United States

Labor Compliance Guide

Hours & Pay Regulations

Normal Working Hours

Under the Fair Labor Standards Act (‘FLSA’), hours of work must be calculated on a workweek basis. An employee’s workweek is a fixed and regularly recurring period of 168 hours — seven consecutive 24-hour periods. The workweek does not need to coincide with the calendar week. It may begin on any day and at any hour of the day. Different workweeks may be established for different employees or groups of employees. Averaging of hours over two or more workweeks is generally not permitted.

 

Federal law permits minors 14 and 15 years of age to work the following hours:

    • 3 Hours (school day)
    • 8 Hours (non-school day)
    • 18 Hours (school week)
    • 40 Hours (non-school week)
    • None during normal school hours
    • None before 7 a.m
    • None after 7 p.m.

Overtime

Under the Fair Labor Standards Act (‘FLSA’), hours of work must be calculated on a workweek basis. An employee’s workweek is a fixed and regularly recurring period of 168 hours — seven consecutive 24-hour periods. The workweek does not need to coincide with the calendar week. It may begin on any day and at any hour of the day. Different workweeks may be established for different employees or groups of employees. Averaging of hours over two or more workweeks is generally not permitted.

 

The FLSA requires non-exempt employees must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay. The FLSA does not limit the number of hours employees aged 16 and older may work in any workweek. The FLSA does not require overtime pay for work on Saturdays, Sundays, holidays, or regular days of rest unless overtime is worked on such days.

 

Overtime pay is calculated using an employee’s regular rate of pay, which is defined as all remuneration for employment paid to, or on behalf of, the employee. In general, an employee’s regular rate of pay is computed by dividing the employee’s total remuneration for hours worked in the workweek by the number of hours worked during the workweek. The regular rate of pay excludes gifts, payment for vacations, holidays, illnesses, travel expense reimbursements made by the employer, and similar payments not made as compensation for hours of work.

 

On March 7, 2019, the Department of Labor announced a proposed rule that would update the Salary Level Test, making more than a million more American workers eligible for overtime. This would raise the salary requirement that determines whether an employee is exempt from getting paid overtime. In order for an employer to avoid paying an employer an overtime premium for hours worked over 40 in a workweek, it must show that the employee meets a duty and salary test.

 

After an attempt in 2016 during the Obama administration to raise the level to $47,476 per year was delayed by a federal judge for the U.S. District Court for the Eastern District of Texas (and then denied by the current administration), the current DOL is scheduled to propose a new threshold in March 2019. US Labor Department Secretary R. Alexander Acosta suggested during his confirmation hearing that the maximum for mandatory overtime pay should be increased to around $33,000.

 

What might the new salary threshold be if the proposed Overtime Rule gets enacted?

      • Either the revised salary threshold would be $31,824 annualized or $612 per week; or
      • If instead, the DOL were to increase the threshold by the level of inflation, the new salary level would be $30,576 annualized or $588 per week.

What to expect after enactment of the Overtime Rule?

The new overtime rule would result in the reclassification by employers of more than a million currently exempt workers as non-exempt and an increase in pay for others. Companies then might set an hourly rate for those employees that would result in the same number of hours worked and the same total pay, even with overtime hours.

 

Amendment to Regulation on Fluctuating Workweek Method of Calculating Overtime

The Department of Labor (the Department) is revising its regulation under the Fair Labor Standards Act (FLSA or the Act) for computing overtime compensation of salaried non-exempt employees who work hours that vary each week (fluctuating workweek). On May 20, 2020, the U.S. Department of Labor announced a final rule, which among other requirements allows employers to pay bonuses or other incentive-based pay to salaried, non-exempt employees whose hours vary from week to week. The final rule is effective from August 7, 2020.

 

The Changes to Fluctuating Workweek Overtime Calculations

On November 5, 2019, the Department issued a Notice of Proposed Rulemaking (NPRM) proposing to revise its existing regulation at § 778.114(a) to clarify that any bonuses, premium payments, or other additional pay of any kind must be included in the fluctuating workweek method of calculating compensation of the regular rate unless they are excludable as per statutory law. The Department also proposed simplifying revisions § 778.114 by listing each required circumstance for the fluctuating workweek method to correctly compute overtime pay and removing duplicative text from revised § 778.114(c). 

 

Finally, the Department proposed to change the title of the regulation from “Fixed salary for fluctuating hours” to “Fluctuating Workweek Method of Computing Overtime” to better reflect the purpose of the subsection and to improve the ability of employers to locate the applicable rules.

 

Circumstances Where an Employer May Use the Fluctuating Workweek Method To Compute Overtime Pay

There are five circumstances that enable an employer to use the fluctuating workweek method to properly compute the regular rate and overtime pay owed under the FLSA. Each of these circumstances is discussed below.

