional fields and apply advanced knowledge in that field in theperformance of their duties. For example, if a law firm hires an engineer as a paralegal to provideexpert advice on product liability cases or to assist on patent matters, that engineer would qualify forexemption.
DOL also maintains that paralegals in a law firm are not eligible for the administrative exemption
because they are production workers and also do not exercise discretion and independent judgment (see, for
example, Wage and Hour Opinion Letter dated April 13, 1995). But DOL’s stand suffered a setback in 1994
when a Dallas, Texas, jury found that paralegals were administratively exempt (Reich v. Page & Addison
Nevada No Yes Nev. Rev. Stat. §§608.018(2)(e), 608.250
New Hampshire No No N.H. Rev. Stat. §279:21
New Jersey Yes Yes N.J. Stat. §34:11-56a4
New Mexico Yes Yes N.M. Stat. §50-4-21(C)(2)
New York Yes Yes N.Y. State Consolidated Laws, c.31, art.18, §651;N.Y. Dept. of Labor Wage Orders; N.Y. Comp.Codes R & Regs. Tit. 12, §142-2.16(c)(4) (1990)
North Carolina Yes Yes N.C. Gen Stat. §95-25.14(b)(4)
North Dakota No Yes N.D. Century Code §34-06-03; N.D. Admin. Code§§46-02-07-01, 46-02-07-02(4)(a)
¶262 General Rule for Computer Employees (Effective Aug. 23, 2004)
To qualify as an exempt computer employee (29 C.F.R. §541.400(b)) — what formerly was called a
“computer professional — a worker must have a primary duty that consists of:
• the application of systems analysis techniques and procedures, including consulting with users, to
determine hardware, software or system functional specifications;
• the design, development, documentation, analysis, creation, testing or modification of computer
systems or programs, including prototypes, based on and related to user or system design specifications;
• the design, documentation, testing, creation or modification of computer programs related to machine
operating systems; or
• a combination of the aforementioned duties, the performance of which requires the same level of
skills.
This primary duty requirement applies both to salaried and hourly computer employees.
Note that the computer professional exemption established in the pre-2004 regulations was limited to
employees working in software-related functions. DOL eliminated this limitation in adopting the 2004
regulations, concluding that it was inconsistent with congressional intent as expressed in the 1996 FLSA
amendment (see 69 Fed. Reg. 22,160).
Newly Emerging Computer Jobs
DOL’s 2004 revised exemption regulations (29 C.F.R. §541.400(a)) describe the employees covered by
this exemption as “computer systems analysts, computer programmers, software engineers [and] other simi-
larly skilled workers in the computer field.” In the public comments preceding the 2004 exemption rule
revisions, DOL was asked to expand the regulations to recognize new computer job titles that have emerged
since the early 1990s. These included, among others, network managers, LAN/WAN administrators, database
administrators, web site design and maintenance specialists, and systems support specialists performing
similar duties with hardware, software and communications networks (69 Fed. Reg. 22,159). In response to
those comments, DOL explained that:
Depending on the particular facts, some of the computer occupations mentioned in thecomments could in fact meet this statutory primary duty test for the computer exemption withouthaving to specifically cite job titles in the regulations to qualify for exemption. Where theprescribed duties tests are met, the exemption may be applied regardless of the job title given tothe particular position. Since an employee’s job duties, not job title, determine whether theexemption applies, we do not believe it is appropriate, given the history of the computer em-ployee exemption, to cite additional job titles as exempt beyond those cited in the primary dutytest of the statute itself. In each instance, regardless of the job title involved, the exempt statusof any employee under the computer exemption must be determined from an examination of theactual job duties performed under the criteria in 29 U.S.C. §213(a)(17) of the act. In addition,the department notes that certain jobs cited in the comments could in fact meet the duties test forthe administrative employee exemption and be exempt on that basis where all those tests are met.
The term “primary duty” means the principal, main, major or most important duty that theemployee performs. Determination of an employee’s primary duty must be based on all the facts in aparticular case, with the major emphasis on the character of the employee’s job as a whole. Factors toconsider when determining the primary duty of an employee include, but are not limited to, therelative importance of the exempt duties as compared with other types of duties; the amount of timespent performing exempt work; the employee’s relative freedom from direct supervision; and therelationship between the employee’s salary and the wages paid to other employees for the kind ofnonexempt work performed by the employee.
DOL stated that it relied on judicial decisions, the pre-2004 exemption regulations, and dictionary
definitions to formulate the new general definition of “primary duty” (69 Fed. Reg. 22,185).
DOL’s revised exemption regulations (29 C.F.R. §541.700(b)) state that the amount of time spent
performing exempt work can be a useful guide in determining whether exempt work is the primary duty of an
employee, but it is not conclusive. Employees who spend more than 50 percent of their time performing
exempt work generally will satisfy the primary duty requirement. However, the regulations state expressly
that nothing in the rules requires that exempt employees spend more than 50 percent of their time performing
exempt work. Employees who do not spend more than 50 percent of their time performing exempt duties may
nonetheless meet the primary duty requirement of the exemption if other factors support such a conclusion.
For additional discussion of the definition of “primary duty,” see ¶251.
¶264 Compensation Requirements (Effective Aug. 23, 2004)
As noted above, a computer employee can be exempt if he or she meets the duties test and is paid on a
salary or fee basis like an executive, administrative or professional employee. For those employees, the
minimum compensation that will satisfy the test is $455 per week (see ¶220).
However, unlike other white-collar workers, computer employees also can be exempt if they are com-
pensated on an hourly basis, so long as their hourly rate is not less than $27.63 an hour (29 C.F.R.
§541.400(b)). That minimum wage must be paid for every hour worked, including overtime. Note that the
figure of $27.63 per hour is contained in the FLSA statute and can only be changed by Congress. Thus,
employers seeking to exempt their computer workers from the FLSA face a choice — pay them on a salary
basis or pay at least $27.63 per hour for each hour worked (see also ¶225).
Also unlike executive, administrative and professional workers, computer employees are not eligible for
exemption under the “highly compensated employee” tests (see ¶253). DOL explains in the Preamble to its
One such case is Harkins v. City of Chesapeake, Va., No. 88-254-N, 1988 U.S. Dist. LEXIS 18390
(E.D. Va. Dec. 2, 1988). The court in the dispute held that fire lieutenants and captains were exempt,
because they spent more than 50 percent of their time performing management duties. Specifically, the
duties that evidenced their managerial role, the court said, were the following:
• filling out daily logbooks and reports related to casualties, training, accidents, performance evalu-
ations, overtime authorization and reprimand notices;
• directing others to maintain reports concerning fuel usage, tools, daily pump readings and person-
nel probation;
• preparing detailed surveys of the business district to locate fire hydrants in advance of a fire; and
• commanding activity at the fire scene, including calling other units, positioning pumper trucks,
deciding the proper size hose to use, determining whether to use hydrants or pumper trucks and deciding
whether to enter a burning building.
Another characteristic of managerial responsibility is the lack of close supervision. In Harkins, the
district court noted that the fire lieutenants and captains operated under very little supervision, with
battalion chiefs visiting the station only once per day or every other day. The lieutenants and captains
bore primary responsibility for the readiness of the equipment and men to respond to a fire, and possessed
utmost discretion in handling assigned duties.
Even when the nature of the employee’s management duties is such that other work is performed
simultaneously (and indeed the fire captain or lieutenant may perform mundane tasks, such as sweeping
out the station or washing down engines), the exemption may be preserved. In Harkins, the court said:
[I]f a station captain or station lieutenant decides that it is good for camaraderie that hepitch in with his men, that is a management decision. What he is doing is part of management —to build up good spirit and the effectiveness of his crew — and that is simply part of management.
Such situations are expressly addressed in 29 C.F.R. §541.106, which discusses “concurrent duties.”
Other court cases in which firefighter occupations have been deemed exempt executive work include:
• International Ass’n of Firefighters, Alexandria Local 2141 v. City of Alexandria, Va., 720 F. Supp.
1230 (E.D. Va. 1989), aff’d, 912 F.2d 463 (4th Cir. 1990) (fire station commander captain and fire admin-
istrative services lieutenant were exempt because their primary duty was the “management of an entire
station during their shift” and they necessarily directed the work of two or more employees);
• Sarver v. City of Roanoke, Va., No. 88-0179-R, 1989 U.S. Dist. LEXIS 17545 (W.D. Va. 1989)
(fire captains were executive employees because they regularly supervised three employees within a fire
company, were in charge at fire scenes and made numerous major decisions in life-threatening situations);
• Keller v. City of Columbus, Ind., 778 F. Supp. 1480 (S.D. Ind. 1991);
• Smith v. City of Jackson, Miss., 954 F.2d 296 (5th Cir. 1992) (district and battalion fire chiefs were
¶320 Employees of Special-Purpose Government Districts
The pattern of governmental entities in the United States is such that numerous and different types of
special-purpose governmental jurisdictions exist for the purposes of delivering public services. Often these
“special districts” cross municipal, county or even state lines. In other cases, they may serve only a geo-
graphic portion of a larger governmental jurisdiction. Employees of such governmental entities are covered
by the Fair Labor Standards Act (FLSA), and most special districts can avail themselves of the special FLSA
provisions for state and local government employees.
There are no special rules for special district employees. Despite the general assumption that special
district employees are subject to FLSA coverage, there are a number of situations common to special districts
that may require close examination to determine the extent of coverage or the possibility that other special
rules might apply.
A common type of special district is a multi-jurisdictional planning organization, district commission,
council of governments or other substate intergovernmental agency. Many of these organizations have been
formed to foster regional cooperation and coordination, to administer joint projects, or to channel federal
funds. The key concern about these entities, from the standpoint of potential FLSA coverage, is whether the
organization is truly a governmental organization. The answer to that question will often turn on whether,
under state law, the organization is treated as a governmental organization.
The FLSA regulations (29 C.F.R. §553.1) define a “public agency” for purposes of coverage as “a state,
a political subdivision of a state, or interstate governmental agency.” The U.S. Department of Labor (DOL)
declined, based on comments received on its proposed regulations, to expand that definition further, claiming
instead that the definition reflected the appropriate statutory provision. According to DOL’s discussion of
comments on the proposed regulations, “such entities will be recognized as units of State or local govern-
ments where, in fact, they have been so constituted.”
DOL has offered some advice on what constitutes a political subdivision of a state. The Wage and Hour
Division Administrator has noted as follows:
In NLRB v. Natural Gas Utility District of Hawkins County, Tennessee, 402 U.S. 600 (1971), theU.S. Supreme Court upheld the definition by the National Labor Relations Board of the term “politicalsubdivision”. Under this definition, political subdivisions are entities “that are either (1) createddirectly by the (S)tate, so as to constitute departments or administrative arms of the government, or (2)administered by individuals who are responsible to public officials or to the general electorate” (402U.S. at 604-5). These criteria for determining if an entity is a political subdivision of a State were alsoused by the courts in Williams v. Eastside Mental Health Center (Eastside), 669 F. 2d 671 (11th Cir.1982), and in Skills Development Services v. Donovan, 728 F. 2d 294 (6th Cir. 1984), to define theterm “political subdivision” in section 3(x) of FLSA. In the Eastside case, the court held that whilethere existed controls “perhaps uncommon in the context of normal private corporations contractingwith the states . . .,” the key factor is the authority of a public official to hire and fire the governingboard of directors (669 F. 2d at 679). (Wage and Hour Opinion Letter dated July 16, 1986.)
DOL’s regulations provide that “companionship services” may include:
household work related to the care of the aged or infirm person such as meal preparation, bedmaking, washing of clothes, and other similar services. They may also include the performance ofgeneral household work: Provided, however, that such work is incidental, i.e., does not exceed 20percent of the total weekly hours worked. (29 C.F.R. §552.6.)
DOL’s regulations further provide that “companionship services” do not include services relating to the
care and protection of the aged or infirm which require and are performed by trained personnel, such as a
registered or practical nurse. Trained personnel do not qualify for the professional exemption unless they are
sufficiently trained and paid. While such trained personnel do not qualify as companions, this fact does not
remove them from the category of covered domestic service employees when employed in or about a private
household, according to DOL (29 C.F.R. §552.3 (exemption for domestic service employees)).
FLSA regulations do not define “trained personnel.” In Cox v. Acme Health Services (55 F.3d 1304 (7th
Cir. 1995)), the question on appeal was whether a home health aide, who performed services that required
more training than those delineated in the regulation’s example of “companionship services,” was entitled to
overtime pay. The home health aide had undergone 75 hours of medical training that was far more basic and
limited in scope and duration than the training of a licensed practical nurse, and was much less exten-
sive than required of a registered nurse. The plaintiff in that case argued that the regulation’s use of the
phrase “trained personnel, such as a registered or practical nurse,” meant that other “trained personnel”
also were not exempt. However, relying on McCune v. Oregon Senior Services Division, 894 F.2d 1107
(9th Cir. 1990), the 7th Circuit found that the plaintiff in Cox was not “trained” and thus was exempt. In
McCune, the court noted that the exception applies to services “which require and are performed by
trained personnel” (quoting 29 C.F.R. §552.6). The McCune court found that the plaintiff’s duties,
which included “cleaning, cooking, and hygiene and medical care,” were not “services . . . which require
and are performed by trained personnel, such as a registered or practical nurse.”
The McCune court rejected the plaintiff’s argument that he should be entitled to overtime compensation
“because [he had been] trained by [his] client’s doctors to administer medications and provide other services
generally required to be performed by trained personnel.” That court observed that “[state] law requires these
services to be provided by a licensed nurse . . . If McCune is forbidden from performing these additional
tasks, it would be improper for [the court] to reward him for doing so, regardless of his good intentions.”
The McCune court also noted that eligibility for overtime compensation under the FLSA would depend
on the training required for a particular position, and not on any on-the-job training actually received by an
individual holding that position, because “recognizing on-the-job training would prove an ‘administrative
nightmare’ for the state since each worker would constantly have to be reevaluated.”
The FLSA (29 U.S.C. §213(a)(5)) exempts “any employee employed on a casual basis in domestic
service employment to provide babysitting services or any employee employed in domestic service employ-
ment to provide companionship services.” The “casual basis” requirement applies only to babysitting services
and not to companionship services (29 C.F.R. §552.106; McCune v. Oregon Senior Services Division, 894 F.2d
1107 (9th Cir. 1990)).
Another issue in McCune, and in other cases, was determining who qualified as the employer of home
health aides. Frequently, elderly care recipients receive services as part of a state welfare program. Thus, in
Bonnette v. Calif. Health and Welfare Agency (704 F.2d 1465 (9th Cir. 1983)), and in McCune, the courts
found that the state and the care recipient were joint employers. The Bonnette court said that:
the chore workers were paid by the appellants. It is also undisputed that the appellants controlledthe rate and method of payment, and that they maintained employment records.
Appellants also exercised considerable control over the structure and conditions of employmentby making the final determination, after consultation with the recipient, of the number of hours eachchore worker would work and exactly what tasks would be performed. The recipients were responsiblefor the day-to-day supervision of the chore workers, but appellants intervened when problems arosewhich the recipient and the chore worker could not resolve.
The McCune court found that the state had constructive notice of the hours worked by the caregivers because
state social workers regularly checked on the home.
Another issue that crops up with home health aides is that of independent contractor status. Some home
health aides have been classified as independent contractors rather than employees. DOL generally takes a
dim view of this (Brock v. Superior Care Inc., 840 F.2d 1054 (2d Cir. 1989) (home nurses not independent of
nurse registry)). The traditional FLSA economic reality test must be invoked to resolve such claims.
The companionship exemption does not apply to employees who assist institutionalized patients (Linn v.
Developmental Servs. of Tulsa, Okla., 891 F. Supp. 574 (N.D. Okla. 1995)). Therefore, courts must closely
examine the living arrangement to determine whether the residence where an aide works should be character-
ized as a “private home.” In Linn, the court found that many factors distinguish the homes leased by these
clients from the private homes contemplated by the statute. In Linn, the employer acquired the residences for
the clients as well as the furniture for the residences. The employer maintained a set of keys to the residences
and made decisions as to the number of people who lived in the homes, often placing two or three people
together in a residence. The employer retained substantial authority in determining the composition of
homes. The clients who resided together were unrelated and were grouped together for purposes of treatment
and training.
In the mid-1990’s, the U.S. Department of Labor (DOL) proposed revisions to its regulations to clarify
that the companionship services exemption applies to companions or live-in domestic workers employed by a
third-party employer only if the individuals also are employed by the household using their services. A few
years later, DOL asked for comments on a proposal to make domestic companionship service workers ineli-
gible for the companionship services exemption if they are employed by a third party. Those initiatives did
not result in any changes to the regulations, however.
Then, in January 2001, DOL proposed significantly limiting the exemption for workers who provide
companionship services (66 Fed. Reg. 5,481). DOL took the position that the situation had changed since
The Fair Labor Standards Act (FLSA) contains specific exemptions from minimum wage and overtime
provisions for amusement and recreational employees. Specifically, 29 U.S.C. §213(a)(3) exempts any
employee who is employed by an establishment that is an amusement or recreational establishment, orga-
nized camp, or religious or nonprofit educational conference center, if (a) it does not operate for more than
seven months in any calendar year, or (b) during the preceding calendar year, its average receipts for any six
months of the year were not more than 331/3 percent of its average receipts for the other six months of that
year. This exemption, however, does not apply to any employee of a private entity providing services or
facilities in a national park or forest or on land in the National Wildlife Refuge System under a contract with
the Secretary of the Interior or Agriculture.
¶341 Recreational Establishment
The key portion of this test is that the employee must be employed by a seasonal recreational “establish-
ment.” The U.S. Department of Labor (DOL) has offered in a Wage and Hour Opinion Letter dated Aug. 10,
1976, the following definition of “establishment”:
Certain facilities operate in close proximity while others operate at distances of up to 2 miles.In our view, there appears to be sufficient physical separation to conclude that these units are separate“establishments” within the contemplation of the act. In this regard, the term “establishment” means adistinct physical place of business rather than an integrated business or enterprise. Thus, even thoughthe units operate as a single economic unit, this fact does not, of itself, negate the existence ofseparate establishments within this economic unit. It would be our view that we have one integratedbusiness which is comprised of a number of single physically separate place of business “establish-ments” each of which is to be separately considered in determining its status under the law.
It should be noted that office personnel, warehouse workers and similar workers, not employed in the
recreational or amusement establishment itself but in the local central administrative office, are not exempted
by virtue of this provision of the FLSA. In fact, according to a Wage and Hour Opinion Letter dated July 21,
1970, the Wage and Hour Administrator appears to require a distinct, separate working place for the recre-
ational establishment employees. Otherwise, the administrator may not consider employees who work on
recreation tasks to be employees of a “recreational establishment” under the language of the act.
¶342 Seasonal Operations Test
Applying the test in the statute, it is apparent that a swimming pool or other facility that is open seven
months of the year or less would satisfy the first prong of the test. Thus, seasonal recreational employees of
the swimming pool or other seasonal facilities would be exempted from the overtime and minimum wage
provisions of the FLSA.
The same conclusion presumably would apply to seasonal parks and stadiums. Other facilities that can
qualify for the exemption include concessions at amusement parks and beaches, certain summer camps and
The second exemption applies to in-residence domestic service employees. The act and the regulations
(29 U.S.C. §213(b)(21) and 29 C.F.R. §552.2(b)) provide for an overtime exemption for domestic service
employees who reside in the households in which they are employed. Domestic workers who “live in” the
household where they work are exempt from overtime standards, but not minimum wages or equal pay.
Domestic service employees include, but are in no way limited to, the occupations specified in the
regulations (29 C.F.R. §552.3) as follows:
As used in Section 13(a)(15) of the act, the term “domestic service employment” refers toservices of a household nature performed by an employee in or about a private home (permanent ortemporary) of the person by whom he or she is employed such as cooks, waiters, butlers, valet,maids, housekeepers, governesses, nurses, janitors, laundresses, caretakers, and chauffeurs ofautomobiles for family use. It also includes babysitters employed on other than a casual basis. Thislisting is illustrative and not exhaustive.
Thus, the regulations defining domestic service have two requirements:
1) that the services be of a household nature; and
2) that the services be performed by an employee in or about the employer’s private home.
The work by the domestic service employee “must” be performed in a private home (Field Operations
Handbook (FOH), §11d00c (1984)):
A separate and distinct dwelling in an apartment house or hotel may constitute a home.However, a boarding or lodging house for the purpose of supplying such services to the public, as abusiness enterprise, is not a private home and its employees are therefore not domestic serviceemployees for the purpose of the act. (emphasis supplied.)
Since state and local governments do not supply domestic service as a business enterprise, it is unclear
whether the private home restriction would be disabling. However, in Wage and Hour Opinion Letter dated
Nov. 25, 1975, DOL noted the following concerning house parents hired to care for the retarded in county
institutional residential homes:
A person employed in a private household to care for someone who cannot take care of himselfor herself because of age or infirmity comes within the meaning of this exemption. This is truewhether such a person is employed by the household or a public or private agency. In amending theact so that its benefits as to minimum wage and overtime would be extended to domestic servants, theCongress was mindful of the special problems of working fathers and mothers who need an occa-sional babysitter, or who need a person to care for an elderly invalid in their home. Thus, theyprovided an exception for such employment in section 13(a)(15). With regard to its legislativehistory, the Congress intended that domestic service be considered as relating to services of ahousehold nature performed by an employee in or about the private home of the person by whom heor she is employed. Services performed outside of a private home would not be within the term“domestic service.” Accordingly, the exemption would not apply to employees providing care toinstitutionalized persons, such as in your case, even though they are in a residential home setting.(emphasis supplied.)
In light of these rulings, DOL may have to further clarify its regulations and internal handbook to
account for services offered by state and local governments. As is evident from the foregoing discussion,
existing regulatory guidance may offer impediments to application of the domestic worker exemptions to
governmental employees. In fact, existing regulations specifically allow for revision of the domestic service
It should be noted that a mother caring for her own children and others in her residence is not considered to
be providing “babysitting services” according to the act (29 U.S.C. §213(a)(15)). The care must be provided in or
about the private home of the infant or child (29 C.F.R. §552.105(a) and (b)) to meet those criteria.
Where babysitters are paid by a county or state agency, the question of whether they are employees of
the governmental agency would depend on the facts of the situation. Where the parent is free to select and
make the necessary arrangements with the babysitter, an employer-employee relationship would not neces-
sarily exist between the governmental agency and the babysitter (Wage and Hour Opinion Letter dated
Nov. 11, 1974). In a Wage and Hour Opinion Letter dated Dec. 17, 1974, DOL noted as follows:
On the basis of the available information, it would be our position that if the enrollee in theProgram selects, and, in fact, is free to select and deal directly with the individual who will providethe child-care service, the prerequisite employer-employee relationship would not exist for purposesof the Act as between the State . . . and the individual providing the service. The fact that the fundsare provided by the State and paid (directly or through the enrollee) to the individual providing theservice would not alter this position.
But the monetary requirements of the act must be met for any full-time child care service performed in
or about the private household of the parent by whom the babysitter is employed, and the babysitter must be
paid at least the applicable minimum wage by the parent, even though other payments may be provided by
the governmental agency (Wage and Hour Opinion Letters dated Nov. 11, 1974; Nov. 13, 1974; and Dec. 17,
1974).
¶352 Companionship Service
Trained personnel, such as registered or practical nurses, are not exempt under section 13(a)(15) as
companions (FOH §25k01).
FLSA regulations state that, under 29 U.S.C. §213(a)(15), the term “companionship services” shall
mean those services that provide fellowship, care and protection for a person who, because of advanced age
or physical or mental infirmity, cannot care for his or her own needs (29 C.F.R. §552.6). Such services may
include household work related to the care of an aged or infirm person, such as meal preparation, bedmaking,
washing of clothes and other similar services. Thus, a blanket exemption from the FLSA exists for those who
give companionship and incidental housekeeping assistance to elderly, impaired individuals.
The FLSA regulations state that people who provide care and protection for babies and young children
who are not physically or mentally infirm are considered babysitters, not companions (29 C.F.R. §552.106).
The companionship services exemption applies only to those who must perform the service with respect to
aged or infirm persons and not generally for other people. The “casual basis” limitations of 29 C.F.R. §552.5,
requiring that the work be irregular or intermittent and not the employee’s vocation, do not apply to compan-
ion services. In addition, it should be noted that to be exempt, an employee must not spend more than 20
percent of his or her total working hours on nonexempt tasks, such as general household work (29 C.F.R.
§552.6). Work related to the care of the individual is not counted toward the 20 percent threshold.
commerce under 29 C.F.R. §782.2.” The court awarded Rhodes a reduced amount of overtime compensation
plus liquidated (double) damages after finding the state had not properly supervised Rhodes’ use of overtime
and compensatory time.
¶362 Local Delivery Drivers Exemption
The FLSA exempts local delivery drivers from the overtime pay requirement of the act (29 U.S.C.
§213(b)(11)). It exempts:
employment on the basis of trip rates, or other delivery payment plan, if the Secretary shallfind that such plan has the general purpose and effect of reducing hours worked by such employeesto, or below, the maximum workweek applicable to them under Section 207(a).
The requirements and procedures for submission of petitions to the Wage and Hour Administrator for
approval of plans to operate under the §213(b)(11) exemption are explained in the regulations (29 C.F.R. Part
551). Each petition must contain, in part, a complete description of the wage payment and full information con-
cerning its application, as well as a statement of facts and reasons which support a finding that the plan has the
general purpose and effect of reducing the hours worked (29 C.F.R. §551.5). In addition, the regulations
impose a recordkeeping requirement on employers operating under an approved plan (29 C.F.R. §516.15). An
example of a delivery payment plan can be found in Wage and Hour Opinion Letter dated May 18, 1973.
In a May 30, 1995, Wage and Hour Opinion Letter from the deputy assistant administrator, DOL exam-
ined a trip payment plan for a wholesale beer distributor. The drivers were paid $114.50 for delivering up to
310 cases of beer per day. For the next 190 cases, the drivers were paid an additional 30 cents per case. The
plan provided an incentive to the drivers to complete their deliveries quickly and efficiently. DOL thus
surmised that it had the effect of reducing hours worked to an average workweek of 38.37 hours. DOL
concluded that the plan met the requirements of §213(b)(11) of the FLSA.
DOL has set up a regulatory scheme for approving such plans (see 29 C.F.R. Part 551). An employer
desiring to use such a plan must petition the administrator of the Wage and Hour Division (see 29 C.F.R.
§551.3). Employers are required to explain the plan’s method of compensation, the employees’ duties and
other relevant information, such as the average hours worked. The administrator then makes a formal “find-
ing,” either granting or denying approval of the plan. These trip rates or other similar plans thus provide a
possible exemption option for local drivers.
¶363 Rail Carriers and Air Carriers
Rail Carriers
The overtime provisions of the FLSA also are inapplicable to any employee of an employer engaged in
the operation of a common carrier by rail and subject to the provisions of Part I of the Interstate Commerce
The provisions of Part I of the Interstate Commerce Act apply only to common carriers engaged in
interstate commerce in the transportation of passengers or property wholly by railroad, or partly by railroad
and partly by water, when both are under the common control, management or arrangement for a continuous
carriage or shipment. Employers in this category include railroad carriers, express companies, sleeping car
companies and refrigerator car companies (FOH §24i01). Employees must perform duties that subject their
employer to Part I of the Interstate Commerce Act to qualify for exemption (FOH §24i03). DOL will con-
sider the exemption to apply to employees who spend no more than 20 percent of their time performing
nonexempt work (FOH §24i03).
It should be noted that employees of rail carriers are covered generally by other specialized wage and
hour laws and collective bargaining rules.
Air Carriers
The overtime provisions of the FLSA do not apply to any employee of a carrier by air who is subject to
the provisions of Title II of the Railway Labor Act (29 U.S.C. §213(b)(3); 29 C.F.R. §786.1). According to
DOL, this exemption is not an industry or establishment exemption (FOH §24j01); it applies only to indi-
vidual employees of an air carrier when their activities bear a reasonably close relationship to the exempt
type of transportation activities that bring their employer’s operation under Title II of the Railway Labor Act.
Title II applies to every common carrier by air that is engaged in interstate or foreign commerce, to
every carrier by air transporting mail for or under contract with the U.S. government, and to every air pilot or
other person who performs work as an employee or subordinate official of such carrier(s). Employees may
perform nonexempt work and still qualify for the exemption if the nonexempt work does not exceed 20
percent of their time.
¶364 Charter Activities Exemption
An exemption exists to the overtime provisions of the FLSA for employees who engage in both passen-
ger transit and charter activities on buses, trolleys or electric railways. Specifically, 29 U.S.C. §207(n)
provides as follows:
(n) Employment by street, suburban, or interurban electric railway, or local trolley or motorbuscarrier. In the case of an employee engaged in the business of operating a street, suburban orinterurban electric railway, or local trolley or motorbus carrier (regardless of whether or not suchrailway or carrier is public or private or operated for profit or not for profit), in determining thehours of employment of such an employee to which the rate prescribed by subsection (a) of thissection applies there shall be excluded the hours such employee was employed in charter activities bysuch employer if (1) the employee’s employment in such activities was pursuant to an agreement orunderstanding with his employer arrived at before engaging in such employment, and (2) if employ-ment in such activities is not part of such employee’s regular employment.
DOL has ruled that it was the intent of Congress, however, to count charter hours as worked when
calculating the regular rate of pay under the act. (See Wage and Hour Opinion Letter dated July 9, 1976.)
and has a 12-minute overtime work interval. While the case law may make that 12-minute period de minimis,
DOL’s regulations would not.
At least one court has suggested that the amount of time considered de minimis is partially a function of
the sophistication of the employer’s timekeeping system (Saunders v. John Morrell & Co., 1 Wage & Hour
Cas. 2d (BNA) 879 (D. Iowa 1991)). Moreover, in Saunders, the district court subsequently ruled that a
three-minute period spent cleaning safety equipment at the end of the shift was not de minimis because
the employer required the work and had the technology to keep track of the time (1 W.H. Cas. (BNA),
885 (D. Iowa 1992)).
¶403 Formula Time
The employer typically is faced with a problem in determining how long it takes employees to do certain
tasks that may constitute working time. DOL’s Field Operations Handbook (FOH §31b01a) provides that the
employer can set up a formula that sets a reasonable time for employees to do certain preliminary and
postliminary tasks that may, under the circumstances, be compensable working time. The Handbook (FOH
§31b01a) states:
31b01a Clothes changing and wash up time on a formula basis. An employer may set up aformula by which employees are allowed given amounts of time to perform clothes changing and washup activities provided the time set is reasonable in relation to the actual time required to perform suchactivities. The time allowed will be considered reasonable if a majority of the employees usuallyperform the activities within the given time.
However, bear in mind that clothes-changing time is not always compensable (see ¶404).
¶404 Preliminary and Postliminary Activities
The Portal-to-Portal Act eliminated from working time certain travel and walking time and other “pre-
liminary” and “postliminary” activities — those performed prior or subsequent to the workday. Pre- or
postliminary activities compensable by contract, custom or practice are considered working time under the
FLSA (29 C.F.R. §785.9(a)). Similarly, job-related activities that are required as a part of an employee’s work
are covered, even if they are performed before or after the employee’s specified work schedule. For example,
preliminary activities such as filling out time, material or requisition sheets, checking job locations, removing
trash, fueling cars and picking up plans are compensable work if done at the employer’s behest and for the
employer’s benefit (Dunlop v. City Elec. Inc., 527 F.2d 394 (5th Cir. 1976); Beovich v. C.G. Gredvig Inc., 2
Wage & Hour Cas. 2d (BNA) 539 (D. Oregon 1994)). In general, all hours worked within the employee’s
regular working hours are compensable if they are performed for the employer’s benefit.
Whether pre- and postliminary activities, such as clothes changing, are compensable is determined by
the facts. For example, uniform changing by a police officer is not considered working time unless it has
been made compensable by collective bargaining or by custom and practice (Wage and Hour Opinion Letter,
Dec. 30, 1985). In Reich v. IBP Inc., 38 F.3d 1123 (10th Cir. 1994), however, the court said that the donning,
(35 hours + 5 hours for lunch = 40 hours). On the other hand, if the parties have agreed that meal times will
be paid for but not counted as working time, the agreement will be respected by DOL (29 C.F.R.
§778.320; see also 46 Fed. Reg. 7308 (Jan. 23, 1981); Reich v. Lucas Enterprises Inc., 2 F.3d 1151 (6th Cir.
1993) (unpublished opinion)). It must be emphasized, however, that payments made for time not worked
cannot be credited toward overtime compensation owed (Lucas Enterprises).
The Fair Labor Standards Act also allows an employer and its employees to agree on the compensability
of time worked at home for extended periods of time. Although 29 C.F.R. §785.23 is entitled “Employees
residing on employer’s premises or working at home,” it contains the following language that courts have
used to interpret situations in which work is performed by an employee at home:
An employee who resides on his employer’s premises on a permanent basis or for extendedperiods of time is not considered as working all the time he is on the premises. Ordinarily, he mayengage in normal private pursuits and thus have enough time for eating, sleeping, entertaining, andother periods of complete freedom from all duties when he may leave the premises for purposes of hisown. It is, of course, difficult to determine the exact hours worked under these circumstances and anyreasonable agreement of the parties which takes into consideration all of the pertinent facts will beaccepted. This rule would apply, for example, to the pumper of a stripper well who resides on thepremises of his employer and also to a telephone operator who has the switchboard in her own home(emphasis added).
At least one court looking at the applicability of 29 C.F.R. §785.23 to at-home work has emphasized that
it is the ‘reasonableness’ of the agreement between the employer and the employee that governs the legiti-
macy of the compensation plan. In Leever v. City of Carson, the 9th U.S. Circuit Court of Appeals ruled that a
city’s failure to take into account the actual number of hours that a K-9 police officer spent caring for her dog
at home rendered her pay agreement for the off-duty time “unreasonable” (Leever v. City of Carson, No. 02-
16525, 9th Cir., Mar. 4, 2004) “[The city’s] obligation was to make an investigation as to the number of off-
duty hours K-9 officers were reasonably required to work per pay period and to take a reasonable estimate of
such hours into account in its [collective bargaining agreement] negotiations,” the Leever court held, rejecting
the city’s position that it could not have known precisely how many hours the officer worked at home with
her police dog and that the extra $60 it paid her every two weeks for the at-home work was reasonable be-
cause the amount was negotiated with the officer’s union. The court noted that 29 C.F.R. §785.23 requires an
agreement to be “reasonable” and to take into account “all of the pertinent facts.” Although it acknowledged
that the regulation does not specify what “pertinent facts” should be considered, the 9th Circuit said that “at a
minimum, an agreement must take into account some approximation of the number of hours actually worked
by the employee or that the employee could reasonably be required to work.”
In Leever, not only did the city fail to ask the plaintiff-officer or its other K-9 officers how long they
spent working with their dogs during off-duty hours, its efforts to approximate the number of hours through
other means were insufficient, the court held, overturning the lower court’s decision and sending the case
back for trial. “Although the city was not required to account for the exact number of hours worked by its K-9
officers each day,” the Leever court said, “it was required, at a minimum, to make a reasonable investigation
Generally, the time periods during which this waiting occurs are short, but even when they are not, they
are unpredictable so that the employee cannot use the time for his own benefit. In such cases, waiting is an
integral part of the job (Brock v. DeWitt, 633 F. Supp. 892 (W.D. Mo. 1986) (restaurant employees required to
report to work at a certain time but not punch in until evening rush must be compensated for waiting time);
Wright v. Carrigg, 275 F.2d 448 (4th Cir. 1960) (employees who transported mail must be compensated for
time spent at railroad station waiting for mail to arrive, even though employees often slept while waiting)).
Off duty
Employees who wait before starting their duties because they arrived at the place of employment earlier
than the required time are not entitled to be paid for the waiting time. However, if an employee reports at the
required time and then waits because there is no work to start on, the waiting time is compensable work time
(Irwin v. Clark, 400 F.2d 882 (9th Cir. 1968)).
DOL has defined “off duty” as a:
period during which an employee is completely relieved from duty and which are long enough toenable the employee to use the time effectively for his or her own purposes are not hours worked. Theemployee is not completely relieved from duty and cannot use the time effectively for his or her ownpurposes unless the employee is definitely told in advance that he or she may leave the job and that theemployee will not have to commence work until a specified hour has arrived. Whether the time is longenough to enable the employee to use the time effectively for his or her own purposes depends upon allof the facts and circumstances of the case.
(DOL W.H. Publication 1459 (May 1985); see also Bicanic v. J.C. Campbell Co., 20 N.W.2d 885 (Minn.
1945) (lumber camp cook was not working when he was not on duty or subject to call); Boll v. Federal Reserve
Bank, 365 F. Supp. 637 (E.D. Mo. 1973) (bank examiner need not be paid for the time between when he arrived in
a city and before he could report to the bank, since such time could be used for his own purposes)).
¶422 Split Shifts/Layover Time
According to DOL, if an employee has time off in the middle of a workday which is long enough to
effectively use as he or she wishes, and the employee understands that he or she does not have to return to
work until a definite specified time, the employee would not be considered to be working during the time-off
period (DOL W.H. Publication 1459 (May 1985)).
In a Service Contract Act case, which defines working time under FLSA standards, the principal issue was
whether the employer had to pay for “layover time” for drivers on a mail delivery contract. The drivers had to wait
two to four hours between deliveries in small, rural towns with very few amenities. The Deputy Secretary of DOL
found that the contractor must compensate the employees for the layover time since the employees did not have “a
reasonable opportunity to use the time effectively for [their] own purposes,” because the small towns did not
afford them such opportunities (Sidney W. Johnson, 81-SCA 1390-SCA-136, 9/28/90; see also Joy R. Manning,
82-SCA 136, 9/28/90 (layover time of nine hours compensable in small rural town that lacked amenities)).
On-call time is time spent by employees, usually off the working premises, in their own pursuits where
the employee must remain available to be called back to work on short notice if the need arises. The Fair
Labor Standards Act (FLSA) (29 U.S.C. §201) requires employers to compensate workers for on-call time
when such time is spent “predominantly for the employer’s benefit.” This test was first used by the U.S.
Supreme Court in Armour & Co. v. Wantock, 323 U.S. 126 (1944).
U.S. Department of Labor (DOL) regulations (29 C.F.R. §785.17) state the rule as follows:
An employee who is required to remain on call on the employer’s premises or so close theretothat he cannot use the time effectively for his own purposes is working while ‘on call.’ An employeewho is not required to remain on the employer’s premises but is merely required to leave word at hishome or with company officials where he may be reached is not working while on call (Armour & Co.v. Wantock, 323 U.S. 126 (1944); Handler v. Thrasher, 191 F.2d 120 (C.A. 10 1951); Walling v. Bankof Waynesboro, Georgia, 61 F. Supp. 384 (S.D. Ga. 1945)).
In a companion case to Armour, the High Court stated that determining the compensability of on-call
time involves a fact-specific, case-by-case analysis (see Skidmore v. Swift & Co., 323 U.S. 134 (1944)). While
no single factor determines the outcome of such an analysis, certain facts traditionally have influenced the
courts in their review of employers’ on-call policies. Among them are:
• the terms of the employment agreement, if any;
• physical restrictions placed on an employee while on call;
• the maximum period of time allowed by the employer between the time the employee was called and
the time he or she reports back to work (referred to as “response time”);
• the percentage of calls expected to be returned by the on-call employee;
• the frequency of calls during on-call periods;
• the uses of the on-call time by the employee; and
• the disciplinary action, if any, taken by the employer against employees who fail to answer calls.
More recently, a federal trial court in Arizona held in Kartchner v. Town of Kearny (D. Ariz., No. CIV
95-0317 PHX RCB, Dec. 23, 1996), that two employees — a paramedic and an emergency medical technician
— were not entitled to overtime pay based on time spent on call. The two employees worked 24 hours a day,
five days a week on an on-call basis and received an average of 0.6 calls per day. The workers were required
to respond to all calls within 10 minutes, wear a beeper that operated only within a 10-mile radius, keep the
dispatcher informed of their location at all times, wear a uniform and drive the ambulance at all times.
Ruling against the workers, the Kartchner court based its decision on the fact that the workers did
not have an employment agreement that called for compensation of on-call hours and on the Armour
Note that there are special rules for police officers and firefighters who are compensated under §207(k)
of the act. For sleep time to be excluded for such employees, they must work a shift of more than 24 hours (29
C.F.R. §553.201). A tour of duty of 24 hours and 10 minutes is sufficient to constitute “more than 24 hours on
duty” (Wage and Hour Opinion Letter, June 25, 1990; see also Wage and Hour Opinion Letter, Sept. 11,
1987 (24-1/4 hours sufficient)).
¶453 Sleeping Time for Employees Residing on Employer’s Premises
Some employees reside at the premises at which they work. For example, an employee may both work
and reside in a group home for foster children, handicapped individuals, drug abusers, criminals on probation
or problem youth. A park and recreation employee may live at the park or a housekeeper may live with their
employer. Such employees are on duty 24 hours a day to handle an emergency. The regulations specifically
provide that not all the time the employee is on the employer’s premises is working time (29 C.F.R. §785.23).
The regulations state that:
An employee who resides on his employer’s premises on a permanent basis or for extendedperiods of time is not considered as working all the time he is on the premises. Ordinarily, he mayengage in normal private pursuits and thus have enough time for eating, sleeping, entertaining, andother periods of complete freedom from all duties when he may leave the premises for purposes of hisown. It is, of course, difficult to determine the exact hours worked under these circumstances and anyreasonable agreement of the parties which takes into consideration all of the pertinent facts will beaccepted. This rule would apply, for example, to the pumper of a stripper well who resides on thepremises of his employer and also to a telephone operator who has the switchboard in her own home.
DOL’s Field Operations Handbook (FOH §31b18) notes that “precise recordkeeping regarding hours
worked is not required” in this situation. The employer can keep time records showing the schedule adopted
and can simply indicate that the employee’s work time generally coincided with the schedule.
In a Wage and Hour Opinion Letter dated Feb. 3, 1981, DOL offered some guidance to the employer of a
house-parent at a privately operated home for the mentally retarded. The regulations state that “employees
who reside at their employer’s premises five days a week are considered to reside there ‘for extended periods
of time’” (29 C.F.R. §785.23). Five consecutive days could be Monday through Friday even if the employees
sleep over only four nights. Moreover, even employees who do not reside at the community residence but
remain on duty at least 24 hours and up to two or three days may have sleep time deducted. DOL reasoned as
follows:
Under the particular circumstances you have described, we believe that such sleep time can bededucted from hours worked, provided that the employer and employees agree in advance to do so, andthat no more than 8 hours per night (or actual, uninterrupted sleeptime, if that is less than 8 hours), isdeducted. We have reached this conclusion, which represents a departure from the general rule under29 C.F.R. 785.21, because of the home-like environment afforded to these employees in communityresidences, with private quarters and other amenities. Even where employees sleep over for only one ortwo nights, there are ample facilities to enable them to get a full night’s sleep.
When the demands of the job have seriously interfered with the employee’s ability to sleep, or the
sleeping facilities have been minimal, sleep time is usually compensable. Here, however, because of the
for example, continuing certification for nurses or paramedics — and the training is not tailored to meet
the particular needs of the employer, such training would not be considered compensable working time.
In another administrative ruling, however, DOL did find that health clerks employed by a school
district were entitled to compensation for time spent in a Red Cross recertification training class that was
held outside their normal working hours (Wage and Hour Opinion Letter dated April 21, 1986). In that
situation, the school district required its health clerks to renew their first aid certificates every three
years, and DOL found that the recertification was directly related to the workers’ job. Thus, the fourth
criterion (see above) was not met, and the time spent in Red Cross recertification training was considered
compensable.
Another situation arises when an employer makes training a precondition of employment. In Chao v.
Tradesmen (310 F.3d 904 (2002)), for example, an employer made the completion of an OSHA work-
safety course a condition of employment for new hires. However, the employer made an exception to this
precondition, allowing a new employee to register for the course within 60 days of beginning work and to
complete it with a reasonable period of time.
Ruling that the employer was not required to pay the workers for the OSHA training time, the 6th
U.S. Circuit Court of Appeals said that “the plaintiffs here are performing no work [for the employer]
while attending the OSHA classes and the subject matter is not directly related to their job skills.”
The court added:
We do not see why the employer should be penalized for allowing a potential employeeto begin earning income while striving to meet certain prerequisites for the job when theemployer could just as easily withhold employment until successful completion of all the jobrequirements.
FLSA regulations state that attending an independent trade school or pursuing a correspondence
course on a worker’s own initiative outside regular working hours is not compensable work, even if it is
job-related (29 C.F.R. §785.30). Taking pubic-school courses or courses in a government-sponsored on-
the-job training program also is considered noncompensable time.
Time spent in labor management conferences related solely to internal union affairs is not compens-
able. On the other hand, if the purpose of the meeting is to handle problems affecting day-to-day business
operations — including the settlement of grievances or disputes over an existing union contract — an
employee must be paid for time spent during regular working hours or for time when the worker is re-
quired to be on the employer’s premises. As a matter of enforcement policy, however, time spent in
adjusting union grievances will not be counted as working time if this is spelled out in a collective bar-
gaining agreement or exists through custom and practice (29 C.F.R. §785.42). The compensability of time
spent during regular working hours in negotiating a new union contract is determined on a case-by-case
If the travel time, before or after the work day, is not for the benefit of the employer or part of the employer’s
principal activity, the travel time in noncompensable. In Tanaka v. Richard K.W. Tom, Inc. (299 F. Supp. 732 (D.
Hawaii 1969)), the court found that because the employer furnished a pick-up truck for the employees’ conve-
nience in traveling to and from the job site, the employees were not entitled to compensation for the time spent
traveling (see also D.A.& S. Oil Well Servicing, Inc. v. Mitchell, 262 F.2d 552 (10th Cir. 1958)).
Moreover, even if employees must use the employer’s transportation to obtain access to the job site, such
travel time is noncompensable, ruled a district court in Dolan v. Project Const. Corp. (558 F. Supp. 1308 (D.
Colo. 1983)). In Dolan, employees were required to meet at a main camp to pick up identification tags and,
for security reasons, had to board the employer’s bus to the job site. The court held that the 30-minute bus
ride was not compensable. This was the case despite the fact that the employees received their paychecks on
the bus and occasionally were given informational mimeographs on job progress and company policy. The
court found that such activity was not part of the employer’s “principal activity,” noting that the employees
were free to disregard the mimeographs and that no work instructions were disseminated on the bus.