    • The employee’s hours must fluctuate from week to week.
    • The employee must be paid a fixed salary that does not vary with the number of hours worked (though the new rule states that employers using the fluctuating workweek method may take occasional disciplinary deductions from an employee’s salary for willful absences or tardiness or for infractions of major work rules);
    • The fixed salary must satisfy the minimum wage;
    • The employer and employee must have a clear mutual understanding that the fixed salary is compensation (apart from overtime premiums) for whatever hours the employee works each week. The NPRM clarifies that employers may pay bonuses, premium payments, and other additional pay of any kind in addition to the fixed salary; and
    • The employee receives overtime compensation, in addition to such fixed salary and any bonuses, premium payments, commissions, hazard pay, and additional pay of any kind, for all overtime hours worked at a rate of not less than one-half the employee’s regular rate of pay for that workweek. Since the salary is fixed, the regular rate of the employee will vary from week to week and is determined by dividing the amount of the salary and any non-excludable additional pay received each workweek by the number of hours worked in the workweek.

Public Holidays

Below is the list of Public Holiday for the US:

    • New Year’s Day 
    • Martin Luther King Day
    • President’s Day – (Third Monday of February)
    • Memorial Day 
    • Independence Day 
    • Labor Day 
    • Columbus Day 
    • Veterans Day
    • Thanksgiving Day 
    • Christmas Day 

Minimum Wage

The federal minimum wage provisions are contained in the Fair Labor Standards Act (FLSA). The federal minimum wage is $7.25 per hour effective July 24, 2009. Many states and localities have also enacted minimum wage laws which entitle employees to receive a higher rate of pay compared to what’s required under Federal law.

Tips & Gratuities

Employers of employees who regularly receive $30 a month or more in tips can claim a tip credit of up to $5.12 an hour; the minimum wage for these employees is $2.13 an hour. If an employee’s hourly average of tips plus wages is less than $7.25 an hour, the employer must make up the difference. If a state does not allow for a tip credit or has a tip credit amount that is less than the federal tip credit amount, employers in that state generally must apply the state amount that provides employees the greater benefit. If an employer has a tip-back arrangement with employees, such that employees are required to give or credit their tips to their employer as gross receipts, these tips cannot be credited under the FLSA and the employees must be paid at least a full minimum wage.

Meal Breaks

As a general rule, the FLSA does not require that employees (other than minors) receive any breaks, whether paid or unpaid. FLSA’s regulations outline only when breaks must be paid if they are offered at an employer’s sole discretion.

 

Check state and local ordinances for possible requirements.

 

Employers are not required to compensate their employees for what is known as ‘bona fide meal periods’. In order for a break to be considered a bona fide meal period, it ordinarily must last at least 30 minutes and the employee must be completely relieved from duty, both active and inactive. This means that if office or factory workers, for example, are required to eat at their desks or machines, the time spent must be treated as hours worked.

Special Leave

Paid Leave

Currently, the FLSA does not contain any requirements for paid sick leave. Check state and local ordinances for possible paid leave requirements.

Unpaid Leave

Employees may be eligible to take unpaid, job-protected leave for specified family and medical reasons under the Family Medical Leave Act (‘FMLA’).

Advanced Sick Leave

 Employees are eligible for a maximum of 240 hours (30 days) of advanced sick leave for purposes of a serious health condition and a maximum of 104 hours (13 days) for general family care purposes.

FMLA

Employers covered by the FMLA are required to grant leave to eligible employees a total of 12 workweeks of leave during any 24-month period for any one or more of the following reasons –

      • Upon the birth of a son or daughter of the employee;
      • Upon the placement of a son or daughter with the employee for adoption or foster care;
      • In order to care for the spouse, or a son or daughter or parent of the employee or parent of the employee’s spouse, if such spouse, son, daughter, parent or parent of the employee’s spouse has a serious health condition; or
      • Because of a serious health condition of the employee.

The right to take leave under FMLA applies equally to male and female employees. A father, as well as a mother, can take family leave for the birth, placement for adoption or care of a child. A husband and wife who are eligible for FMLA leave and are employed by the same covered employer may be limited to a combined total of 12 workweeks during any 24 month period if such leave is taken upon the birth or placement of a son or daughter for adoption or foster care or to care for a sick parent of the employee or sick parent of the employee’s spouse.

 

Intermittent leave may be taken for a serious health condition which requires treatment by a health care provider periodically, rather than for one continuous period of time, and may include leave of periods from an hour or more to several weeks. An employer may limit unpaid leave under this section to twelve days during any calendar year.

Qualifying Exigency Leave

Entitles eligible employees to take up to 12 workweeks of unpaid, job-protected leave in a 12-month period for a “qualifying exigency” related to the foreign deployment of the employee’s spouse, son, daughter, or parent.

Military Leave

Entitles eligible employees who are the spouse, son, daughter, parent, or next of kin of a covered servicemember (current member or veteran of the National Guard, Reserves, or Regular Armed Forces) with a serious injury or illness incurred in the line of duty to take up to 26 workweeks of unpaid, job-protected leave during a single 12-month period to care for their family members.
Government agencies (including local, state and federal employers) and elementary and secondary schools are covered by the FMLA, regardless of the number of employees. Special rules