¶473 Call Back or Emergency Calls
In certain rare emergency situations, the regulations provide that an employee must be compensated for
home-to-work travel time. For example, if an employee, after completing a day’s work, is called at home and
must travel a “substantial distance” to perform the emergency job, the travel time is compensable (29 C.F.R.
§785.36). Otherwise, DOL takes no position on the compensability of home-to-work travel for emergency
calls. This effectively leaves the matter for the parties to negotiate or a court to resolve.
¶474 Out-of-Town Travel
The rules on compensable travel time are more complicated when the employee is traveling out of town.
The first issue addressed in the regulations is the treatment of those who are assigned to work in another city
for a day. DOL gives the following illustration of the one-day travel assignment problem (29 C.F.R. §785.37):
For example, an employee who works in Washington, D.C. with regular working hours from 9a.m. to 5 p.m. may be given a special assignment in New York City, with instructions to leave Wash-ington at 8 a.m. He arrives in New York at 12 noon, ready for work. The special assignment iscompleted at 3 p.m., and the employee arrives back in Washington at 7 p.m.
That all travel occurred on the same day does not mean that the employee does not need to be compen-
sated for the travel time. DOL takes the position that such travel is not ordinary home-to-work travel. Instead,
the travel was performed for the employer’s benefit and at its request. It is part of the “principal activity” of
the employer, therefore, the employee must be compensated. Note, however, that not all of the travel time
needs to be counted as hours worked. DOL specifically permits the employer to exclude the travel time
between the employee’s home and the airport or railroad station as “home-to-work” travel time.
¶480 Time Spent in Court or Other Legal Proceedings
Employees may have occasion to miss work to appear in court or at some other legal proceeding. This
could involve an employee who is subpoenaed to serve on jury duty, or a worker who is subpoenaed to testify
(or voluntarily testifies) in a non-work-related case — for example, as a witness to a car accident. A worker
also might miss work to testify in a work-related case — for example, as a witness in a worker’s compensa-
tion or sexual discrimination lawsuit. And, finally, an employee might miss work to prosecute his own work-
related or non-work-related case.
Exempt employees
With respect to exempt white-collar employees paid on a salary basis, Fair Labor Standards Act (FLSA)
regulations (29 C.F.R. §541.602(b)(3)) state:
While an employer cannot make deductions from pay for absences of an exempt employeeoccasioned by jury duty, attendance as a witness or temporary military leave, the employer can offsetany amounts received by an employee as jury fees, witness fees or military pay for a particular weekagainst the salary due for that particular week without loss of the exemption.
This provision covers employees who are subpoenaed to jury duty or to testify in court. Time that an
employee spends in court as a party in his or her own case would not be covered by 29 C.F.R. §541.602(b)(3)
and would be treated like personal leave (see, for example, Shockley v. City of Newport News, 997 F.2d 18
(4th Cir. 1993), in which the court said that this salary test provision covers absences that involve perfor-
mance of a “civic duty”).
Neither the courts nor the U.S. Department of Labor (DOL) appears to have addressed the situation of
an employee who, for example, voluntarily appears as a witness in a friend’s court case. However, it can be
debated whether such an appearance involves performance of a “civic duty” or whether it would be consid-
ered personal leave.
In a Wage and Hour Opinion Letter dated June 5, 1998, DOL addressed the question of whether an
employer could require a salaried, exempt white-collar employee to use accrued vacation time for an absence
due to jury duty or attendance in court as a witness. In that administrative ruling, DOL stated that:
When an employer has a bona fide benefit plan whereby personal leave is accrued and is usedfor vacation, holiday, illness or injury, etc., it is permissible to substitute or reduce the accrued leavein the plan for the time an employee is absent from work even if it is less than a full day withoutaffecting the salary basis of payment, if by substituting or reducing such leave the employee receivesin payment an amount equal to his or her guaranteed salary. Payment of an amount equal to theemployee’s guaranteed salary must be made even if an employee has no accrued benefits in the leavebank account, and the account has a negative balance, even where the employee’s absence is for lessthan a full day.
“Thus,” DOL concluded in the opinion letter, “it is our opinion that an employer can require an em-
ployee to use accrued vacation time for jury duty [and] witness attendance.”
In another opinion letter, DOL reiterated that “[e]mployers are expressly prohibited from making
deductions from the salary of an otherwise exempt employee for certain types of civic duties,” including jury
duty and attendance as a witness. (Wage and Hour Opinion Letter dated March 30, 1994.) However, an
employer would not have to compensate an exempt worker for the full weeks that he or she performed no
work for the employer due to jury duty or serving as a witness (Wage and Hour Opinion Letter dated July 11,
1995). For example, a salaried exempt worker who serves for 2-1/2 weeks on a grand jury would not have to
be paid for the two full weeks of missed work, but would have to be paid for the week in which he or she
worked a half-week. In such a situation, it would be advisable for an employer to ensure that the employee
does not work at home in the evenings or during a lunch break at court, for example, as that would require
the employer to pay wages for the full week.
The March 30, 1994, opinion letter goes on to say that:
Deductions may be made, however, when the employee is absent from work for a day or moredays for personal reasons, other than sickness or accident. Thus, if an employee is absent for one ormore full days to handle personal affairs, his or her salaried status will not be affected if deductions aremade from his or her salary for such absences.
As noted above, although 29 C.F.R. §541.602(b)(3) covers the situation in which an exempt worker is
called to jury duty or to testify as a witness, it does not necessarily speak to a situation in which an exempt
employee misses work to testify in a non-work-related case, for example. An argument could be made that
such an absence could be treated as personal leave.
As a general principle, deductions for absences of less than one day are not permitted for exempt em-
ployees (see ¶220 for a detailed discussion of the salary basis test for exempt workers). There is, however, an
exception for public employers. Commonly referred to as the “public accountability rule,” this regulation
allows public employers to use a pay system in which deductions for absences of less than a day can be made
from the salary of exempt employees, as long as the pay system is established by statute, ordinance, regula-
tion, policy or practice. (See ¶222 for a detailed discussion of the public accountability rule.)
Nonexempt employees
FLSA rules regarding compensability of time that a nonexempt worker spends serving on a jury or
testifying in court vary depending on whether the court time is related to the principal duties of the worker’s
job. By appearing in court or another judicial proceeding, is the worker being ‘suffered or permitted to
work’? Is the time in court spent for the benefit of the employer? Basically, if the answer to these questions
is yes, the time is compensable. If the answer is no, the time generally is not compensable.
Therefore, applying these general “working time” criteria, a nonexempt worker who is called to jury
duty would not have to be paid for this time under the FLSA. As discussed below, however, some state laws
require that jurors be paid their full wages during jury duty. The time spent testifying by a nonexempt worker
†¶499 Commonly Asked Questions About Hours Worked and Compensation
1. Are employees entitled to be paid for lunch time if they eat at their desks?If an employee chooses to eat at his or her desk and is completely relieved from duty, that time
would not be considered working time so long as no work is performed. However, if an employee isrequired to eat at his or her desk, the time would be considered working time (29 C.F.R. §785.19). Becareful of employees who voluntarily eat at their desks, but answer phones or perform other work. Theyare “working,” even though it is voluntary on their part.
2. Must employees who come in early to work be paid for that time?The conditions under which the employee comes into work early would determine whether that time
would be considered working time. If an employee comes in early and reads a book until the time theworkday begins, this time would not be considered working time. However, if the employee comes inearly and begins working or performing preliminary tasks necessary to the job, and the employers knowthat the employee is working, the time would be considered working time (29 C.F.R. §785.11).
3. Is on-call time considered working time?The issue of pay for on-call time depends largely upon the employee’s freedom while on call,
including how quickly he or she is required to respond to the call. If the employee can come and gofreely while on call, that time is not compensable (29 C.F.R. §785.17). If the employee, however, mustremain on or close to the employer’s premises and cannot use the time freely, the time may be consid-ered working time and could be compensable (29 C.F.R. §785.17). An employee who is required to leavea telephone number where he or she may be reached would not normally be compensated for that on-calltime, unless a very short response time, e.g., within a few minutes, is required and such a responseperiod is unreasonable. Providing “beepers” to employees can alleviate many on-call time problems.
4. If a secretary joined a secretaries club and the jurisdiction paid the dues, would the time spentattending the club meetings be considered working time?
Attendance at such meetings would not be considered working time if the following criteria are met(29 C.F.R. §785.27):
• attendance is outside of the employee’s regular working hours;• attendance is voluntary;• the meeting is not directly related to the employee’s job; and• the employee does not perform any productive work during such attendance.
5. Would attendance at meetings held after working hours to settle grievances be considered com-pensable time?
Normally, employees are entitled to compensation only for grievance assistance activities during thetime they are required to be on an employer’s premises (29 C.F.R. §785.42). However, such time may beconsidered working time if specified in a contract or union agreement.
6. During times when a city council meeting is being held after hours and a secretary is required tobe present, would this be considered working time for the secretary?
If attendance is required by the employer, the time attending the council meeting would be consid-ered working time if the employee is covered by the FLSA (29 C.F.R. §785.29). Legislative employees,however, if not part of the Civil Service, are excluded from the act’s coverage, so long as they are notemployed in a legislative library.
7. Do hours spent being treated (at the suggestion of the employer) for an on-the-job injury countas working time?
Time spent by an employee waiting for and receiving medical attention at the direction of theemployer during the employee’s normal working hours on days when the employee is working would beconsidered working time (29 C.F.R. §785.43).
8. Must employees be paid for the time they spend waiting to punch in on the time clock?Most “preliminary and postliminary” activities outside an employee’s principal activities are not
considered compensable. They are only compensable if there is a contract, custom or practice to pay forsuch time. Such activities would include checking in or out or waiting in line to do so, changing clothes,washing up or showering, and waiting in line to receive pay checks, unless required by the nature of thejob (29 C.F.R. §790.7(g)). To the extent that such waiting time is “de minimis” (i.e., very minor, such asone or two minutes), it would not normally have to be compensated, in any case.
9. Are coffee breaks considered working time?Coffee breaks and snack breaks are compensable rest periods and cannot be excluded from hours
worked as bona fide meal periods. These rest periods must be counted as hours worked if they last 20minutes or less (29 C.F.R. §785.18).
10. Are sleeping periods considered working time?The FLSA regulations (29 C.F.R. §785.20) establish three general policies regarding sleeping time.
For employees on tours of duty of less than 24 hours, sleeping time is compensable as long as the em-ployee is on duty during that period and must work when required. For employees who work 24 hours ormore, up to eight hours of sleeping time can be excluded from compensable working time if:
• an expressed or implied agreement excluding sleeping time exists (this means simply informing theemployee of your practice to exclude such time);
• adequate sleeping facilities for an uninterrupted night’s sleep are provided;• at least five hours of sleep is possible during the scheduled sleeping period (though the five hours
need not be consecutive hours); and• any interruption to that period will be considered working time.
Firefighters, police officers and other public safety personnel who are on duty exactly 24 hourscannot have their sleeping time excluded (29 C.F.R. §553.15). They must work duty shifts in excess of24 hours before sleeping time can be excluded.
11. Are paid sick days, vacation days, holidays, etc., considered compensable working time?The FLSA does not require payment for nonworking time, such as holidays, sick leave, vacations or
jury duty for nonexempt employees.
12. Does an employer have to pay overtime to an employee who took eight hours sick leave onMonday but was then required to work eight hours on Saturday? The employee’s total work timefor the week was 40 hours plus eight hours sick leave.
No. The FLSA requirement to pay premium rates for hours worked over 40 in a week applies onlyto time the employee actually spends working. Sick leave time, even if the employer pays the employeefor the hours, is not considered hours worked. Other types of noncompensable time, such as holidays,annual leave, weather-related absences and jury duty, are treated the same way as sick leave. Provided,however, the employer may agree to pay overtime based on hours paid, or otherwise provide so by policyor practice.
The FLSA also provides that the regular rate does not include payments in the nature of gifts made at
Christmas time or on other special occasions, as long as the amount of the bonus is not measured by or dependent
on hours worked, production, or the employee’s efficiency (29 U.S.C. §207(e)(1); 29 C.F.R. §778.212). These
special bonuses may be excluded from the regular rate even if the bonus (for example, a Christmas bonus) is paid
so regularly that the employee is led to expect it. Such bonuses may be excluded even if the amount paid to
different employees or groups of employees varies.
Nondiscretionary bonuses, on the other hand, must be included along with other earnings to determine an
employee’s regular rate on which overtime pay must be computed. A bonus is regarded as nondiscretionary if the
employer contracts, agrees or makes a promise to pay it. Examples found in the regulations (29 C.F.R.
§778.211(c)) include bonuses that are announced to employees to induce them to work more steadily, more
rapidly or more efficiently; bonuses to remain with the employer; attendance bonuses; individual or group
production bonuses; and bonuses for quality and accuracy of work.
In a 2004 ruling, a federal district court in Missouri ruled that a city’s policy of “buying back” unused
accrued sick leave from its firefighters amounted to a nondiscretionary attendance bonus (Acton v. City of Columbia,
W.D. Mo., No. 03-4159-CV-NKL, Sept. 10, 2004), and therefore the buy-back amounts should have been
included in the worker’s regular rate of pay for purposes of calculating overtime wages. In that case, the
firefighters earned 10 days of sick leave per year. If a firefighter accumulated at least five days of sick time, he or
she could “sell” the time back to the city at a 75 percent rate (that is, the firefighter would receive a lump sum
representing 75 percent of his or her regular hourly rate for unused sick time sold back to the city).
The Acton firefighters maintained that this buy-back program amounted to a nondiscretionary attendance
bonus. Agreeing with the workers’ position, the court rejected the rationale used by the 6th U.S Circuit Court of
Appeals’ decision in Featsent v. City of Youngstown, 70 F.3d 900 (6th Cir. 1995)), in which that court said that
payments for nonuse of sick leave should not be included in a worker’s regular rate of pay.
The Acton court found that Columbia’s buy-back sick-leave payments constituted remuneration, because the
payments were directly related to services rendered. The court said that:
[o]ne clear purpose of the Columbia sick-leave buy-back plan is to encourage regular attendance,and an employee who attends regularly is more valuable than an employee who takes all the sick time towhich he or she is entitled to. Effectively, the buy-back program permits the city to retroactively givemore money to those employees who have worked steadily because their services were more valuable thanthe services of an employee who regularly uses his sick leave time. In essence, the payments are for workalready done and, therefore, qualify as remuneration.
Ruling that the city’s buy-back program amounted to a nondiscretionary bonus and therefore should have
been included in the workers’ regular hourly rate of pay, the Acton court noted that the program was administered
pursuant to a city ordinance that stated that the city “shall” buy back the firefighters’ unused sick leave. The
court found that the word “shall” clearly indicated that the pay was not discretionary.
The Acton court also relied on a U.S. Department of Labor (DOL) Opinion Letter, dated Feb. 24, 1986, in
which DOL said that if an employee opts for payment in exchange for sick leave, the payment amounts to a
nondiscretionary attendance bonus and therefore must be included in the regular wage rate for the purpose of
calculating overtime pay under the FLSA.
Finally, the Acton court referred to a FLSA regulation, 29 C.F.R. §778.211(c), in support of its decision that
the Columbia sick-leave buy-back plan was similar to an attendance bonus, noting that:
bonuses, which are announced to employees to induce them to work steadily or more rapidly ormore efficiently, or to remain with the firm are regarded as part of the regular rate of pay. Attendancebonuses, individual or group production bonuses, or bonuses contingent upon the employee’s continuingin employment until the time the payment is to be made are in this category.
Bonuses in regular rate calculations
Where a bonus is paid for a weekly pay period, it is added to the employee’s other earnings and divided by
the employee’s hours of work for that week. According to DOL, where a bonus is paid for a longer period of
time, the employer may disregard, temporarily, the bonus and pay overtime pay at time and one-half the regular
rate, exclusive of the bonus. When the amount of the bonus can be ascertained, however, it must be apportioned
back over the workweeks of the period during which the bonus was earned by the employee. The employer must
then examine every workweek in that period and calculate the additional overtime pay owed the employee. This
is determined by dividing the bonus amount by the employee’s hours of work during the particular time period
and multiplying the average hourly bonus amount by one-half times the employee’s overtime hours of work
during the time period.
When considering whether or not to offer nondiscretionary bonuses, the employer should take into account
the possibility of increased overtime costs. While productivity bonuses can be an effective management tool, they
may be more costly than originally anticipated.
¶516 On-Call Pay and Other Pay for Nonworking Time
As a general rule, if an employee is free to use the time as he or she pleases (that is, is not required to
remain on company premises and merely is required to leave word where he or she can be reached), time spent
waiting while on-call is not considered working time (29 C.F.R. §785.17). Accordingly, there is no legal com-
punction to pay employees additional wages or an overtime premium by virtue of their being on-call, or waiting
to be “beeped” or “called” to come into work. In fact, an employer is not even required under the FLSA to give
its employees any compensation for the burden of carrying a beeper or being on-call. Any compensation practice
in this regard is more liberal than the minimum requirements of the FLSA.
Some employers nonetheless have adopted a policy of compensating employees at the federal minimum
wage or by fixed lump weekly sums for every hour they are on-call, even though they do not work and are free
to use the time as they please. It is this additional “on-call pay” for unrestricted on-call time that may cause a
The question posed by the practice of giving “on-call pay” is whether such compensation must be included
in the “regular rate” of pay for calculation of overtime pay. The FLSA (29 U.S.C. §207(e)) provides this defini-
tion of ‘regular rate’:
As used in this section the “regular rate” at which an employee is employed shall be deemed toinclude all remuneration for employment paid to, or on behalf of, the employee, but shall not be deemedto include . . . (2) payments made for occasional periods when no work is performed due to vacation,holiday, illness, failure of the employer to provide sufficient work, or other similar cause; reasonablepayments for traveling expenses, or other expenses, incurred by an employee in the furtherance of hisemployer’s interests and properly reimbursable by the employer; and other similar payments to anemployee which are not made as compensation for his hours of employment.
Normally, on-call pay would be classified as one of the types of compensation excluded from the regular
rate calculation. Under the statute, certain payments for periods when no work is performed, or “similar pay-
ments to an employee which are not made as compensation for his hours of employment,” are excluded from the
regular rate. Obvious examples of excluded compensation include many fringe benefits along with such items as
vacation or sick leave. On its face, on-call pay would appear to be payment for hours not worked, even though it
is not one of those items specifically enumerated in the statute. The FLSA regulations (29 C.F.R. §778.223),
however, contain a specific provision dealing with this issue, which states:
For example, an employment contract may provide that employees who are assigned to take callsfor specific periods will receive a payment of $5 for each 8-hour period during which they are “on-call”in addition to their regular (or overtime) rate for hours actually spent in making calls. If the employeeswho are thus on call are not confined to their homes or to any particular place, but may come and go asthey please, provided that they leave word where they may be reached, the hours spent “on-call” are notconsidered as hours worked. Although the payment received by such employees for such “on-call” timeis, therefore, not allocable to any specific hours of work, it is clearly paid as compensation for perform-ing a duty involved in the employee’s job and is not of a type excludable under section 7(e)(2). Thepayment must therefore be included in the employee’s regular rate in the same manner as payment forservices, such as an attendance bonus, which is not related to any specific hours of work. (emphasisadded)
There is no regulatory history explaining this provision. It appears to have been added as an afterthought to
the main thrust of the regulation — that on-call pay is not for working time and therefore is not time worked for
which straight time or overtime pay is required. The regulation is designed to thwart an employer that pays at or
near the minimum wage and then gives generous on-call pay to employees. DOL believes this produces an
artificially low regular rate of pay for overtime purposes.
DOL has applied these principles in a Wage and Hour Opinion Letter dated June 6, 1973. Employees were
guaranteed a minimum $50 per week overtime payment for on-call work regardless of whether they actually
worked during that time, and the employer inquired of DOL whether any of that time could be excluded from
the computation of the employee’s regular rate of pay for overtime purposes. DOL responded:
Under the principles stated in section 778.223 of the enclosed Interpretative Bulletin, however,sums received by employees for “on-call” time while not attributable to any particular hours of work,are paid as compensation for performing a duty involved in their jobs and must, therefore, be includedin the employee’s regular rate of pay for the purpose of computing overtime pay under the act. Theycannot be credited towards statutory overtime due.
Similar sentiments were expressed in another Wage and Hour Opinion Letter dated Jan. 4, 1968 (regarding
an on-call payment of $10 per weekday night and $15 per weekend night) and in a 1986 opinion letter involving
a computer company, in which DOL noted regarding a flat fee for on-call payment:
It has been our experience that on-call payments discussed in section 776.223 are made forstandby assignments that are made on the basis of regularly rotating schedules as opposed to being madeon “infrequent and sporadic occasions.” In your client’s case, the service technicians are on-call from 2to 16 shifts per week. It is the regularity and frequency of the on-call payments, along with the fact thatthey are made for performing a duty connected with the employee’s job, i.e., being available to report towork as directed, that distinguishes such payment from those discussed in sections 778.220 through778.222.
Further, in a Wage and Hour Opinion Letter dated Sept. 16, 1987, DOL addressed employees who volun-
teered to be on-call and were paid an extra 16 hours of straight-time pay for doing so, ruling that the on-call
payments had to be included in the regular rate of pay.
DOL has rejected the argument that on-call pay falls within the last proviso of the statute regarding “other
similar payments not made as compensation for hours of employment.”
In other sections of the regulations, DOL has excluded from the regular rate computation all of the following
payments for non-working time: vacation pay, holiday pay, illness or sick pay, show-up or reporting pay, and
call-back pay (29 C.F.R. §778.218–§778.222). With respect to call-back pay, an illustration is given (29 C.F.R.
§778.221(b)) of an employee who is guaranteed a minimum of three hours’ pay when he is called back to work.
The regulation discusses the case where an employee is called back and works two hours, but receives pay for
three hours. In that case, the pay for the third hour is excluded from the regular rate as it is “not regarded as paid
for hours worked.” In a Wage and Hour Opinion Letter dated Dec. 30, 1985, DOL added an additional category
of pay for non-working time to those excluded from the regular rate. In that opinion, DOL ruled that “profi-
ciency pay” for employees to attend continuing education courses necessary to maintain their credentials as
paramedics was not includable in the regular rate.
It might at times be difficult to distinguish on-call pay from other remuneration that may be excluded from
the regular rate. With regard to one such type of pay — travel-time pay — the Field Operations Handbook states
that “[t]he payment for travel time which is not hours worked constitutes “other similar payments to an employee
which are not made as compensation for his hours of employment” and is therefore excludable from the compu-
tation of the regular rate of pay” (FOH §32d05b).
In sum, while payments for non-working time need not be included in the regular rate of pay, on-call pay is
an exception by virtue of what some would argue are incompletely conceived DOL regulations.
wages, the reasonable cost or the fair value of the lodging (per week) must be added to the cash wages before the
regular rate is determined (29 C.F.R. §778.116).
Overtime Based Upon Authorized Basic Rates
Regulations at 29 C.F.R. Part 548 authorize the use of basic wage rates for the computation of overtime pay.
Basic rates must be substantially equivalent to the average hourly earnings paid and may be used only pursuant to
an agreement or understanding arrived at between the employer and the employee or as a result of collective
bargaining before performance of the work. As an example, to simplify bookkeeping and computation of over-
time pay, the regulations authorize rates obtained by dividing an employee’s piece work earnings each day by the
number of hours worked that day, and using that rate for computation of overtime pay for overtime worked that
day (see also ¶514).
Fig. 520-A
COMPUTATION OF REGULAR RATE AND OVERTIME COMPENSATION
TYPE OF OVERTIMEEMPLOYEE REGULAR RATE EQUALS: COMPENSATION
HOURLY: no guaran- Hourly rate + other forms of compensation (including 1.5 x regular rate forteed overtime bonuses and premiums) hours worked past 40 per
week
HOURLY: guaranteed Hourly rate and other forms of compensation ÷ 40* a) 1 1/2 x overtime hoursovertime up to 60 hours *This is a “Belo” plan, which may be used only in guaranteed, which mayper week* limited circumstances (see ¶560) not exceed 60 hours; or
b) 1 1/2 x additionalovertime above hoursguaranteed
SALARIED: fixed work- Salary and other forms of compensation ÷ 40 (hours/ 1.5 x regular rate forweek of 40 hours week) hours worked past 40 per
week
SALARIED: represent- Salary and other forms of compensation ÷ number of 1/2 x regular rate foring payment for all hours hours worked in week (this number will vary with hours over 40 per weekworked in more-than-40 each weekhour workweek
SALARIED: fixed work- Weekly salary and other forms of compensation ÷ Straight time at regularweek under 40 hours number of hours worked in week (this number will rate for hours up to 40
vary with each week) per week
SALARIED: fixed Salary and other forms of compensation ÷ 48 (hours/ 1/2 x regular rate forweekly salary for work- week)* hours up to 48 or otherweek of 48 hours *or other number of hours employee is contracted to contracted maximum
work 1 1/2 x regular rate forhours above contractedmaximum
COMPUTATION OF REGULAR RATE AND OVERTIME COMPENSATION(Continued from previous page)
TYPE OF OVERTIMEEMPLOYEE REGULAR RATE EQUALS: COMPENSATION
SALARIED: paid semi- [(Salary and other forms of compensation x 24) ÷ 1/2 x regular rate formonthly for all hours 52] ÷ number of hours worked hours worked past 40 perworked week
SALARIED: paid [(Salary and other forms of compensation x 12) ÷ 1/2 x regular rate formonthly for all hours 52] ÷ number of hours worked hours worked past 40 perworked week
SALARIED: paid semi- [(Salary and other forms of compensation x 24) ÷ 1 1/2 x regular rate formonthly for 40 hours of 52] ÷ 40 (hours/week) hours worked past 40 perwork per week week
SALARIED: paid [(Salary and other forms of compensation x 12) ÷ 1/2 x regular rate formonthly for all irregular 52] ÷ number of hours worked hours worked past 40 perhours worked week
PIECEWORK a) Weekly earnings and other compensation ÷ number a) 1/2 x regular rate forof hours worked; or hours worked past 40 perb) Piece rate so long as it equals minimum wage each week; orweek b) 1 1/2 x straight time
piece rate if bona fide
¶521 Special Rules for Multiple Jobs/Dual Employment
An employee paid on an hourly basis who performs two or more different kinds of work for the same
employer, each with different pay scales, may be paid on the basis of the regular rate calculated as the weighted
average hourly rate earned during the week (29 C.F.R. §778.115). In the alternative, under 29 U.S.C. §207(g)(2),
such an employee may agree with the employer in advance to be paid overtime for the type of work that is
performed during the overtime hours (29 C.F.R. §778.419).
Where an employee performs two different jobs, however, such jobs must be combined to determine what
overtime over 40 hours is due, and then the regular rate is fixed by one of the above procedures. Thus, employers
must check their records carefully and properly compensate such moonlighting or dual-assignment employees.
For the purpose of determining when an employee’s work for two separate employers is to be aggregated, see the
discussion of joint employment at ¶522 of the Handbook.
Where an employee performs nonexempt work as his or her primary duty, he or she will be considered
nonexempt and must be paid overtime for all hours worked over 40 in a week. Thus, in the case of a school
custodian who works 40 hours as a custodian and also works eight as a teacher, he or she would have to be paid
time and one-half overtime for the extra eight hours.
are less important, involve fewer discretionary powers and are not relatively free from supervision. In its
administrative rulings, DOL has repeatedly held that an exempt worker can do nonexempt work and still
preserve exempt status, as long as his or her primary duty remains exempt, however, few courts have
addressed the issue.
Questions about the amount of wages due also are likely to arise when exempt employees perform
separate, nonexempt work. Because exempt employees generally must be paid on a salary basis and are not
entitled to overtime compensation, an employee who meets the criteria for the exemption is not entitled to
additional compensation for extra, nonexempt, work done for the same employer. However, an employer
can choose to pay an exempt employee additional compensation for nonexempt work done in a different
capacity — a policy which is in keeping with DOL’s longstanding position that payment beyond salary
does not jeopardize an employee’s exempt status (DOL Field Operations Handbook §22b01; see also 29
C.F.R. §541.604).
¶522 Special Rules for Joint Employment
When a worker is employed by two or more separate employers, this normally presents no special FLSA
problems. Ordinarily, each employer is separately considered and each must pay overtime only for hours the
employee works for that particular employer in excess of 40 hours per week. In the case of a government, DOL
has stated in a Wage and Hour Opinion Letter dated Aug. 23, 1974, that:
It is our opinion, based on the statutory language in sections 3(a)(2)(C) and 3(x) of the act,that the government of a political subdivision of a state, including all of its departments andagencies, constitutes a single employer under the act. These sections speak in terms of employmentby the government of the United States, a state, or a political subdivision of a state. There is noindication in the statute or its legislative history that the various departments and agencies of thefederal or state governments, or of the political subdivision of a state government, are to be treatedas separate employers.
(See also Wage and Hour Opinion Letter dated June 17, 1994.)
Thus, as a general rule, any employee who works for two different departments of the same city or county
government is essentially working for the same employer (see ¶521 of the Handbook).
Even where the employee works for an entirely separate employer, there still may be a question of whether
the two employers are so entangled as to create what is called a “joint employment” relationship whereby, for
the purposes of the FLSA, they are treated as one entity. In a Wage and Hour Opinion Letter dated Aug. 6, 1985,
DOL set forth the following test, quoting directly from 29 C.F.R. §791.2(a):
A single individual may stand in the relation of an employee to two or more employers at thesame time under the Fair Labor Standards Act of 1938, since there is nothing in the act whichprevents an individual employed by one employer from entering into an employment relationshipwith a different employer. A determination of whether the employment by the employers is to beconsidered joint employment or separate and distinct employment for purposes of the act dependsupon all the facts in the particular case. If all the relevant facts establish that two or more employ-ers are acting entirely independently of each other and are completely disassociated with respect to
the employment of a particular employee, who during the same workweek performs work for morethan one employer, each employer may disregard all work performed by the employee for the otheremployer (or employers) in determining his own responsibilities under the act. On the other hand, ifthe facts establish that the employee is employed jointly by two or more employers, i.e., thatemployment by one employer is not completely disassociated from employment by the otheremployer(s), all of the employee’s work for all of the joint employers during the workweek isconsidered as one employment for purposes of the act. In this event, all joint employers areresponsible, both individually and jointly, for compliance with all of the applicable provisions of theact, including the overtime provisions, with respect to the entire employment for the particularworkweek. In discharging the joint obligation each employer may, of course, take credit towardminimum wage and overtime requirements for all payments made to the employee by the other jointemployer or employers.
(See also Wage and Hour Opinion Letter dated Jan. 13, 1994, where joint employment was found between a city
and a local authority.)
The test for joint employment includes: (1) sharing employees’ services so as to interchange employ-
ees; (2) an employer acting in the direct interest of another employer; (3) and employers who are not so
completely disassociated that they are deemed to be under common control and share employees (29 C.F.R.
§791.2(b)).
In an Oct. 10, 1985, Opinion Letter, DOL identified the following factors that would support a determina-
tion that two or more state agencies are separate employers:
(1) the agencies are treated as separate employers from other state agencies for payroll purposes;
(2) the agencies deal with other state agencies at arm’s length concerning the employment of any indi-
vidual;
(3) the agencies have separate budgets or funding authorities;
(4) the agencies participate in separate employee retirement systems;
(5) the agencies are independent entities with full authority to perform all of the acts necessary to their
functions under state statutes; and
(6) the agencies can sue and be sued in their own names.
However, even if the state agencies are found to be separate employers, there still may be a “joint employ-
ment relationship” between them. If the agencies are considered joint employers, they are treated as one under
the FLSA. The Oct. 10, 1985, Opinion Letter identifies the following factors as important in the determination
of whether a joint employment relationship exists:
(1) When employed by one state agency, is the employment by another state agency completely voluntary
on the part of the employee, or is the employee led to believe in any way that he or she should accept additional
work at the other state agency?
(2) When employed by one state agency, is the employee assured, promised or led to believe that he or she
will receive additional work from another state agency?
(3) Are employees of one state agency given a special preference for additional work at another state
With regard to the third requirement, an employer need only take care not to permit an employee to work so
many hours that the average rate (regular and overtime) drops below the minimum wage.
It is important to note that in the state of California, certain private entities covered by wage orders may
not use the half-time method. California Industrial Welfare Commission Wage Order l-76 precludes the use of
this method in calculating overtime pay, even though it is permissible under the FLSA (see Skyline Homes Inc.
v. Department of Industrial Relations, 211 Cal. Rptr. 792 (Ct. App. 1985)). Other states also may regulate the
use of half-time.
¶531 Calculating Half-Time
To calculate half-time, first determine the regular rate by dividing the weekly salary by the number of hours
actually worked by the employee during the week. The employee’s half-time premium is determined by multiply-
ing the regular rate by one-half. Thus, the employee’s extra half-time pay would be calculated by multiplying
the half-time premium by the number of hours over 40 worked in the week (29 C.F.R. §778.114, see Fig. 531-
A). However, the amount of additional pay received by the employee as a result of these calculations would be
relatively small.
For example, if a salaried employee works 50 hours in a week at a $500 salary, his or her regular rate
would be $10 an hour. Under half-time, he or she would be entitled to one-half the $10 regular rate for all
overtime hours worked. Thus, he or she would be entitled to $5 an hour multiplied by the 10 hours of over-
time, or $50 in extra overtime pay. In this half-time example, the overtime premium is $50, while the regular
time and one-half FLSA overtime premium would come to $187.50. Thus, half-time is considerably more
advantageous to the employer.
Fig. 531-A
Calculating Half-time
(1) Regular Rate = Weekly Salary ÷ Number of Hours Worked(2) Half-Time Premium = Regular Rate x 1/2(3) Extra “Half-Time” Pay = Half-time Premium x Number of Hours Worked
Over 40
The advantage of half-time for the employer becomes greater with more hours worked; that is, the
hourly premium pay goes down. In the above example, if the employee had worked 60 hours in a week for a
salary of $500, the half-time premium for the extra 20 hours would have been $4.17 an hour for a total of
$83.40. For a 50-hour week, the half-time premium equals 10 percent of the weekly salary; for a 60-hour
week, the half-time premium works out to be only 16.7 percent of the weekly salary. Thus, while the
The Fair Labor Standards Act (FLSA) (29 U.S.C. §207(o)) provides an element of flexibility for state
and local government employers and choice for their employees regarding compensation for statutory over-
time hours. The law authorizes a public agency to provide compensatory time (comp time) off in lieu of
monetary overtime compensation, at a rate of not less than one and one-half hours of compensatory time for
each hour of overtime worked. The calculation used is the same as that generally used for calculating
monetary overtime (29 C.F.R. §553.20). Only state and local governments may use compensatory time;
private employers are not eligible and must pay cash overtime.
The 1985 amendments to the FLSA dramatically changed the rules regarding compensatory time. One
provision of the law specifically allows the use of comp time so long as it is provided for under a collective
bargaining agreement, employment agreement or memorandum of understanding. The “agreement” can be
made in one of three ways: through negotiation with individual employees, through negotiation with employ-
ees’ representatives or through negotiation with a recognized collective bargaining agent (29 C.F.R.
§553.23). If it was the employer’s practice prior to April 15, 1986, to pay existing employees compensatory
time, that practice shall suffice as an “understanding” permitting the use of compensatory time. In such
instances, notice to the employee may be sufficient to satisfy the requirement.
In general, the agreement or understanding should meet the following conditions set forth in House
Report 99-331, 99th Cong. 1st Sess. 10 (1985):
The agreement or bilateral understanding to provide time off as compensation for overtime maytake the form of an expressed condition of employment, so long as (1) the employee knowinglyagrees to it as a condition of employment, and (2) the employee is informed that the compensatorytime received may be preserved, used, or cashed out consistent with the provisions of this newsubsection. The agreement or understanding may include other provisions governing the preservation,use, or cashing out of compensatory time so long as those provisions are consistent with this subsec-tion and the remainder of the Act.
The agreement or understanding to use compensatory time for employees who do not have representa-
tives must be arrived at before the performance of work (29 C.F.R. §553.23(a)). The agreement between an
employer and individual employee without a representative need not be in writing, but a record of its exist-
ence must be kept. It is, of course, advisable to have a written agreement at the start of the employment
relationship. Where an employer is making compensatory time arrangements with individual employees, the
agreements need not be the same for all employees, and the employer need not make compensatory time
available to all employees (29 C.F.R. §553.23(c)).
The agreement or understanding to use compensatory time may also provide:
• for compensatory time off in lieu of overtime payments in cash that is restricted to certain hours of
work only (29 C.F.R. §553.23(a)(2));
• for any combination of compensatory time off and overtime payment in cash so long as the principle
failed to reach compensatory time agreements with the employees’ designated representatives (Nevada
Highway Patrol Association v. Nevada, 899 F.2d 1549 (9th Cir. 1990); Local 2203 v. West Adams County,
877 F.2d 814 (10th Cir. 1989)).
But the Supreme Court agreed with the 4th, 5th and 11th Circuits, finding that the FLSA was not
violated when the employer failed to recognize employees’ representatives for purposes of negotiating an
agreement governing the use of compensatory time when state law prohibited collective bargaining agree-
ments with public employees (Wilson v. City of Charlotte, 964 F.2d 1391 (4th Cir. 1992) (en banc); Abbott
v. City of Virginia Beach, 879 F.2d 132 (4th Cir. 1989), cert. denied, 493 U.S. 1051 (1990)); Dillard v.
Harris, 885 F.2d 1549 (11th Cir. 1989)).
The Supreme Court in Moreau agreed with the county’s argument that the U.S. Department of Labor
(DOL) never intended that state and local laws be disregarded in determining whether a representative is
recognized for the purposes of reaching a comp time agreement. Though DOL’s regulations, when read in
isolation, seem to buttress the deputy sheriffs’ argument that the representative need not be a recognized
agent, such an “interpretation would prohibit entirely the use of comp time in a substantial portion of the
public sector,” said the Supreme Court.
After many years of disagreement among the circuit courts, the Supreme Court has provided guidance
on how public employers in states that prohibit collective bargaining with public employees must proceed
when employees have designated a representative for purposes of negotiating a compensatory time agree-
ment. In states with prohibitions, public employers may now enter into individual comp time agreements
with confidence. In states where no such prohibitions apply, employers should reach compensatory time
agreements with the employees’ representative.
Compensatory time accrual caps
The compensatory time earned by an employee constitutes a legal liability for the employing jurisdic-
tion. Employees generally may accrue up to 240 hours of compensatory time; since compensatory time is
accumulated at time and one-half, this is only 160 hours of actual overtime work. Employees who work in a
public safety activity, emergency response activity or seasonal activity may accumulate up to 480 hours of
comp time. As long as some of the employee’s work regularly includes activities subject to the 480-hour
cap, the employee is covered by the higher cap (see House Report 99-331, 99th Cong. 2nd Sess. 21 1985).
Employers are expected in good faith to resist the temptation to assign clerical employees to an afternoon of
snow shoveling or ambulance crew work merely to bump them to the higher compensatory time cap.
The question of who is a seasonal employee may prove particularly troubling. The legislative history
gives the following guidance (Id. at 22):
Considerable focus has been given to the question of seasonal activity. Seasonal activity is notlimited strictly to those operations that are very susceptible to changes in the weather. Obviously, parksand recreation activity in general are primarily seasonal since they experience peak demand during fair
weather seasons or other sport seasons and largely dormant periods at other times. Road crews, while notnecessarily seasonal workers, may nevertheless have significant periods of peak demand, for instanceduring the snow plowing or road construction season. In such an instance the snow plow operator/roadcrew employee would be able to accrue compensatory time to the higher cap, while otheremployees of the same department who do not have lengthy periods of peak seasonal demand wouldremain under the lower cap. Auditoriums, theaters, and sports facilities that are open for specific limitedseasons, would meet a seasonal test; facilities that operate year round would not. Mere periods of short butintense activity do not make an employee’s job seasonal in nature; therefore, clerical employees workingincreased hours for several weeks on a city budget or processing insurance forms or tax notices would notneed the higher compensatory time cap since the limited periods of increased activity could be accommo-dated within the lower limit. In determining which employees would be considered seasonal, the Secretaryof Labor should first determine whether the “seasonal activity” is a regular and recurring aspect of theemployees’ work and then whether the projected overtime hours during the “season” of significantlyincreased demand exceeds the number of compensatory time hours available under the lower cap.
The regulations seek to further define which employees may legitimately use the higher 480-hour cap.
Accordingly, the regulations define “public safety,” “emergency response” and “seasonal activity” employees
as follows (29 C.F.R. §553.24(c)-(e)):
Public Safety: includes personnel engaged in law enforcement, firefighting or related activities. The
480-hour accrual limit does not apply to office personnel or other civilian employees who perform public
safety activities in emergency situations, even if they spend substantially all of their time in a particular
week on public safety activities. (Note that public safety employees may also be eligible for a partial
overtime exemption under §207(k); see Tab 600.);
Emergency Response: includes dispatching of emergency vehicles and personnel, rescue work and
ambulance service personnel. Once again, an employee must regularly engage in emergency response activi-
ties to be covered by the 480-hour cap. (Note that certain emergency response employees may also qualify
for the §207(k) exemption; see Tab 600.);
Seasonal Activity: includes work during periods of significantly increased demand that are of a regular
and recurring nature. There are two considerations in determining whether employees are engaged in sea-
sonal activity: first, whether the activity is a regular and recurring aspect of the employee’s work and,
second, whether the projected overtime hours during the period of significantly increased demand are likely
to result in the accumulation of more than 240 compensatory time hours.
It should be noted that employees who transfer from one of these three job classifications to a position
subject to the 240-hour limit may carry over to the new position any accrued compensatory time. The
employee, however, must be compensated in cash wages for any subsequent overtime hours worked until the
number of accrued hours of compensatory time falls below the 240-hour limit (29 C.F.R. §553.24(b)).
Use of accrued compensatory time
An employee who has accrued compensatory time and requests use of the time must be permitted to
use the time off within a “reasonable period” after making the request if it does not “unduly disrupt” the
operations of the agency (29 U.S.C. §207(o)(5)). The question of what is unduly disruptive may prove
troubling for employers. The legislative history (House Report 99-331, 99th Cong. 2nd Sess.) gives the
following guidance:
Use of the term “reasonable” is intended to accommodate varying work practices based on thefacts and circumstances of each case. When an employer receives such a request for the use ofcompensatory time, that request should be honored unless to do so would be unduly disruptive. Bythe term “unduly disruptive,” the Committee means something more than mere inconvenience. Forexample, a request by a snow plow operator in Vermont to use 40 hours of compensatory time inFebruary probably would be unduly disruptive. This would be true whether the request was made 48hours or several months in advance. On the other hand, the same request by the same employee forthe same number of hours in June or hunting season probably would not be unduly disruptive.
Undue disruption of operations is the only legitimate reason for denying compensatory time leave,
according to a Wage and Hour Opinion Letter dated Aug. 19, 1994. That letter also explains that an undue
disruption must be more than inconvenience to the employer. Also, the letter says, the fact that the employer
will have to pay an overtime premium to a substitute is not a legitimate reason for denying leave.
DOL emphasizes in its regulations that compensatory time is not to be used as a means of avoiding
statutory overtime compensation. Therefore, an employee has a right to use the compensatory time earned
and must not be coerced to accept more compensatory time than an employer can realistically, and in good
faith, expect to be able to grant (29 C.F.R. §553.25(b)).
†But while the FLSA contains a provision (29 U.S.C. §207(o)(5)) addressing an employer’s general
obligation to honor employee requests to use comp time, the statute is less clear on whether an employer
can exercise control over a worker’s accrued comp time by requiring the employee to use it at certain
times. Prior to 2000, federal circuit courts were split on the issue. The 8th U.S. Circuit Court of Appeals,
for example, ruled in Heaton v. Moore, 43 F.3d 1176 (1994), that employers do not have the right to force
employees to use accrued comp time. Meanwhile, the 9th U.S. Circuit Court of Appeals, in Collins v.
Lobdell, 188 F.3d (1999), affirmed an employer’s right to compel use of such time. In May 2000, the U.S.
Supreme Court resolved the issue, holding that “[n]othing in the FLSA or its implementing regulations
prohibits a public employer from compelling the use of compensatory time.” Thus, the High Court
found, upholding a ruling by the 5th U.S. Circuit Court of Appeals, a Texas county did not violate the
act by forcing its deputy sheriffs to use accrued comp time, even though the employer had not entered
an agreement with the workers permitting such a practice (Christensen v. Harris County, 120 S. Ct. 1655
(May 1, 2000)).
Even in instances where a compensatory time agreement has been formulated, an employer may freely
substitute cash, in whole or in part, for compensatory time. Such a substitution will not affect subsequent
granting of compensatory time off in future workweeks or work periods (29 C.F.R. §553.26).
One important issue that arises with respect to compensatory time off in lieu of cash overtime is
payment for unused compensatory time in the event that an employee leaves the public agency. According
to DOL regulations (29 C.F.R. §553.27(b)), payments for accrued compensatory time earned after April 14,
A workweek is defined in the U.S. Department of Labor (DOL) regulations as any seven consecutive 24-hour
periods (29 C.F.R. §778.105). An employer may declare a workweek that departs from the traditional week of
Sunday through Saturday. A workweek could be declared that begins Monday morning and ends Sunday evening;
this would put both weekend days within the same workweek. The normal workweek is presumed to be Sunday
through Saturday unless another workweek is declared by the employer (29 C.F.R. §778.105).
As noted above, compliance with the FLSA minimum wage and overtime requirements is normally measured
on a workweek by workweek basis. Exceptions exist for certain medical employees and certain public employees.
Back wages due are also measured on a workweek basis. The employer is required to pay the wages due the em-
ployee for every workweek through the applicable statute of limitations period.
A special problem occurs when the employer prepays the employee — that is, gives advance payment to the
employee for work not yet performed. Normally, overtime compensation due an employee should be paid at the time
of the next regular pay period after the workweek is completed. DOL, however, does not object if the employer pays
in advance overtime compensation that will become due an employee.
DOL’s Field Operations Handbook (§32;16c) provides that:
This is the basic principal of the prepayment plan. Thus some employers, in an attempt tokeep the wage or salary constant from pay period to pay period, have resorted to paying theiremployees a sum in excess of what they earn or are entitled to in a particular week or weeks,which sum is considered to be a prepayment or advance payment of compensation for OT [over-time] to be subsequently worked. In other words, the employer and the employee agree that in anyweek in which the employee works less than the applicable statutory maximum w/w [workweek]the employer will advance to the employee the difference between the amount equal to his regularrate of pay for the applicable statutory maximum w/w and the amount he would have received ifhe had been paid only for the number of hours he worked. Bona fide plans of this type require theuse of a record system whereby the employer can maintain a running account.
The prepayment plan cannot be used as a fictitious bookkeeping device, and thus any loans or advances should be
subject to recapture in the last paycheck or by some other means permitted by state law. Prepayment plans cannot be used
with salaried employees who are paid regardless of the hours actually worked (29 C.F.R. §778.114).
¶593 Method of Payment and Payroll Practices
The statutory provisions of the FLSA are largely silent as to the methodology for payment of minimum wages
and overtime premiums. The U.S. Department of Labor (DOL), however, has issued regulations that clarify the
methodology.
How payments may be made
The regulations (29 C.F.R. §531.27) state the following:
§531.27 Payment in cash or its equivalent required.(a) Standing alone, sections 6 and 7 of the act require payments of the prescribed wages,
including overtime compensation, in cash or negotiable instrument payable at par.
Accordingly, DOL rules allow payment by “cash or its equivalent.” This is satisfied by a “negotiable instru-
ment payable at par.” The DOL rules do not allow payment by “scrip, token, credit cards, ‘dope checks,’ coupons
and similar devices [which] are not proper mediums of payment under the [FLSA].” The regulations do not further
define what constitutes “cash or its equivalent.”
In the case of Parr v. State of California, (No. CIV-S-92-1115-GEB-PAN (E.D. Ca. Dec. 2, 1992)), the court
had reason to examine the payment of wages by registered warrants by the state of California during its 1992 fiscal
crisis. The court noted as follows:
The FLSA does not explicitly require employers to pay statutory wages in cash or its equiva-lent. However, the FLSA requires employers to pay employees a minimum hourly wage andovertime, and the FLSA’s implementing regulations require payment of these statutory wages “incash or its equivalent.” 29 U.S.C. §§206 and 207, 29 C.F.R. §531.27. Employers must pay wages“in cash or negotiable instrument payable at par” and “finally and unconditionally or free andclear.” 29 C.F.R. §531.27, §531.35. They may not pay these wages in scrip or a similar medium.29 C.F.R. §531.34. (footnote omitted)
The Parr court, citing Webster’s Third International Dictionary (1986), said that “[c]ash is ‘ready money,’
broadly including ‘bank deposits and certain readily negotiable paper (as checks, drafts, notes, bearer bond, cou-
pons).’” The court went on to conclude that “‘Cash’ means especially ‘ready money’ at command, subject to free
disposal and not tied up in a fixed state; it is almost the equivalent of the term ‘loose money.’”
Accordingly, cash apparently includes direct bank deposits which are ready at the command of the account
holder. The Parr court noted that financial institutions were required to treat the California warrants not as cash or
checks, but as debt instruments, because they were not payable on demand, and concluded that the registered war-
rants did not constitute cash or its equivalent.
With respect to direct deposit of paychecks in a commercial bank account, DOL’s Field Operations Handbook
says the following:
(b) The payment of wages through direct deposit into an employee’s bank account is anacceptable method of payment, provided employees have the option of receiving payment by cashor check directly from the employer. As an alternative, the employer may make arrangements foremployees to cash a check drawn against the employer’s payroll direct deposit account, if it is at aplace convenient to their employment and without charge to them.
The Field Operations Handbook is an internal publication of standard operating procedures for DOL’s Wage
and Hour Division and does not constitute binding law or regulation. It does, however, articulate what DOL’s
position likely will be. Thus, it appears that DOL will tolerate direct deposit if it is optional or if the employee can
alternatively elect to cash a check without charge at a place convenient to the workplace.
To the extent direct deposit is permissible under federal law, employers still must comply with stricter mandates
from state laws and regulations. Specifically, the FLSA regulations (29 C.F.R. §531.26) provide as follows:
§531.26 Relation to other laws.Various Federal, State, and local legislation requires the payment of wages in cash;
prohibits or regulates the issuance of scrip, tokens, credit cards, “dope checks” or coupons;
prevents or restricts payment of wages in services or facilities; controls company stores andcommissaries; outlaws “kick-backs”; restrains assignment and garnishment of wages; and gener-ally governs the calculation of wages and the frequency and manner of paying them. Where suchlegislation is applicable and does not contravene the requirements of the Act, nothing in the Act,the regulations, or the interpretations announced by the Administrator should be taken to overrideor nullify the provisions of these laws. (emphasis supplied)
California, New York and Maryland, for example, allow direct deposit with the permission of the employee
(Calif. Labor Code §213(d); N.Y. Labor Code §192; Md. Ann. Code §3-502(c)). In any issue involving payroll
practices, employers must take special care to comply with both federal and state laws.
†¶594 Credit for Employer-Furnished Board, Lodging or Other Facilities
Payment of minimum wages and overtime may be made by furnishing a nonexempt worker with board, lodg-
ing and other facilities. In other words, employers that provide employees with certain commodities can credit the
value of those items toward wages owed.
In order for an employer to properly claim a credit toward wages for the cost of meals, lodging or other facili-
ties furnished to an employee, certain circumstances must exist:
1) the employee must “receive the benefits” of the meal, lodging or other item;
2) the item must be “customarily” or regularly furnished to the employee or to other workers in similar occupa-
tions in similar communities;
3) the worker must accept the non-cash items voluntarily; and
4) the amount of the credit must represent the “reasonable cost” or “fair value” of the furnished items and must
not include any profit for the employer (29 C.F.R. §531.30 – 29 C.F.R. §531.33).
While board and lodging have a commonly understood meaning relating to meal and housing expenses, what
are “other facilities?” FLSA regulations specify that ‘other facilities’ “must be something like board or lodging” (29
C.F.R. §531.3). The following items, for example, are considered to be other facilities:
• meals furnished at company restaurants or cafeterias or by hospitals, hotels or restaurants to their employees;
• meals, dormitory rooms and tuition furnished by a college to its student-employees;
• housing furnished for dwelling purposes;
• food, clothing and household materials furnished at company stores and commissaries;
• fuel (including coal, kerosene, firewood and lumber slabs), electricity, water, and gas furnished for an
employee’s personal use; and
• transportation between an employee’s home and work where the travel time does not constitute compensable
hours worked under the act and the transportation is not necessary to the employment.
Courts have held that other types of “facilities” can be credited against the minimum wage. For example, in
Brown v. Masonry Products Inc., 874 F.2d 1476 (11th Cir. 1989), the 11th U.S. Circuit Court of Appeals held that
money garnished from a worker’s wages legally were credited toward his wages.
• voluntary contributions to churches, charities, fraternal, athletic or social organizations from which the
employer receives no benefit or profit.
Under the regulations (29 C.F.R. §531.55), an employee must receive “free and clear” payment of wages.
Those regulations state:
Whether in cash or in facilities, “wages” cannot be considered to have been paid by theemployer and received by the employee unless they are paid finally and unconditionally or “freeand clear.” The wage requirements of the Act will not be met where the employee “kicks-back”directly or indirectly to the employer or to another person for the employer’s benefit the whole orpart of the wage delivered to the employee.
The regulations (29 C.F.R. §531.36(b)), however, do limit deductions by stating the following principle:
Deductions for articles such as tools, miners’ lamps, dynamite caps, and other items whichdo not constitute “board, lodging, or other facilities” may likewise be made in non-overtimeworkweeks if the employee nevertheless received the required minimum wage in cash free andclear; but to the extent that they reduce the wages of the employee in any such workweek belowthe minimum required by the Act, they are illegal.
In other words, while deductions in wages are not prohibited, the employer must not reduce wages below the
minimum wage required by the FLSA for nonexempt employees. The required hourly minimum wage should be
paid free and clear without deductions. (See ¶597, below.)
In addition, any deduction should be made in compliance with any other applicable law. Federal government
service contractors, for example, should comply with the Service Contract Act. Employers should also comply with
state law. Many states have statutory and regulatory restrictions on seizing an employee’s final paycheck, and
violation of those requirements often triggers misdemeanor or other criminal penalties. The District of Columbia,
for example, requires payment of wages due upon the next regular payday or within seven days of the date of
quitting or resigning (see D.C. Code §36-103(2)). Virginia allows wage deductions upon the written and signed
authorization of the employee (see Va. Code §40.1-29). Prudent employers will check and comply with state laws
as well as with the FLSA.
†¶597 Wage Deductions for Uniforms, Tools and Equipment
As noted above (see ¶594), an employer may make wage deductions for tools and equipment used by an
employee — including uniforms and weapons — subject to specific requirements.
If, for example, wearing a uniform is required by some other law, by the nature of the business, or by the
employer — and if the employer requires the employee to bear the cost — the employer may not reduce the
employee’s wage below the minimum wage or cut into overtime compensation required by the act (W.H. Publica-
tion 1428 (Rev. March 1984)).
The U.S. Department of Labor (DOL) has issued an administrative ruling regarding wage deductions for the
cost of weapons and uniforms for police officers, stating that the cost of weapons and uniforms may be docked from
officers’ wages only if the deductions meet the following specific requirements:
¶599 Commonly Asked Questions About Overtime Compensation
1. Can comp time be substituted for overtime pay?Under the 1985 Amendments to the Fair Labor Standards Act, state and local governments may award
comp time instead of paying overtime. However, there are certain stipulations in the use of comp time. First,comp time generally must be awarded at time-and-a-half for hours worked over 40 per week. Second, lawenforcement, fire protection, emergency response and seasonal employees can accrue 480 hours of comp timebefore any overtime payment must be made. All other employees can accrue up to 240 hours of comptime. During the same pay period, a time-off plan where the employee is furloughed may also be used.
2. If a public safety officer works 40 hours a week in the public safety capacity at one rate of payand works 10 hours on the weekend driving a city bus at a different rate of pay, how is his or herovertime calculated?
Since such dual employment is not sporadic or occasional, it does not qualify for the provisionfound at 29 U.S.C. §207(p)(2). Similarly, the employee is not on special detail doing law enforcement,fire protection or related activities as defined in 29 U.S.C. §207(p)(1). Thus, the employee may be paidovertime on the basis of a regular rate of pay calculated as the weighted average hourly rate for both thepublic safety and bus driving jobs (29 C.F.R. §778.115). In the alternative, he or she may be paid over-time on the basis of an established policy of the employer agreed to by the employee, such as paying forthe overtime on the basis of the work performed during the overtime hours (29 C.F.R. §778.419). Re-member that a “20 percent rule” applies to the use of the seven-to-28-day work period for law enforce-ment and firefighting personnel (see 29 U.S.C. §207(k)); that is, the time spent in non-public safety workcannot exceed 20 percent of the employee’s working time during the work period.
3. Do state labor laws supersede the FLSA?State labor laws cannot supersede the FLSA. However, any state law or municipal ordinance that
establishes more restrictive wage and hour requirements than the FLSA is permitted, and will be enforcedunless the state law itself specifies that it is not applicable.
4. What is the regular rate of pay for an employee whose activities are part of a task system suchas a sanitation worker who is done for the day after completion of a designated route?
Generally, such employees are paid a flat sum for a day’s work for doing a particular job, regardlessof the number of hours worked in the day or at the job. If the employee receives no other form ofcompensation for services, the regular rate would be determined by totaling all the sums received at theday rates or job rates in the workweek and dividing by the total hours actually worked. The employeewould be entitled to extra half-time pay at the rate for all hours worked in excess of 40 in the workweek(29 C.F.R. §778.112). In the alternative, the employee may be paid for hours worked in excess of 40 forthe week at time-and-a-half the hourly or daily rate paid for that work during the first 40 hours.
5. If an employee works 40 hours during the week and then volunteers to help paint a city buildingon the weekend, would he or she have to be paid overtime?
If the employee truly “volunteered” to work on the weekend without contemplation of pay, thenthat time would not be compensable. However, an employee cannot work for the same employer asa nonpaid volunteer doing the same type of work for which he or she is paid. In addition, such“volunteer” work is deemed suspect by the U.S. Department of Labor (DOL), and the city would berequired to demonstrate that the city neither solicited nor induced the employee to volunteer his time(see also 29 U.S.C. §203(e)(4)(A)).
6. If a retired person volunteers to do work for the city, would that person be considered anemployee?
Individuals who volunteer or donate their services for public service are not considered employeesof the jurisdiction, according to DOL, so long as their volunteer status is truly bona fide. Volunteerservices now have a statutory seal of approval.
7. If employees volunteer to work overtime, do they have to be paid overtime?An employee who volunteers to work overtime must be paid for that time because he or she is
being suffered or permitted to work for the benefit of the employer (29 C.F.R. §785.11). The employermust instruct the employee not to work overtime and, if necessary, take steps to discipline employeeswho do work unauthorized overtime so the employer has not suffered or permitted the work (see also29 U.S.C. §203(e)(4)(A)).
8. Can hours worked be averaged over several workweeks through the use of comp time in order toavoid paying overtime?
In computing hours worked, the FLSA requires that each workweek stand alone (29 C.F.R.§778.104). It does not permit the averaging of hours over two or more weeks, with the exception ofpolice, firefighters, and certain hospital and nursing home employees. This is true regardless of whetheran employee works on a standard or swing-shift schedule and regardless of whether he or she is paid ona daily, weekly, bi-monthly or other basis. However, comp time may be given rather than paid overtimeat time and one-half.
9. Must exempt employees who work overtime be paid for that overtime?Exempt employees are not subject to the overtime provisions of the FLSA. Such workers need not
be paid overtime. Employers generally may pay overtime or comp time if they wish, but they are notrequired to do so by the FLSA.
10. On what rate of pay would overtime be based for an employee who works 40 hours per week ina full-time exempt classification during the day and one night a week in a nonexempt classification?
Generally no overtime pay would be required. The employee likely would not lose his or her ex-emption at all under the short test and would lose it under the long test only if nonexempt workamounted to over 20 percent of his or her working time.
11. Must the actual overtime pay be included in the paycheck for the pay period in which theovertime was worked?
The FLSA does not provide when employees are to be paid. However, a delay beyond the payperiod after the period in which the work was performed would most likely not pass muster with DOL.Work periods need not coincide with pay periods, in any event.
12. When may a jurisdiction use the “half-time” method for calculating overtime pay?Overtime may be calculated by the “half-time” method for salaried employees who work a fluctuat-
ing workweek for a fixed salary. Half-time may not be used unless the fixed salary is large enough toensure that no workweek will be worked in which the employee’s hourly earnings (as calculated from thesalary) fall below the FLSA minimum wage.
An employee must understand that the salary covers whatever hours the job may demand in aparticular workweek, and that the employer pays the salary even though the workweek is one in which afull schedule of hours is not worked (29 C.F.R. §778.114).
Half-time also is the means of computing overtime pay when an employee is on a fixed salary for afixed number of hours over 40. Thus, if an employee is paid $480 for a 48-hour workweek, that em-ployee would be entitled to half-time for eight hours each week (and time-and-a-half for all hours over48 in a workweek).
13. How should overtime be calculated for part-time employees?Under the FLSA, overtime premiums need not be paid to employees until they work in excess of 40
hours a week. There is no requirement in the FLSA to pay overtime for hours worked in excess of eighthours per day. Part-time workers may receive comp time for hours worked up to 40 hours in a week.
14. Must an employee be paid time-and-one-half for working on holidays?There is no requirement under the FLSA that employees be given premium pay for holidays, week-
ends, or evening shifts. Overtime is only required for time actually worked in excess of 40 hours per
week. Under the FLSA, extra compensation provided by a premium rate of at least time and one-halfwhich is paid for work on Saturdays, Sundays, holidays or regular days of rest, may be treated as anovertime premium (29 C.F.R. §778.203).
15. If an ambulance crew works either a 24 hours on, 48 hours off shift or a 48 hours on, 48 hoursoff shift, when must overtime be paid?
Ambulance and rescue service employees whose services are deemed substantially related tofirefighting or law enforcement activities would qualify for the §207(k) exemption for overtime whichpermits the computation of hours worked on the bases of a work period and which bases the overtimerequirements on a work period concept. (Most emergency medical services (EMS) qualify.) Under§207(k) the work period must be not less than seven nor more than 28 days. The work period, ratherthan the shift cycle, would determine when overtime must be paid. EMS personnel who are part of themunicipal fire department are entitled to ovetime over 212 hours in a 28-hour day period; if connectedwith the police department, overtime is required for time worked over 171 hours in the work period. Ifthe EMS is independent of the police and fire departments, most likely the 212-hour, 28-day work periodwould apply, although this is not certain.
16. If all payroll records list hourly rates, but personnel policies specifically exclude certain employ-ees from overtime because they are considered “salaried”, would these employees be exempt fromcoverage?
These employees would only be considered exempt from the minimum wage and overtime provisionsif they met the criteria of the long or short tests for administrative, professional or executive employees.In addition, they must be paid on a salary basis. This means, among other things, that they cannot rou-tinely be “docked” for being absent for portions of a workday.
17. Is longevity pay (extra pay for seniority) included in the regular rate of pay?Yes. The FLSA requires inclusion into the regular rate of pay of “all remuneration for employment
paid to, or on behalf of, the employee,” except for:• sums paid as gifts or discretionary bonuses (longevity pay is not discretionary).• payments made for occasional periods when no work is performed due to vacation, holiday or
illness.• sums paid for benefit plans, including profit-sharing plans or trusts providing similar benefits.• contributions pursuant to a bona fide plan for providing old-age, retirement, life, accident, or
health insurance or similar benefits.• premium pay for hours in excess of eight in a day or in excess of 40 in a week or in excess of
the employee’s normal working hours.• premium pay of at least time-and-one-half for work on Saturdays, Sundays and other special days.• premium pay of at least time-and-one-half for hours in excess of the basic day or workweek
established in a collective bargaining agreement or employment contract.Thus, longevity pay would be included in the regular rate.
18. How is the regular rate of pay calculated for pieceworkers?There are two acceptable ways of calculating the regular rate for pieceworkers. One is to divide the
total weekly earnings by the total number of hours worked in the same week; the employee is entitled topayment of one-half his regular rate for each hour worked over 40, in addition to the full pieceworkearnings. The second way to pay pieceworkers for overtime is simply to pay time-and-a-half the piecerate for all “pieces” produced or worked during the overtime hours.
For purposes of this exemption, the number of law enforcement and fire protection employees are
considered separately. For example, if an agency employs fewer than five employees in fire protection
activities but five or more employees in law enforcement activities, it may claim an exemption for the fire
protection employees but not for the law enforcement employees. Part-time employees are counted in
determining the number of public safety employees. No distinction is made between employees on duty
and those on leave status. All such categories must be counted in determining whether the exemption
applies. Volunteers, however, are not counted (29 C.F.R. §553.1(d)).
By contrast, excluded (“non-covered”) employees such as elected officials, their personal staff,
policy-making appointees and legal advisers are not counted in determining whether the exemption ap-
plies. If the agency employs fewer than five employees under these guidelines, it is totally exempt from
the overtime provisions of the act (29 C.F.R. §553.200(b)).
It is important to note that this exemption applies on a workweek basis. Therefore, it is possible that
employees may be subject to the maximum hours standard in certain workweeks but not in others (29
C.F.R. §553.200(c)). Of course, in those weeks where the exemption does not apply, the agency may use a
207(k) plan as described in ¶602.
The overtime exemption for law enforcement, fire protection and corrections agencies with fewer than
five employees has been discussed by the DOL Wage and Hour Division in several opinion letters (dated
April 12, 1989; April 16, 1990; Jan. 17, 1992). In the latter ruling, DOL concluded that full-time highway
department employees who worked as part-time police officers would not qualify for this exemption because
they spent less than 20 percent of their time performing law enforcement or fire protection activities.
¶602 History of the Hours Set by the U.S. Department of Labor
Section 207(k) of the FLSA provides as follows:
(k) Employment by public agency engaged in fire protection or law enforcement activities
No public agency shall be deemed to have violated subsection (a) of this section with respectto the employment of any employee in fire protection activities or any employee in law enforcementactivities (including security personnel in correctional institutions) if—
(1) in a work period of 28 consecutive days the employee receives for tours of duty which inthe aggregate exceed the lesser of (A) 216 hours, or (B) the average number of hours (as determinedby the Secretary pursuant to Section 6(c)(3) of the Fair Labor Standards Amendments of 1974) intours of duty of employees engaged in such activities in work periods of 28 consecutive days incalendar year 1975; or
(2) in the case of such an employee to whom a work period of at least 7 but less than 28 daysapplies, in his work period the employee receives for tours of duty which in the aggregate exceed anumber of hours which bears the same ratio to the number of consecutive days in his work period as216 hours (or if lower, the number of hours referred to in clause (B) of paragraph (1)) bears to 28days, compensation at a rate not less than one and one-half times the regular rate at which he isemployed.
The 1999 amendment adds a new section to the FLSA (29 U.S.C. §203(y)), providing the following
definition:
“Employee in fire protection activities” means an employee, including a firefighter,paramedic, emergency medical technician, rescue worker, ambulance personnel, or hazardousmaterials worker, who —
(1) is trained in fire suppression, has the legal authority and responsibility to engage in firesuppression, and is employed by a fire department of a municipality, county, fire district, or state, and
(2) is engaged in the prevention, control, and extinguishment of fires or response to emergencysituations where life, property, or the environment is at risk.
The 1999 law clearly makes it easier for a practicing firefighter who spends time engaged in “response to
emergency situations” to qualify for the §207(k) exemption. But how does the law affect EMS workers who
have been trained as firefighters?
Under the terms of the 1999 amendment, an EMS employee who works for a fire department will qualify
as §207(k)-exempt if he or she is trained in firefighting, responds to emergency situations and has “the legal
authority and responsibility to engage in fire suppression.” An important question with regard to the EMS
exemption issue is how the phrase “responsibility to engage in fire suppression” is construed by courts.
At this writing, that is uncertain. Interpretation of the term by courts and the U.S. Department of Labor
(DOL) in the future may play a big part in whether the 1999 amendment will make it easier for EMS employ-
ees to be classified as exempt. Much could depend on how “responsibility” is defined: that is, whether (and
how often) an employee would actually have to answer fire-related calls to have “responsibility” for fighting
fires in view of the act’s requirements.
Answers to these questions may be provided by emerging case law in the aftermath of the amendment
and by DOL as it answers employer inquiries in its Wage and Hour Division opinion letters. Regardless, the
language of the amendment appears to indicate that responding to medical emergencies is now an exempt
activity, and would not count as nonexempt work under the 80/20 rule — for firefighters or EMS workers.
However, this amendment applies only to employees working for fire departments — not for police depart-
ments or other public agencies.
Readers also should note other limitations on the §207(k) exemption not affected by the 1999 amend-
ment. DOL regulations note that ambulance and rescue service employees are not exempt under §207(k) if
they are employed by public hospitals or institutions primarily engaged in the care of the sick, aged or men-
tally ill who reside in such institutions (29 C.F.R. §553.215(b)). Further, emergency personnel are not
§207(k)-exempt if they work for private entities, even if their activities are substantially related to the fire
protection or law enforcement activities performed by a public agency (29 C.F.R. §553.215(c)).
attend required training sessions after a day’s work and who picks up other deputies is considered to be at
work while driving (Wage and Hour Opinion Letter dated May 4, 1989). Finally, time spent by police
officers in physical fitness training while off-duty is not compensable (Wage and Hour Opinion Letter
dated June 1, 1994).
It is important to note that just because employees cannot return home after work does not mean that
they continue to be on duty after the shift. For example, firefighters working on a forest fire may be
transported to a camp after their shift in order to rest and eat a meal. This time is generally not compens-
able (29 C.F.R. §553.221(g)).
A Wage and Hour Opinion Letter dated Sept. 10, 1987, clarified three additional working time issues
of special interest to public safety employees: time spent seeking medical treatment; time spent testifying
in court; and time spent purchasing uniforms. The letter was signed by the DOL administrator, which
means that it may be relied upon by the inquiring employer as a “good faith” defense (29 U.S.C. §259; see
¶952 of the Handbook).
Whether time spent seeking medical treatment for an industrial accident is considered compensable
working time depends on who made the appointment and at what time it is scheduled. According to the
opinion letter, if the employer or the employer’s agent (insurance carrier) directs the employee to seek
medical attention during the workday, the time spent traveling to the doctor and receiving treatment is
considered compensable working time (29 C.F.R. §785.43). However, if the appointment is scheduled
during off-duty hours, the time is not compensable working hours, nor is the appointment “hours worked”
if the employee makes the appointment on his or her own initiative and schedules it during the workday.
DOL stated in the Sept. 10, 1987, opinion letter that:
In order for the time spent waiting for or receiving medical attention or treatment to becompensable, the visit to the doctor must be at the direction of the employer and it must occurduring the employee’s normal work hours on days when the employee is working.
With respect to whether time spent purchasing a uniform is compensable, DOL also noted in that
administrative ruling that while public safety departments furnish uniforms to employees, it is customary
that employees be fitted for and pick up the uniforms on their own time and that this practice comports
with the FLSA. Thus, such time is noncompensable.
See ¶678 for a discussion of the compensability of time spent testifying in court or other proceedings.
¶671 Sleep Time
When a state or local government has elected to use the section 207(k) exemption, sleep and meal
time cannot be excluded from compensable time under 29 C.F.R. §553.201 where:
(1) the employee is on duty for less than 24 hours (which is the general rule applicable to all
employees; see 29 C.F.R. §785.21); or
(2) the employee is on duty exactly 24 hours (which represents a departure from 29 C.F.R. §785.21).
In a Wage and Hour Opinion Letter dated June 6, 1975, DOL clarified the exclusion of meal time:
The preceding rule concerning employees under section 7(k) who are on duty 24 hours or lessapplies in the usual case of a police officer’s meal period. Of course, if the police officer is com-pletely relieved from duty during the meal period, and is not required to remain in radio contact, theofficer would be off duty during this period and such meal period time would not be included inhours worked for purposes of section 7(k) of the act.
In a subsequent Wage and Hour Opinion Letter dated July 29, 1985, Deputy Undersecretary of Labor
Susan R. Meisinger stated that DOL's regulations “should not be read to preclude the exclusion from an
employee’s compensable hours of work time spent in bona fide meal periods when the policeman is completely
relieved from duty.” Meisinger in the letter approved the city of Los Angeles’ system under the following
terms:
With respect to law enforcement employees, we would not consider the fact that they remainin uniform as meaning that they are on duty while eating a meal. Moreover, we would not considerinfrequent interruptions of short duration which may occur when a citizen compliments, or asksthe law enforcement employee a simple question, as nullifying the exclusion of an otherwise bonafide meal period from compensable hours of work. Therefore, if the 3/4-hour meal period grantedthe city’s police officers meets these conditions, the time so spent can be excluded from theircompensable hours of work.
On the other hand, where law enforcement personnel are required to remain on call in barracks or
similar quarters, or are engaged in extended surveillance activities (e.g., “stakeouts”), they are not consid-
ered relieved from duty, and any such meal periods are compensable (29 C.F.R. §553.223(b)).
With respect to employees under section 207(k) who are confined to a duty station, FLSA regulations
reflect the intent of Congress to mandate a departure from the usual FLSA rules. Where a public agency
elects to use the section 207(k) exemption for employees, meal time in this situation cannot be excluded
from the compensable hours of work where the employee is on a tour of duty of less than or exactly 24
hours (29 C.F.R. §553.233(c)). Even for shifts in excess of 24 hours, meal time for employees must be free
of duties, whether active or inactive, so that the employees can eat a regular meal. If meal time is inter-
rupted, the time spent responding to the situation is compensable. According to DOL, meal periods for
207(k) employees must occur at a scheduled hour or within a specified time frame during the work day that
is suitable for a normal meal period. The meal period can be adjusted to accommodate an emergency,
however (Wage and Hour Opinion Letter dated Sept. 11, 1987).
Note that in the case of police officers or firefighters who are on a tour of duty of more than 24 hours,
meal time may be excluded from compensable hours of work, provided that the tests in 29 C.F.R. §785.19
and §785.22 (bona fide meal periods free from duty) are met (29 C.F.R. §553.223(c)).
Under FLSA regulations (29 C.F.R. §785.19), the meal time rule of general applicability provides the
following:
(a) Bona fide meal periods. Bona fide meal periods are not work time. Bona fide meal periodsdo not include coffee breaks or time for snacks. These are rest periods. The employee must becompletely relieved from duty for the purposes of eating regular meals. Ordinarily, 30 minutes ormore is long enough for a bona fide meal period. A shorter period may be long enough under special
conditions. The employee is not relieved if he is required to perform any duties, whether active orinactive, while eating. For example, an office employee who is required to eat at his desk or afactory worker who is required to be at his machine is working while eating [citations omitted].
(b) Where no permission to leave the premises. It is not necessary that an employee bepermitted to leave the premises if he is otherwise completely freed from duties during the mealperiod.
The most frequently litigated issue with respect to this section is whether the employee is “completely
relieved from duty.” While questions also can arise regarding the length of the meal period, the 30-minute
length specified in the regulations is not absolute (Blain v. General Electric Company, 371 F. Supp. 857
(W.D. Ky. 1971); see also Douglass v. Hurwitz Co., 145 F. Supp. 29 (E.D. Pa. 1956)). The court in Blain
cited several DOL opinion letters in support of this proposition. See Wage and Hour Opinion Letters dated
Dec. 21,1943, (15 minutes), and Oct. 13, 1964, (20 minutes).
Court cases involving meal time have arisen in a variety of employment areas; however, most of the
conclusions reached in these cases can be stated generally and can apply to any type of worker. Note that
more than meal time compensation alone is often at stake: If the employee has already worked 40 hours (or
some other statutory threshold) that week, his or her meal time is compensable at an overtime rate.
Which standard to apply?
Generally speaking, there are two types of resolutions to meal-time disputes: those applying a “pre-
dominant benefit’’ standard (i.e., who receives the greatest benefit from the meal period, the employer or
the employee?) (see ¶441 of the Handbook), and those applying a “completely relieved from duty” stan-
dard (i.e., is the employee required to perform any duties during the meal period?). In Hill v. United States
(751 F.2d 810 (6th Cir. 1984), cert. denied, sub nom. Cummings v. United States, 474 U.S. 817 (1985)),
the plaintiffs were postal workers who were allowed 30-minute lunch breaks. The employees had a choice
of dining at three lunch places, chosen by them and approved by their supervisors. However, the employ-
ees were required to carry certain items (keys and special types of mail) to lunch with them.
Relying on Armour & Co. v. Wantock, 323 U.S. 126 (1944), the 6th U.S. Circuit Court of Appeals in
Hill applied a “predominant benefit” standard, finding that the postal workers’ lunch breaks were noncom-
pensable under the FLSA. The court found the postal workers’ case to be unlike F.W. Stock & Sons v.
Thompson, 194 F.2d 493 (6th Cir. 1952), in which mill workers had to pay “constant attention” to their
machines and thus were deemed to be working. The Hill court also noted that there was no evidence that
the postal workers were subject to more than minimal (if any) interruptions during their lunches.
In another case, which consolidated two appeals (Henson v. Pulaski Sheriff’s Department and Houser
v. North Little Rock Police Department, 1 Wage & Hour Cas. 2d 1057), the 8th U.S. Circuit Court of
Appeals ruled that meal time spent by sheriff’s deputies and police officers was noncompensable. In its
decision, the court rejected the “completely relieved from duties” test under DOL regulations in support of
the “predominant benefit” standard, which the court called the proper test for determining the compens-
ability of meal periods under the act. “Established in the earliest cases interpreting the FLSA, this standard
comports with the [U.S.] Supreme Court’s admonition to use a practical, realistic approach under the
unique circumstances of each case when deciding whether certain activities constitute compensable work,”
the 8th Circuit said. The majority of federal circuit courts also have adopted this standard in examining the
compensability of meal periods and on-call time (see, for example, Lamon v. Shawnee, Kan., 972 F.2d
1145 (10th Cir. 1992); Birdwell v. City of Gadsden, Ala., 970 F.2d 802 (11th Cir. 1992)).
Another case, Culkin v. Glenn L. Martin Nebraska Co., 97 F. Supp. 661 (D. Neb. 1951), aff ‘d, 197
F.2d 981 (8th Cir.), cert. denied, 344 U.S. 866 (1952), often is cited as proof that compensation for meal
times is due if any duties are required of the employee. In Culkin, security guards at a military contractor’s
plant at the height of World War II had to be paid for meal times when they were required to remain on the
premises, wear their sidearms and watch for employees without a badge. The duties required in Culkin
were, in fact, substantial, and the holding is thus consistent even with the “predominant benefit” standard.
In comparison, in Agner v. United States, 8 Cl. Ct. 635 (1985), aff’d, 795 F.2d 1017 (Fed. Cir. 1986),
security guards were required to keep their radios on during meals, but were otherwise free to “eat, rest
and engage in any other appropriate personal activity.” Their meal times were held to be not compensable.
(See also Nerseth v. United States, 17 Cl. Ct. 660 (1989) (a forest service dispatcher required to eat while
monitoring a radio was not entitled to compensation.))
Meal periods and the Section 207(k) rule
As noted above, there are special meal time rules for law enforcement officers and firefighters who
work special §207(k) schedules. The FLSA regulation (29 C.F.R. §553.223(b)), which applies to certain
law enforcement officers, states:
If a public agency elects to use the section 7(k) exemption, the public agency may, in the caseof law enforcement personnel, exclude meal time from hours worked on tours of duty of 24 hours orless, provided that the employee is completely relieved from duty during the meal period, and all theother tests in §785.19 of this title are met. On the other hand, where law enforcement personnel arerequired to remain on call in barracks or similar quarters, or are engaged in extended surveillanceactivities (e.g., stakeouts), they are not completely relieved from duty, and any such meal periodswould be compensable.
The subtle differences between this regulation and 29 C.F.R. §785.19 have been the subject of several
court cases. In Lamon, for example, the 10th U.S. Circuit Court of Appeals noted that both regulations
require an employee to be “completely relieved from duty” for a meal break to be noncompensable;
however, only the general regulation, not the §207(k) regulation, states that “the employee is not relieved
if he is required to perform any duties, whether active or inactive, while eating.”
The appellate court in Lamon therefore held that, unlike most employees, law enforcement personnel
may be required to perform some duties during their non-compensable meal periods. The test is whether
“during meal periods a police officer’s time and attention are primarily occupied by a private pursuit,
¶699 Commonly Asked Questions Concerning Police and Firefighters
1. Is the time a police officer spends in court waiting to testify considered working time?
The time spent by a police officer waiting to testify is considered working time under the FLSA.The regulations state that time spent away from the employer’s premises under conditions that restrict anemployee from using the time effectively for personal pursuits constitutes compensable hours of work (29CFR 553.221). For example, a police officer who is required to remain at home until summoned
to testify in a pending court case, and thereby must be in a constant state of readiness, is engaged incompensable hours of work. If an “on-call” system could be worked out, such waiting time might not becompensable.
2. Are volunteer firefighters considered employees of the jurisdiction?
Bona fide volunteers are those who perform hours of service for civic, charitable or humanitarianreasons without promise, expectation or receipt of compensation for services rendered (29 C.F.R.§553.101). Volunteers lose their status and become employees if they are compensated for their time.However, the FLSA permits volunteers to be reimbursed for expenses, reasonable benefits or nominalfees. Included in the definition of expenses, reasonable benefits or nominal fees (29 C.F.R. §553.106) arethe following:
• uniform allowances or reimbursements for cleaning expenses;• out-of-pocket expenses such as meals and transportation;• tuition, transportation, and meal costs involved in attending special classes or training for fire
protection;• books, supplies and other materials;• benefits, such as inclusion in group insurance plans, pension plans, or length of service awards; and• nominal fees, including “per call” fees.
However, a full-time paid firefighter cannot be a volunteer firefighter part of the time in the samejurisdiction. The U.S. Department of Labor says that an employee cannot be both a “paid” employee and a“nonpaid” volunteer while performing the same type of work for the same employer (29 C.F.R. §553.102).
So long as these two tests are met the volunteer may not be considered an employee.
3. Is a police officer who works a second job as a security guard for a private company and wears hispolice uniform while on duty entitled to overtime pay by the jurisdiction?
The jurisdiction would not be responsible for the hours a police officer worked on a second job as asecurity officer, as long as he worked for and was paid by the second employer. However, if while on thesecond job the police officer responds to an emergency or makes an arrest for the jurisdiction, that timewould be compensable by the jurisdiction.
4. Must firefighters or police who are off their shifts, but still on-call the rest of the time, be paid for theon-call time?
The answer depends upon the restrictions placed on the employee during the on-call periods. It
would not be deemed working time in most cases if the employee is free to engage in his or her ownpursuits, subject only to the employee leaving word where he or she can be reached by the employer. Theability of the employee to leave the jurisdiction while otherwise on-call would virtually ensure that theon-call time is not compensable. If the employee made a call, the time making the call would, of course,be compensable.
Employers should remember that if an employee is not really free to use the on-call time freely, thenthat time would be considered compensable (29 C.F.R. §553.221).
5. Would it be considered working time if a police officer is off duty but responds to an emergency?
The time spent responding to an emergency — at least when required by the employee’s job duties —when a police officer is off-duty would be considered compensable time (29 C.F.R. §553.221(g)). Gener-ally, all time during which the employee is “suffered or permitted” to work for the employer is compens-able time.
6. In a situation where a police department sets up a corporation that operates as a referral service forsecurity jobs, would police who take the security jobs be considered employees of the jurisdiction whileworking at the security jobs?
A police officer working a job outside the department, who has been referred to that job by hisdepartment, is not considered to be an employee of the jurisdiction while performing duties on the secondjob so long as the special detail work is performed (1) solely at the employee’s option and (2) the twoemployers are separate and independent entities (29 C.F.R. §553.227). The hours of work for the separateand independent employer are not combined with the hours worked for the primary public agency, evenwhere a state law or local ordinance requires that such work be performed by public agency personnel (forexample, a city ordinance requiring police at sporting events in the city stadium).
7. Are police officers eligible for overtime compensation when they are extraditing a prisoner?
A police officer who is engaged in extraditing a prisoner would be entitled to compensation for thatwork (29 C.F.R. §553.221). All of the time with the prisoner would be working time, except for any timein which the officer is completely free from duty to eat or sleep. (Any such free time is unlikely in a one-officer extradition.)
8. Do ambulance drivers working out of the police or fire department fall under the section 207(k)exemption for police and firefighters?
Possibly, so long as the ambulance service personnel form an integral part of the public agency’s fireprotection activities and spend less than 20 percent of their time on nonexempt activities (29 C.F.R.§553.210). Moreover, ambulance drivers of a public agency other than a fire protection or law enforce-ment agency might be treated as employees engaged in fire protection or law enforcement activities andwould fall under the section 207(k) exemption if their services are substantially related to firefighting orlaw enforcement activities (29 C.F.R. §553.215). Their services would be related if:
• the ambulance and rescue service employees have received special training in the rescue of fire,crime, and accident victims or firefighters or law enforcement personnel injured in the performance oftheir duties; and
• the ambulance and rescue service employees are regularly dispatched to fires, riots, natural disas-ters, accidents and crime scenes.
9. Would emergency medical service technicians be considered exempt under the professional oradministrative definitions?
Physicians and registered nurses who might be part of the emergency medical service (EMS) teamwould be exempt professionals. The head of the EMS team, if a non-professional, might qualify as eitheran executive or administrative employee; the rest of the team most likely would not qualify (see Tab 200).Any such determination is highly dependent on the facts in each case — what the employee does andwhether he or she does it without direct supervision and exercises genuine discretion and independentjudgment.
10. If a person is a firefighter but also drives an ambulance for the fire department, would that em-ployee still be eligible for the section 207(k) exemption?
Yes, if the ambulance driving includes calls at fires. In the unusual case where the ambulancedriving was completely unrelated to fire department work, then the employee would be eligible if theambulance driving did not exceed 20 percent of his or her time. Under the FLSA regulations, policeofficers and firefighters may perform such non-exempt work as long as it doesn’t exceed 20 percent of theemployee’s total hours of work in the work period (29 C.F.R. §553.212).
11. If a fire department contracted for ambulance service, would the ambulance drivers be consideredemployees of the fire department?
Employees of a bona fide private ambulance service would not be considered employees of the firedepartment so long as the ambulance service contractor is an independent contractor. Ambulance andrescue service employees of private companies do not come under the section 207(k) exemption (29C.F.R. §553.202).
12. If volunteer firefighters are given $25 per month off their utility bills to help defray the expense ofdamaged or burned clothing, would they still be considered volunteers?
Reimbursement for out-of-pocket expenses incurred incidental to answering a call or replacingclothing would not negate the volunteer status. However, if the payment is for replacement of clothing,the cost should be documented, at least sufficiently to reflect a reasonably accurate estimate. The FLSApermits reimbursement of volunteers for expenses, reasonable benefits or nominal fees. The regulationsspecifically permit a public agency to pay volunteers for the wear and tear on personal clothing wornwhile performing hours of volunteer service (29 C.F.R. §553.106).
13. If a city employee is also a volunteer city firefighter and leaves her job to fight a fire, would she beconsidered an employee of the jurisdiction during the time spent fighting the fire?
It would appear that in such circumstances the employee is a bona fide volunteer. An individual isnot considered a volunteer where she is otherwise employed by the same public agency to perform thesame type of services. Although the employee here works for the city, she is not a firefighter in herregular job and may be considered a volunteer firefighter. The employee is not “working” during the timeshe volunteers, and thus no compensation is due.
14. Are police chiefs considered exempt under the executive or administrative test?
If the duties and salary of a police chief, ranking police officer, or detective would meet the “stan-dard” or “highly compensated employee” tests for executive or administrative employees, then he or shecould be considered exempt (see Tab 200 of the Handbook). The police chief is almost certain to qualifyfor one or the other exemption. Other ranking police officers and detectives may be exempt, depending ontheir job duties and responsibilities, and how closely they are supervised.
15. Would a police dispatcher who is also a police officer be eligible for the section 207(k) exemption?
If the police dispatcher could meet all of the following criteria, the dispatcher would be includedunder the section 207(k) exemption:
• is a uniformed or plainclothes member of a body of officers or subordinates empowered to maintainpublic peace and order and protect both life and property and prevent and deter crimes;
• has undergone, or is undergoing, or will undergo on-the-job training and/or a course of instructionor study that typically includes self-defense, physical training, firearm proficiency, criminal and civilprinciples, investigative and law enforcement techniques, community relations, medical aid, and ethics.Typically, however, dispatchers are civilian employees who do not meet the above criteria and thus are noteligible for the 207(k) plan (29 C.F.R. §553.211(g)).
16. How should overtime be handled where an ambulance driver works for both the hospital and thefire department of the same political subdivision at the same time and is paid from separate pay-rolls?
To qualify for the section 207(k) firefighter work period (i.e., overtime only after 212 hours in a28-day period), the 20 percent test must be met. In other words, the time worked for the hospital mustbe 20 percent or less of the time worked by the employee. The employee must be paid overtime on thebasis of a regular rate of pay, calculated as the weighted average hourly rate earned during the workweek,or if applicable, up to a 28-day work period. Alternatively, in some circumstances, such an employee mayagree with the employer in advance that he or she will be paid overtime at the rate applicable to the typeof work performed during the overtime hours (29 C.F.R. §778.419).
17. Would a volunteer firefighter who is paid $4.00 per call for expenses be considered an employee?
Individuals do not lose their volunteer status when they receive payment for expenses incurred whilevolunteering. Out-of-pocket expenses incurred, such as payment for the cost of meals and transportation,may be paid to volunteers. In addition, volunteers may be paid a nominal fee on a “per call” basis forvolunteering. The following factors are considered in determining whether a given per call amount isnominal (29 C.F.R. §553.106):
• the distance traveled;• the time and effort expended by the volunteer;• whether the volunteer has agreed to be available around-the-clock or only during specified time
periods; and• whether the volunteer provides services as needed or year-round.
A payment of $4.00 per call is probably a reasonable amount to cover out-of-pocket expenses and/oras a nominal fee. Therefore, the volunteer would not lose his status because of the payment.
18. If a police officer has a patrol car serviced during off hours, would that time be considered working time?
Working time includes pre-shift and post-shift activities that are an integral part of the employee’sprincipal activities or that are closely related to performance (29 C.F.R. §553.221). An argument can bemade that time spent having the patrol car serviced would be considered working time. On the other hand,if the officer also is allowed to take the car home and use it off-duty for personal purposes, it is possiblethat maintenance of the car would not be working time.
19. If a fire department has a three-day work cycle (one-day-on, two-days-off) for its firefighters, wouldthis cycle qualify for the section 207(k) exemption?
The department can establish any cycle it chooses, as long as the work period is not less than seven,nor more than 28, consecutive days. The regulations define “work period” as any established and regularlyrecurring period of work. It need not coincide with the pay period or with a particular day of the week orhour of the day. Thus, such a fire department could establish a work period of any multiple of three-daycycles (i.e., nine, 12, 15, 18, 21, 24, or 27 days).
20. Can police officers and firefighters trade shifts without having to be paid overtime, if the trade-offmeans the employee would be working more than 40 hours a week?
According to the 1985 FLSA amendments (29 U.S.C. §207(p)(3)), state or local government person-nel may trade or substitute tours of duty without the state or local government employer being subject toadditional overtime compensation by virtue of the voluntary trading of time by such employees. Thefollowing criteria must be met in order for there to be no effect on hours worked to the employer:
• substitution or trading is done voluntarily (i.e., solely at the employees’ option); and• the substitution or trading is approved by the employer.
The employees’ decision to substitute for each other should be made without any coercion by theemployer, and they should be free to refuse such substitution without sanction or explanation. Substitution
should be at the employee’s own convenience, without fear of reprisal or promise of reward. There is norequirement that the employer maintain a record of time traded or substituted, nor is there any period oftime for which the time traded must be paid back by the other employee (29 C.F.R. §553.31).
21. Would a public works employee who is a volunteer firefighter be eligible for overtime compensationwhen fighting a fire?
Individuals who volunteer to perform fire protection or law enforcement activities, usually on apart-time basis, are not considered employees of the jurisdiction and would therefore not be eligiblefor overtime compensation for fighting a fire as volunteers. Volunteers may include individuals who areemployed in some other capacity for the same public agency (29 C.F.R. §553.101). To the extent theso-called “volunteer” is given more than nominal compensation, he or she could become an employee(29 C.F.R. §553.106).
22. When can a jurisdiction use the “Belo” plan for calculating overtime?
The Belo plan guarantees compensation for a predetermined amount of overtime. It can be used onlyfor employees whose work necessitates irregular hours. In other words, the nature of the work mustdictate the hours to be worked — not the employer. It guarantees compensation at a predetermined amountof overtime.
A jurisdiction may employ the Belo plan if the following requirements are met:• a specific agreement is reached between the employer and the employee;• the employee’s duties necessitate irregular hours of work, some of which result in workweeks of less
than 40 hours;• the weekly overtime pay is guaranteed; and• the guaranteed number of weekly hours worked does not exceed 60 per week (29 C.F.R. §778.402).
DOL interprets eligibility for Belo plans strictly, but firefighters are one occupation that may qualify.
• clean-up work, including the use of vacuum cleaners and floor waxers, and maintenance of grounds,
but not including the use of power-driven mowers or cutters;
• kitchen work and other work involved in preparing and serving food and beverages, including the
operation of machines and devices used in performing such work, including but not limited to dishwashers,
toasters, dumbwaiters, popcorn poppers, milk shake blenders, and coffee grinders;
• work in connection with cars and trucks confined to dispensing gasoline and oil; courtesy service;
car cleaning, washing and polishing, but not work involving the use of pits, racks or lifting apparatus, or
involving the inflation of any tire mounted on a rim equipped with a removable retaining ring; and
• cleaning vegetables and fruits, and wrapping, sealing, labeling, weighing, pricing and stocking
goods when performed in areas physically separate from work in freezers and meat coolers. No other work
involving the preparing of meat for sale can be performed except as described in this section.
¶722 Hours of Work for Minors 14 to 16 Years of Age
There are restrictions on the number of hours that minors 14 to 16 years old may be employed, as well
as restrictions on the time of day they may be employed.
Minors who are between 14 and 16 years old are confined to the following periods for employment in
any qualified occupation (29 C.F.R. §570.35(a)):
• outside school hours;
• not more than 40 hours in any one week when school is not in session;
• not more than 18 hours in any one week when school is in session;
• not more than eight hours in any one day when school is not in session;
• not more than three hours in any one day when school is in session; and
• between 7 a.m. and 7 p.m. in any one day, except during the summer (June 1 through Labor Day)
when the evening hour is 9 p.m.
There is an exception to the above restrictions for minors 14 and 15 years of age who are employed to
perform sports-attending services at professional sporting events, i.e., baseball, basketball, football, soc-
cer, tennis, etc. (29 C.F.R. §570.35(b)):
The requirements of paragraphs (a)(2) through (a)(6) of this section shall not apply, providedthat the duties of the sports-attendant occupation consist of pre- and post-game or practice set-up ofballs, items and equipment; supplying and retrieving balls, items and equipment during a sportingevent; clearing the field or court of debris, moisture, etc. during play; providing ice, drinks, towels,etc., to players during play; running errands for trainers, managers, coaches, and players before,during and after a sporting event; and returning and/or storing balls, items and equipment in clubhouse or locker room after a sporting event. For purposes of this exception, impermissible dutiesinclude grounds or field maintenance such as grass mowing, spreading or rolling tarpaulins used tocover playing areas, etc.; cleaning and repairing equipment; cleaning locker rooms, showers,lavatories, rest rooms, team vehicles, club houses, dugouts or similar facilities; loading and unload-ing balls, items and equipment from team vehicles before and after a sporting event; doing laundry;and working in concession stands or other selling and promotional activities.
Employers should keep accurate and complete records of each employee’s work hours and compensa-
tion, since keeping good records can benefit the employer if and when an employee sues. Employers should
not only maintain the records required by the Fair Labor Standards Act (FLSA), but should document every
job action that is taken with each employee. For example, documenting the events leading up to an
employee’s termination and the reasons for that action can make a significant difference if the employer later
is sued for wrongful discharge. No employer should wait until it is sued to begin preparing its defense to
such claims.
The adequacy of an employer’s records is a subject closely related to the legal concept of “burden of
proof” in an FLSA case. Burden of proof is defined in Black’s Law Dictionary as “the necessity or duty of
affirmatively proving a fact or facts in dispute.”
Proving Hours Worked and Wages Paid
Relatively early in the FLSA’s history, the U.S. Supreme Court ruled that “an employee who brings suit
under [29 U.S.C. §216(b)] of the [FLSA] for unpaid minimum wages or unpaid overtime compensation,
together with liquidated damages, has the burden of proving that he performed work for which he was not
properly compensated” (Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946)).
However, continued the High Court:
The remedial nature of this statute [i.e., the FLSA] and the great public policy which itembodies ... militate against making that burden an impossible hurdle for the employee. Due regardmust be given to the fact that it is the employer who has the duty under [29 U.S.C. §211(c)] of the[FLSA] to keep proper records, of wages, hours and other conditions and practices of employmentand who is in the position to know and to produce the most probative facts concerning the nature andthe amount of work performed.
The Supreme Court also explained how the burden of proof shifts from the employee to the employer:
[A]n employee has carried out his burden if he proves that he has in fact performed work forwhich he was improperly compensated and he produces sufficient evidence to show the amount andextent of that work as a matter of just and reasonable inference. The burden then shifts to theemployer to come forward with evidence of the precise amount of work performed or with evidenceto negative the reasonableness of the inference from the employee’s evidence.
An employee’s “proof” may be nothing more than his or her credible sworn testimony (see Arias v.
United States Service Industries Inc., 80 F.3d 509 (D.C. Cir. 1996)).
As noted by the Supreme Court in Anderson, an employer that complies with the FLSA’s recordkeeping
requirements should have no trouble proving the hours worked by its employees and the wages paid to them.
This is because the FLSA’s recordkeeping requirements are quite detailed (see ¶810 of the Handbook).
However, stated the Anderson court, if an employer fails to comply with these requirements, the courts will
not “penalize the employee by denying him any recovery on the ground that he is unable to prove the precise
If DOL receives a complaint alleging only minor violations affecting one or a few employees, then DOL
will assign the complaint to an investigator as a “conciliation,” as opposed to an investigation. A conciliation
is a technique that provides a faster resolution by focusing on a single employee or minor violation that can
often be handled over the telephone. Conciliations are converted to full investigations when additional viola-
tions are discovered or the facts of a case are unclear.
¶911 DOL Investigative Procedures
DOL has identified the following investigative procedures (WH Publication 1340 (Rev. Aug. 1979)) for
a compliance officer to use when he or she calls upon an employer. The compliance officer will:
• identify him- or herself and show the employer official credentials.
• confer with the employer or a designated representative, making any necessary explanations about the
records that need to be seen and the approach to be taken. The compliance officer will also ask the employer’s
permission to conduct private interviews with some employees.
• ask the employer to make space available for his or her use and to designate some staff members who
can help with questions about the employer’s records and payroll system.
• ask to see certain records to determine what laws apply and what, if any, exemptions are available (for
example, records of government contracts, records showing interstate commerce, or records showing the
employer’s annual dollar volume of business).
• review payrolls and time records, often on a spot-check basis, and make notes or transcriptions essential
to the investigation. Information from the employer’s records will not be revealed to any unauthorized person.
• interview certain employees privately. Generally, the purpose of such interviews is to confirm payroll or
time records, to identify workers’ duties in sufficient detail to decide what, if any, exemptions apply, and to
determine if minors are illegally employed.
When all of the fact-finding steps have been completed, the compliance officer will ask to meet with the
employer (or its representative) about the investigative findings. If no violations were discovered, the compliance
officer will tell the employer. If violations were found, the employer will be told what they are and how to correct
them. If the employer owes back wages, the usual procedure is to ask it to compute and pay the amounts due.
¶912 How Wage and Hour Targets Investigations
According to WH Publication 1340 (Rev. Aug. 1979), there are many reasons for an investigation of a
particular employer:
Some [investigations] are based on complaints; some on other information that an establishmentmay not be complying with a law; some on the need to correct improper practices found in a particularindustry; and some on a general plan to see as many covered employers as possible within the limits ofavailable Wage and Hour staff. If the Division has received a complaint, the compliance officer musttreat the complaint confidentially.
Consequently, an employer will not know the reason for a DOL investigation, though most investiga-
Employees under 20 years of age may be paid $4.25 per hour during their first 90 consecutive calendar days ofemployment with an employer.
Certain full-time students, student learners, apprentices, and workers with disabilities may be paid less than theminimum wage under special certificates issued by the Department of Labor.
Tip Credit: Employers of “tipped employees” must pay a cash wage of at least $2.13 per hour if they claim a tip creditagainst their minimum wage obligation. If an employee’s tips combined with the employer’s cash wage of at least$2.13 per hour do not equal the minimum hourly wage, the employer must make up the difference. Certain otherconditions must also be met.
Overtime PayAt least 11⁄2 times an employee’s regular rate of pay for all hours worked over 40 in a workweek.
Child LaborAn employee must be at least 16 years old to work in most non-farm jobs and at least 18 to work in non-farm jobsdeclared hazardous by the Secretary of Labor. Youths 14 and 15 years old may work outside school hours in variousnon-manufacturing, non-mining, non-hazardous jobs under the following conditions:
No more than: • 3 hours on a school day or 18 hours in a school week;
• 8 hours on a non-school day or 40 hours in a non-school week.
Also, work may not begin before 7 a.m. or end after 7 p.m., except from June 1 through Labor Day, when eveninghours are extended to 9 p.m. Different rules apply in agricultural employment.
EnforcementThe Department of Labor may recover back wages, either administratively or through court action, for the employeesthat have been underpaid in violation of the law. Violations may result in civil or criminal action.
Fines of up to $10,000 per violation may be assessed against employers who violate the child labor provisions of thelaw and up to $1,000 per violation against employers who willfully or repeatedly violate the minimum wage orovertime pay provisions. This law prohibits discriminating against or discharging workers who file a complaint orparticipate in any proceedings under the Act.
Note: • Certain occupations and establishments are exempt from the minimum wage and/or overtime pay provisions.• Special provisions apply to workers in American Samoa.• Where state law requires a higher minimum wage, the higher standard applies.
For Additional Information, Contact the nearest Wage and Hour Division office — listed in your telephone directoryunder United States Government, Labor Department.
This poster may be found on the world wide web at this address: http://www.dol.gov/dol/esa/regs/compliance/posters/flsa.htm
Your Rights Under the Fair Labor Standards Act
Federal Minimum Wage
$4.75 perhour
beginning October 1, 1996
$5.15 perhour
beginning September 1, 1997
The law requires employers to display this poster where employees can readily see it.
WH Publication 1088Revised October 1996
U.S. Department of LaborEmployment Standards AdministrationWage and Hour DivisionWashington, D.C. 20210
644 F. Supp. 1202 (W.D.Texas 1986)). However, employers should be prepared to present detailed evidence
of their good faith and reasonable grounds if they intend to rely on the good-faith defense, since courts have
not established a definitive test to determine when employers have acted in good faith (see ¶951). Note,
however, that while courts may deny the recovery of liquidated damages, they may award prejudgment interest
(see ¶923).
Even when employers act in good faith, courts may award partial liquidated damages to compensate
employees for delays in paying the wages that are due to them.
Waiver of liquidated damages
In Brooklyn Savings Bank v. O’Neil, 324 U.S. 697 (1945), the U.S. Supreme Court ruled that an employee
cannot waive, by acceptance of a check or even a signature on a release or waiver form, liquidated damages
under the act. The High Court in Brooklyn also refused to award interest on an FLSA claim, reasoning that
allowing interest on top of liquidated damages is akin to allowing interest on interest.
In an age discrimination case (involving the enforcement provisions of the FLSA), a three-member panel
of the 6th Circuit ruled that an employee who was an attorney could execute a release of his own claim in
return for $12,000 and still then sue his employer for liquidated damages and back wages (Runyan v. National
Cash Register Corp., 759 F.2d 1253 (6th Cir. 1985)). While this decision was reversed by the entire 6th
Circuit court on the basis that the Age Discrimination in Employment Act’s remedial scheme was different
from the FLSA, the original holding presumably still would be valid for an FLSA action (Runyan v. National
Cash Register Corp., 787 F.2d 1039 (6th Cir. 1986)). Thus, if employers wish to settle potential FLSA suits,
they are well advised to ask DOL to formally review their potential settlements to eliminate or minimize the
likelihood of further litigation (see ¶960).
Emotional Damages
The Fair Labor Standards Act was amended in 1977 to allow “equitable relief” under the act’s anti-
retaliation rules. The statute (29 U.S.C. §216(b) states that:
Any employer who violates the provisions of section 15(a)(3) of this act [29 U.S.C. §215(a)(3),the anti-retaliation provision] shall be liable for such legal or equitable relief as may be appropriate toeffectuate the purposes of section 15(a)(3), including without limitation employment, reinstatement,or promotion, and the payment of wages lost and an additional equal amount as liquidated damages.
Interpreting this provision — particularly, what kind of economic relief is envisioned under the rule —
has generated great controversy in the courts. The 7th U.S. Circuit Court of Appeals, for example, decided that
the phrase “legal relief” includes compensatory and punitive damages and ruled in Travis v. Gary Community
Mental Health Center, 921 F.2d 108 (7th Cir. 1990), that workers who proved their employer discriminated
against them for raising FLSA claims could be awarded compensation for emotional distress and punitive
The U.S. Department of Labor (DOL) may sue employers for back pay, overtime, interest, liquidated
damages, costs and equitable relief in much the same manner as with private action (¶932). In addition, DOL is
given other tools to pursue recalcitrant employers (¶¶931-934).
†¶931 Injunctive Relief
Injunctive relief involves prohibiting an employer from doing something in the future. Although the
Secretary of the U.S. Department of Labor is empowered to bring legal action for injunctive relief on behalf of
workers, injunctive relief is not available privately to workers under the FLSA’s minimum wage and overtime
pay provisions.
Some courts, however, see injunctive relief as part of the broader remedial scheme of the act’s anti-
retaliation provisions (see, for example, Martinez v. Deaf Smith County Grain Processors Inc., 583 F. Supp.
1200 (N.D. Tex. 1984)). In fact, in Bailey v. Gulf Coast Transportation Inc. (7 Wage & Hour Cas.2d (BNA)
968 (11th Cir. 2002)), the 11th Circuit took the analysis one step further, rejecting the employer’s position that
the “equitable relief” described in the FLSA’s anti-retaliation rules should not include preliminary injunctions.
The 11th Circuit in Bailey — in contrast to its approach in Snapp (see ¶941) — interpreted the FLSA’s anti-
retaliation language expansively, holding that preliminary injunctive relief is available to address violations of
the act’s anti-retaliation provisions.
Highlighting just how unsettled this issue is, however, a district court within the 7th Circuit held pre-
cisely to the contrary, ruling that all employee suits for injunctive relief are prohibited under the FLSA
(Bjornson v. Daido Metal U.S.A. Inc., 12 F. Supp. 2d 837 (N.D. Ill. 1998)).
However, it is clear that DOL can request — and that a federal district court can issue when it finds an
employer has violated the FLSA — an injunction against the employer. The FLSA, 29 U.S.C. §217, provides
that district courts:
shall have jurisdiction, for causes shown, to restrain violations of section 15, including in the caseof violations of section 15(a)(2) [i.e., failure to pay minimum wage or overtime] the restraint of anywithholding of payment of minimum wages or overtime compensation found by the court to be due toemployees under this act (except sums which employees are barred from recovering at the time of thecommencement of the action to restrain the violations, by virtue of the provisions of Section 6 of thePortal-to-Portal Act of 1947).
As interpreted by the courts, this provision allows for two kinds of injunctions:
• a retrospective injunction, which requires the employer to pay minimum wages and overtime compen-
sation that were not paid when due; and
• a prospective injunction, which prohibits the employer from violating the FLSA in the future.
A prospective injunction is commonly used by district courts that hear FLSA disputes. While an em-
ployer is, of course, prohibited from violating the FLSA even in the absence of a prospective injunction, an
Section 215(a)(3) of the Fair Labor Standards Act (FLSA) protects from retaliation employees who
file complaints alleging FLSA violations or who participate in FLSA proceedings initiated by themselves
or others (29 U.S.C. §215(a)(3)). The act forbids any “person,” including an employer, from discharging,
retaliating against, demoting, harassing, or in any other manner discriminating against an employee for
engaging in a protected activity — that is a worker’s assertion of his or her FLSA rights.
Employers or others that violate the section 215(a)(3) may face fines of up to $10,000 for a first
offense, and for subsequent violations, fines of up to $10,000, plus imprisonment for up to six months. In
addition, an employee who suffers discriminatory or retaliatory treatment may seek an injunction ordering
the employer to reinstate him or her. Regardless of whether a court orders an employee to be reinstated,
employers found liable for violating the FLSA’s anti-retaliation rules may be required to pay civil rem-
edies, including back wages, attorney’s fees, and, in the case of willful violations, liquidated damages.
For a full discussion on remedies available to workers under the FLSA, see ¶920–¶928.
Since 1985, the FLSA, including its anti-discrimination provisions, has applied to state and local
governments (see Fair Labor Standards Amendments of 1985, P.L. 99-150, 99 Stat. 787; Garcia v. San
Antonio Metropolitan Transit Auth., 469 U.S. 528 (1985)). The 1985 FLSA amendments expressly provided
that section 215(a)(3) would protect public employees who asserted rights under the FLSA during a specified
transition period. Since the end of that period, which occurred in 1986, state and local employees have been
protected by the FLSA’s anti-retaliation provisions in the same manner as private-sector employees.
Another provision of the statute, 29 U.S.C. §218(a), was created to discourage employers from
nullifying the intended outcomes of the FLSA. That provision admonishes employers not to use the act or
any order issued under its authority as justification for reducing employee wages that exceed the minimum
wage as set by the FLSA. Additionally, the act does not excuse an employer from complying with any
state or federal law that sets a higher minimum wage or that mandates a shorter maximum work week than
that established by the act. Rather than imposing liability or punishment on an employer, however, this
provision warns employers that they should not act contrary to the FLSA’s goals.
¶941 Section 215(a)(3) of the Act — Discrimination/“Retaliation”
Section 215(a)(3) of the FLSA makes it unlawful for any person:
to discharge or in any other manner discriminate against any employee because such employeehas filed any complaint or instituted or caused to be instituted any proceeding under or related tothis [act], or has testified or is about to testify in any such proceeding, or has served or is about toserve on an industry committee.
Courts have held that section 215(a)(3) protects an employee when (1) the employee has engaged in a
statutorily protected activity, and (2) the employer then subjects the employee to an adverse employment
action (3) as a reprisal for having engaged in the protected activity (Blackie v. State of Maine, 75 F.3d 716
The issue of reducing employees’ wages as a method of controlling the budgetary consequences of
the FLSA was settled shortly after the original enactment of the law. Employers that wish to reduce the
base salaries or wages of their workers, so that after payment of overtime premiums the total budgetary
impact of those employees’ wages is negligible, apparently may do so under the provision codified at 29
U.S.C. §218(a). The provision provides, in part:
No provision of this act or any order thereunder shall excuse noncompliance with any federalor state law or a municipal ordinance establishing a minimum wage higher than the minimum wageestablished under this act or a maximum work week lower than the maximum work week establishedunder this act . . . and no provision of this act shall justify any employer in reducing a wage paid byhim which is in excess of the applicable minimum wage under this act.
It has been the interpretation of a majority of courts that section 218(a) was intended merely as a
warning to employers that the act was not designed to lower wages or maximum hours established in the
act (White v. Witwer Grocer Co., 132 F.2d 108 (8th Cir. 1942); Weir v. Hudson Coal Co., 99 F. Supp. 423
(M.D. Pa. 1951)). Courts have further held that section 218(a) does not prohibit agreements between
employers and employees having such an effect, provided the employee receives at least the minimum
wage (White; Weir).
Further, in a case involving the application of the overtime pay provisions of the FLSA to an em-
ployee working irregular hours for a fixed weekly wage, another court observed that the language in
section 218(a) “was intended primarily to discourage the possible tendency that the minimum wage fixed
in the act would become the maximum wage paid by employers” (Missel v. Overnight Motor Transp. Co.,
126 F.2d 98 (4th Cir. 1942), aff’d, 316 U.S. 572 (1942)). In the context of collective bargaining agreements, an
employer in another case was held not to have violated section 218 when it achieved compliance with the
FLSA through a reduction in the employees’ basic hourly compensation (General Mills Inc. v. Williams,
132 F.2d 367 (6th Cir. 1942)).
Similarly, Section 218 of the act does not establish a prohibition against an increase in hours of
employment that has the effect of reducing an employee’s regular rate of pay, as long as the minimum
wage and overtime provisions of the act are not violated (Dolan v. Day & Zimmerman Inc., 65 F. Supp.
923 (D. Mass. 1946)). Further, the adjustment of an employee’s basis of pay from a weekly or monthly
salary to an hourly wage with overtime compensation at one and one-half times the regular hourly rate
does not violate the act, even if the change results in an actual reduction in the employee’s wages
(Brueschke v. Joshua Hendy Corp., 14 Lab. Cas. ¶64,266 (S.D. Cal. 1947);Vogelpohl v. Lane Drug Co.,
Employers have several defenses that should be specially pleaded, if applicable, in answering a Fair Labor
Standards Act (FLSA) lawsuit. These defenses include an absolute good faith defense (¶951), a defense to
liquidated damages (¶953), the statute of limitations (¶954) and constitutional immunity for states (¶955).
¶951 Absolute Good Faith Defense: Reliance on DOL Opinions
The U.S. Department of Labor’s (DOL) Wage and Hour opinion letters not only provide guidance for
employers with questions about DOL policy, but may be an important defense in a lawsuit brought by an
employee alleging a violation of the FLSA. (See Appendix III of the Handbook for opinion letters pertaining to
public employers.) For instance, an employer that provides DOL with all the pertinent facts of a situation,
requests an opinion letter, and then follows the advice rendered by DOL has an absolute good faith defense
against subsequent lawsuits brought by an employee concerning the specific contents of the letter. There can be
no monetary damages assessed.
The absolute good faith defense is discussed in 29 U.S.C. §259 of the Portal-to-Portal Act (see Appendix I
of the Handbook). Specifically, the section states that:
. . . no employer shall be subject to any liability or punishment for or on account of the failure ofthe employer to pay minimum wages or overtime compensation under the Fair Labor Standards Act of1938. . . if he pleads and proves that the act or omission complained of was in good faith in conformitywith and in reliance on any written administrative regulation, order, ruling, approval, or interpretation,of the agency of the United States specified in subsection (b) of this section, or any administrativepractice or enforcement policy of such agency with respect to the class of employers to which hebelonged. Such a defense, if established, shall be a bar to the act or proceeding. . . (emphasis added.)
Essentially, the Portal-to-Portal Act provides that an employer will not be liable for back wages if it can
establish its actions were taken in good faith, in conformity with, and in reliance on a written ruling of the
Wage and Hour Administrator, even if the ruling is later found invalid.
To prevail on the basis of this defense, the employer must establish each of the elements set forth above.
Thus, for example, if an employer relies on a Wage and Hour opinion letter exempting employees from the
FLSA when four conditions exist, only three of which are met in the employer’s situation, the employer’s
reliance on the Wage and Hour opinion letter will not be a defense to liability. In such a case, the employer
would not be deemed to have acted “in conformity” with the Wage and Hour opinion letter (see 29 C.F.R.
§790.14). The statute also provides that an employer may rely on “any written administrative regulation, order,
ruling, approval, or interpretation” (see 29 U.S.C. §259). DOL regulations do not provide precise definitions of
these terms. However, the regulations state that these terms require some kind of affirmative action by the
agency. It is insufficient to meet the good-faith standard, for example, if the agency expressly declines to
express an opinion as to the application of the law in a particular fact situation or if an agency simply does not
reply to a request by an employer (see 29 C.F.R. §790.17).
damages, that an employer is likely to have to pay for violating the law, especially if the violation was merely
a result of inadvertence or even negligence.
It is also important to note that the statute of limitations is “tolled” — or stopped — at the time a lawsuit is
filed and not when an employee makes a complaint or pursues other administrative remedies (Beale v. D.C., 789 F.
Supp. 1172 (D.D.C. 1992); Johnson v. N.C. Dep’t of Transp., N.C. Ct. App., No. 9123DC691, July 21, 1992).
Equitable Tolling
As stated above, FLSA lawsuits against employers generally must be commenced within two years after
the cause of action accrues for non-willful violations and three years for willful violations. Generally, a claim
for unpaid overtime accrues at the end of each pay period for which it is owed and not paid (Cook v. U.S., 855
F.2d 848 (Fed. Cir. 1988)). The statute of limitations is typically tolled (stopped) in an FLSA case at the time a
lawsuit is filed. Under some circumstances, however, courts may “equitably toll,” or stop the statute of limita-
tions from running. Under these circumstances, an employee can bring a lawsuit more than two or three years
after the alleged underpayments.
Whether the statute of limitations is tolled is determined by the courts on a case-by-case basis, with the
understanding being that exceptions to the statute of limitations rarely should be created (Udvari v. United
States, 28 Fed. Cl. 137 (Fed. Cir. 1993)). To justify tolling of the statute of limitations (Japanese War Notes
Claimants Association of the Philippines Inc. v. United States, 373 F.2d 356 (Cl. Ct. 1967)):
Plaintiff must either show that [the employer] has concealed its acts with the result that plaintiffwas unaware of their existence or [he or she] must show that [his or her] injury was “inherentlyunknowable” at the accrual date. An example of the latter would be when [the defendant] delivers thewrong type of fruit tree to the plaintiff and the wrong cannot be determined until the tree bears fruit. Inthis situation the statute will not begin to run until plaintiff learns or reasonably should have learned ofhis cause of action.
In Udvari, for example, a U.S. Secret Service agent sought compensation under the FLSA for dog han-
dling performed during off-duty hours. The work performed fell outside the two-year statute of limitations but
the plaintiff argued that the statute of limitations should be tolled since he did not learn of his potential claim
until he consulted with an attorney. The employee knew, however, that other officers had received lump sum
payments, and he admitted that three years earlier he had begun receiving extra pay “rumored” to be for canine
care. The court did not toll the statute of limitations in that case because the employee should have “reason-
ably learned of his cause of action when he began receiving extra compensation and heard rumors about what
the compensation represented.”
In another case involving alleged overtime activities (Aguilar v. Clayton, 452 F. Supp. 896 (E.D. Okla.
1978)), employees argued that they should not be limited by the statute of limitations because they had pursued
administrative relief, having asked for overtime compensation from their commander and later filing a claim
with the Civil Service Commission. The Aguilar court concluded that the filing of an administrative claim does
not in any way toll or otherwise affect the FLSA’s two-year statute of limitations. The employees’ argument
If the employer is unable because of financial reasons to make a full, lump-sum settlement payment
for back wages, it is possible to arrange installment payments, provided the employer’s agreement to pay in
installments is “both reasonable and firm” (see U.S. Department of Labor Field Operations Handbook §53c15).
Such installments should be made based on an agreed-upon schedule, and DOL may require the employer to
waive the running of any statute of limitations.
In the event an employee refuses to accept back wages payments or cannot be located, the question arises
of who keeps the unclaimed wages due. In 29 U.S.C. §216(c) the FLSA provides as follows:
Any such sums not paid to an employee because of an inability to do so within a period of threeyears shall be covered into the Treasury of the United States as miscellaneous receipts.
Thus, the unclaimed sums are payable to the U.S. Treasury. The ostensible policy behind this rule is to
prevent unfair business competition by discouraging retention of wage underpayments by employers.
Upon settling an FLSA claim, DOL may ask the employer to sign an agreement that includes (1) a stipula-
tion of present and future compliance with the FLSA, (2) an agreement to deliver certified or cashier’s checks
for back wages, and (3) a waiver of the statute of limitations. A sample stipulation agreement can be found in
the DOL Field Operations Handbook §53c21(d).
As noted above, the settlement procedures for FLSA claims are very formalized, and employers should
seek legal counsel as well as consult with DOL prior to attempting any “private” settlement of FLSA disputes.
†¶961 Alternative Dispute Resolution
In 1997, DOL proposed a plan (62 Fed. Reg. 6690-6695; Feb. 12, 1997) to begin a pilot test program to
determine whether many labor disputes, including claims brought under the FLSA, could be addressed by
alternative dispute resolution (ADR) methods, rather than litigation. Also in 1997, the agency collected public
comments on its proposal, which DOL said was offered in response to the 1996 Administrative Dispute Resolu-
tion Act (P.L. 104-320) — a statute that reauthorized alternative means of dispute resolution in the federal
administrative process. To implement the act’s provisions, DOL’s test encompassed six categories of cases,
including those arising from the FLSA and the Family and Medical Leave Act. During the test, DOL mediated
about 30 cases, settling many of them in the first session. However, DOL put its ADR effort on hold tempo-
rarily after the pilot ended because the agency needed to resolve some funding and organizational issues.
After reconsidering how to implement ADR methods, DOL awarded a grant in September 2000 to the
Alliance for Education and Dispute Resolution at Cornell University. The university’s dispute resolution
program is designed to mediate labor cases using professionally trained, private mediators as part of a two-year
pilot program. DOL and the program’s coordinators will evaluate the effectiveness of the ADR pilot upon its
completion.
For more information on the program, contact DOL’s Office of the Assistant Secretary for Policy at (202)
Although lawyers are in the best position to deal with issues like legal venue when a Fair Labor Standards
Act (FLSA) lawsuit is filed and with other methods of resolving an FLSA claim — through arbitration, for
example — employers are well-advised to understand these legal considerations so that they can be active
partners with legal counsel should that become necessary.
¶971 Federal Removal
In May 2003, the U.S. Supreme Court ruled that an employer sued in state court for alleged violations of
the FLSA has the right — despite objections from the worker — to have the case transferred to federal court
(Breuer v. Jim’s Concrete of Brevard Inc., 123 S.Ct. 1882 (2003). The High Court’s unanimous decision in
Breuer settled a dispute among the federal circuit courts over an employer’s right to have a case transferred or,
in legal parlance, “removed” from state to federal court.
In making its decision, the Supreme Court relied on the federal removal statute, 28 U.S.C.§1441(a), which
states that:
[e]xcept as otherwise expressly provided by act of Congress, any civil action brought in a statecourt of which the district courts . . . have original jurisdiction may be removed by the defendant . . . tothe district court.
The Court ruled that since the FLSA is a federal law, the plaintiff in Breuer could have filed his suit for
unpaid overtime wages in federal district court — and therefore, under the federal removal statute, the ability
of the employer, Jim’s Concrete, to have the case transferred to federal court could be denied “only if Congress
expressly provided as much (emphasis added).”
Finding that the FLSA contains no such express prohibition against removal, the High Court said that the
employer was within its right to have the lawsuit transferred to federal court.
†¶972 Effect of Arbitration on FLSA Statutory Remedies
In recent years there has been a substantial increase in the number of employers adopting alternative
dispute resolution (ADR) mechanisms to resolve employment disputes. Major corporations that have adopted
such procedures perceive many benefits in the private resolution of disputes with employees. Employers tend
to view ADR mechanisms as working faster and also costing substantially less than full litigation. Signifi-
cantly, employers typically prefer ADR procedures such as arbitration because cases are decided by experi-
enced arbitrators, rather than by jury panels that are generally comprised of individuals who identify more
closely with employees than with managers.
Critics of the trend toward ADR contend that such procedures usually are imposed on employees
before disputes arise (often as a condition of employment or continued employment). As such, they argue,
the employer-employee agreement to take disputes to ADR is negotiated from unequal bargaining positions:
The CBA at issue in O’Brien contained no such waiver, the court said, noting that “[t]he arbitration
provision . . . applies only to ‘grievances,’ which in turn are defined as allegations that the town violated the
CBA. Not a single reference appears to arbitration of statutory claims, let alone a clear and unmistakable waiver
of a judicial forum for such claims.”
Therefore, the 1st Circuit concluded that the O’Brien police officers were not obliged to arbitrate their
wage and hour claims — and that they did have a right to file an FLSA lawsuit in federal court.
Other courts are reluctant to find that a union can consent to a waiver of statutory rights on behalf of
individual employees. For example, in Bonilla v. Small Assemblies Co., No. 99 C 6675 (N.D. Ill. 2001), a
district court ruled that the employee could proceed with an FMLA lawsuit, bypassing the union’s arbitration
mechanism entirely.
Arbitration of FMLA claims
Because the enforcement mechanisms of the FMLA are very similar to those of the FLSA, arbitrators’
rulings on FMLA issues have been particularly instructive in understanding the application of the FLSA to a
particular collective bargaining agreement. In Grand Haven Stamped Products Co., 107 LA (BNA) 131
(Daniel, 1996), for example, the union pursued a grievance over the employer’s requirement that accrued paid
leave be applied to an FMLA absence. After an extensive analysis of the statute, U.S. Department of Labor
(DOL) regulations and the preamble to the agency’s final rules, the arbitrator concluded that the company had
mistakenly imposed that requirement despite limiting language in the parties’ contract. The arbitrator stated:
Though employees under a collective bargaining agreement may acquire new rights and benefitsgreater than in the [Family and Medical Leave] Act, the employer may exercise no rights under thecontract which are contrary to the act nor does it secure from the act any right which is contrary to itscontractual commitment (emphasis added).
In other words, when a CBA and the FMLA conflict, the provision more favorable to the employee con-
trols. An employer may not reduce a contractual right by referring to the statute. Again, this same logic may be
relevant for FLSA claims.
In Grand Haven, conflicting terms in the contract included the statements that employees had the right to
choose their vacation time, and the company had the right to designate vacation periods so as to avoid
workflow disruption. The arbitrator’s ruling rejected the claim that the latter term gave the company control
over the entire vacation designation process. Basing his decision largely on the record of contract renewal
negotiations between the union and the company, the arbitrator noted that the company had sought — but not
achieved — contract language specifically recognizing its rights to impose all “employer-favorable”
terms authorized by the FMLA. Concluding that the employees’ rights under the contract were not subject
to any established past practice or unilaterally imposed restriction or condition, the arbitrator sustained
the union grievance and ruled that the company misapplied the FMLA when it required substitution of
¶999 Commonly Asked Questions About Enforcement of the FLSA
1. What are liquidated damages and when must they be paid?
Liquidated damages under the FLSA are sums equal to the wages improperly withheld from theemployee. They are commonly referred to as “double back pay.”
An employee who wins a suit against an employer will generally be eligible to collect liquidateddamages. However, if the employer can present a “good faith” defense and has reasonable grounds forbelieving it was complying with the FLSA, then the court, in its discretion, may excuse the employer frompaying all or part of the liquidated damages. In the absence of liquidated damages, the employee is en-titled to interest.
2. What should be done about labor agreements which contain provisions that are in noncompliancewith the FLSA?
The jurisdiction should seek to renegotiate the labor agreements to come into compliance with theact. Provisions allowing comp time are valid, but employers must still give the leave at time and one-half,regardless of the labor agreement provisions.
3. What is the worst that can happen to a unit of government that does not comply with the FLSA?
Failure to comply with the FLSA could result in any of the following:• payment of liquidated damages (double back pay);• payment of attorney’s fees;• civil money penalties;• fines and jail terms for cases of repeated willfull violations; and• other injunctive and equitable relief.
4. Is compliance with the FLSA retroactive?
DOL’s original policy was to make compliance reviews retroactive to April 15, 1985, for traditionalgovernment activities and for transportation department activities. Non-traditional activities have beencovered by the FLSA since 1976. However, the 1985 Fair Labor Standards Amendments retroactivelywiped out such liability for traditional functions. State and local govenments were given until April 15,1986, to achieve compliance with the act, and enforcement was suspended until Aug. 1, 1986, to allowpayment of monetary overtime compensation.
5. How is the FLSA enforced?
The Wage and Hour Division within the U.S. Department of Labor initiates investigations whencomplaints are filed or when particular industries are targeted for investigation. The solicitor of labor canbring a lawsuit on an employee’s behalf in appropriate cases where the Wage and Hour Division finds thatFLSA violations have occurred. Additionally, the U.S. Department of Justice can criminally prosecutepersons who commit willful violations of the act.
State and local governments should examine their procurement practices to limit potential FLSA liabili-
ties. Procurement solicitations and contracts commonly contain provisions on labor standards and other socio-
economic matters. These provisions should be crafted to provide public employers as much protection as is
possible.
¶1011 Independent Contractor Contract Clauses
A public employer may be responsible for wage payments of its so-called “contractors” if the contractors
do not qualify as independent contractors under the FLSA (see ¶217). An economic reality test is used to determine
if the contractor is really independent, and if this is not the case, if the contractors are really employees of the public
employer. If there is no bona fide independent contractor relationship, the public employer has liability for mini-
mum wage and overtime violations. The following are sample procurement contract clauses for use by state and
local contracting personnel to deal with independent contractors. Contract administrators, of course, should check
with legal counsel to review state or local law requirements prior to use of such a form:
General Independent Contractor Clause
This agreement does not create an employee/employer relationship between the parties.It is the parties’ intention that [the contractor] will be an independent contractor and not [thepublic employer’s] employee for all purposes, including, but not limited to, the application ofthe Fair Labor Standards Act minimum wage and overtime payments, Federal InsuranceContribution Act, the Social Security Act, the Federal Unemployment Tax Act, the provisionsof the Internal Revenue Code, [the state revenue and taxation law], [the state workers’compensation law] and [the state unemployment insurance law]. [The contractor] will retainsole and absolute discretion in the judgment of the manner and means of carrying out [thecontractor’s] activities and responsibilities hereunder. The contractor agrees that it is aseparate and independent enterprise from the public employer, that it has a full opportunity tofind other business, that it has made its own investment in its business, and that it will utilize ahigh level of skill necessary to perform the work. This agreement shall not be construed ascreating any joint employment relationship between [the contractor] and [the public em-ployer], and [the public employer] will not be liable for any obligation incurred by [thecontractor], including but not limited to unpaid minimum wages and/or overtime premiums.
Indemnity and Hold Harmless Clause
[The contractor] shall indemnify and hold [the public employer] harmless from alllosses, injuries or damages, and wages or overtime compensation due its employees inrendering services pursuant to this agreement, including payment of reasonable attorneys’fees and costs in the defense of any claim made under the Fair Labor Standards Act or anyother federal or state law.
Section 215(a)(1) of the FLSA provides for a safe harbor exemption from the provision against resale or
shipping of so-called “hot goods,” for example, goods manufactured in violation of the child labor laws. The
safe harbor allows purchasers in good faith to ship or resell the goods. To support the good faith, public em-
ployers should add a clause to their procurement contracts which reads as follows:
The undersigned hereby certifies that in the execution of the work he or she will complywith all applicable provisions of Sections 6, 7, and 12 of the Fair Labor Standards Act of1938, as amended, and that there will be no violations of the “hot goods” or “hot cargo”provisions of the Act involving restrictions on the use of underaged employees.
Employers should note that the use of this clause will not guarantee the non-applicability of the “hot
goods” rules. In a 1967 case, Wirtz v. Lone Star Steel Co., 56 Lab. Cas. (CCH) ¶31,956 (E.D. Tex. 1967), the
U.S. District Court held that a company had not violated the “hot goods” provision of the FLSA because it had
all contractors sign a similar statement when endorsing their paycheck. The Court of Appeals, however, re-
versed and found that the company, by ignoring obvious contractor violations of the Act, had violated the
FLSA “hot goods” provision. The court held that “[a] person or a corporation cannot take an ‘ostrich-like
attitude’ and still be in good faith under the [FLSA]. . . . [T]he contractors violated the minimum wage provi-
sions of the Act and [the] Company could and should have known of such violation.” Wirtz v. Lone Star Steel
I understand that overtime compensation in this position will be based on the fluctuat-ing workweek (for example, half-time) method set forth in 29 C.F.R. §778.114. The salary Ireceive is meant to cover all hours worked. Thus, I understand that part of my overtime isbeing paid in my basic salary. The amount of overtime compensation paid will vary with thenumber of overtime hours worked. For each workweek that I work in excess of 40 hours, youwill divide my weekly salary by the number of hours I work. This sum will be multiplied byone-half and then multiplied by the number of hours over 40 hours I worked in the week todetermine the overtime pay. For example, if my salary is $380.00 a week, my regular rate ofpay for working 50 hours in a week will be $7.60 an hour ($380 ÷ 50). For a 50-hour week,my half-time overtime premium is $3.80 per overtime hour worked. ($7.60 ÷ 2). I will bepaid my salary plus $38.00 for working 50 hours overtime ($3.80 x 10 hours). The exactamount of overtime paid may vary weekly depending on how many hours I work.
I have reviewed the sample overtime calculations for half-time and the attached for-mula. I understand this method of calculating my overtime. This method shall be used untilsuch time as I am notified otherwise and shall remain effective even if my salary shall beadjusted for any reason.
Employee Signature
Date
Sample Half-Time Overtime Calculations# of Hours 40 50 60 70
Salary $380.00 $380.00 $380.00 $380.00
OT Pay 0 38.00 63.33 81.43
Total Pay $380.00 $418.00 $443.33 $461.43
Formula
(1) Regular Rate = weekly salary ÷ Number of Hours Worked
(2) Half-Time Premium = Regular Rate x 1/2
(3) OT Pay = Half-Time Premium x Number of Hours WorkedOver 40
In accordance with the Fair Labor Standards Act, the [public employer] has a policy ofgranting employees compensatory time off in lieu of compensation for hours worked inexcess of 40 hours a week, or other permissible work schedules for law enforcement,firefighting, emergency management, seasonal and other employees. A copy of this policydated _______________ has been provided to me. I understand that the compensatory timewill be granted at time and one-half for all hours worked in excess of 40 hours per week orother permissible work schedules. I further understand that the compensatory time may belimited, preserved, used or cashed out consistent with the provisions of that policy andapplicable law and regulations of the U.S. Department of Labor.
I knowingly agree to the provision of time off as compensation for overtime work as acondition of my employment and consent to the use of compensatory time in accordance withthe policy. I further understand that in the event any portion of the policy is interpreted toconflict with the FLSA or its regulations, that the conflicting portion shall be struck and theremainder of the policy shall continue in full force and effect.
The [public employer] hereby agrees to employ employee as an [inspector] at a regularhourly rate of $8.00 per hour for the first 40 hours in any workweek and at the rate of $12.00per hour for all hours in excess of 40 in any workweek, with the guarantee that employee willreceive, in any week in which he performs any work for the [public employer], the sum of$440.00 as total compensation for all work performed up to and including 50 hours in suchworkweek.
Coefficient Table for Computing Extra Half-time for Overtime
U.S. DEPARTMENT OF LABOREMPLOYMENT STANDARDS ADMINISTRATION
WAGE AND HOUR DIVISION
This table may be used for computing overtime on piecework, bonuses, commissions or fixed salaries for varying hours. Refer toPart 778 of Title 29 of the CFR for guidance regarding when the coefficient method is applicable.
This form has been prepared for use by employers who may find the coefficient table to be a time saver when computing the extrahalf time for hours worked over 40 in a workweek.
TO CONVERT INTO WEEKLY EQUIVALENT: Multiply SEMIMONTHLY salary by 0.4615; MONTHLY salary by 0.2308;ANNUAL salary by 0.01923.
TO CONVERT INTO STRAIGHT-TIME HOURLY EQUIVALENT FOR 40 HOURS: Multiply WEEKLY salary by 0.025;
SEMIMONTHLY by 0.01154; MONTHLY salary by 0.00577; ANNUAL by 0.00048.
TO CONVERT INTO TIME AND ONE-HALF HOURLY RATE BASED ON 40 HOUR WEEK: Multiply WEEKLY salary
by 0.0375; SEMIMONTHLY by 0.0173; MONTHLY salary by 0.00866; ANNUAL by 0.000721.
CAUTION: Be sure straight-time earnings are not below legal minimum.
General: In determining the extra half-time that is due for overtime pay after 40 hours, the method of calculation commonly used is todivide the straight-time earnings by the total number of hours worked and multiply the result by the number of overtime hours dividedby two. For instance, the
Computation for 48 hours would be X ; for 50 hours, X ; for 473/4 hours,
_________ X _____. The table on the reverse side contains the decimal equivalents of the fraction,
O.T. Hours Total Hr. X 2.
For example, the decimal for 48 hours is = = .083; for 50 hours it is = =.l;
and for 473/4 hours = = .081.
How to use: (a) Multiply the straight-time earnings for an overtime week by the applicable decimal and the result will be the extra half-time due. Thus, by using the decimals in the table (on the reverse side) the computations performed are, in effect, exactly the same as ifthe equivalent fractions were used, with the advantage of having eliminated the long division necessitated by the fractions. For example:
(1). A pieceworker earns varying wages each week. In a 439/10 hour week he earned $153.65 straight-time. The coefficient for439/10 hours is .0444. .0444 X $153.65 = $6.82, additional half-time due. $153.65 + $6.82 = $160.47, the pieceworker’stotal pay for the week.
(2). Jones is paid a weekly salary of $180.25. He worked 511/2 hours. The coefficient for 511/2 hours is .112. .112 X$180.25 = $20.19. $180.25 + $20.19 = $200.44, Jones’ total pay for the week.
(b) The decimal table can also be used effectively when back wages are due because of additions to wages (such as a weekly bonus) thatwere not included in the regular rate in computing overtime. For example:
(1). An employee worked 48 hours and received a production bonus of $9.60 which was not included in the regular rate. Thus,$9.60 X .083 = $0.80, the additional half-time due on the bonus.
(2). Jones in the same week (example (a), (2) above) received a production bonus of $25.00. .112 X $25.00 = $2.80, theadditional half-time due on the bonus. $180.25 + $20.19 + $25.00 + $2.80 = $228.24, Jones’ total earnings. A furthershort-cut (combining (a), (2), and (b), (2)) would be: $180.25 + $25.00 = $205.25 X .112 = $22.99 + $205.25 = $228.24,Jones’ total earnings.
(c) Short-cuts For Computing Back Wages. When both the overtime hours and the earnings vary, individual weekly computations mustbe made. However, if an employee is paid at a constant hourly rate, time can be saved by adding the unpaid overtime hours during theperiod and multiplying the total by one-half the hourly rate. When the weekly hours vary and the straight-time earnings are constant,add the decimals for the overtime weeks and multiply the total by the earnings for 1 week. When the weekly hours are constant but theearnings vary, add the earnings for the overtime weeks and multiply the total by the decimal for 1 week. For example:
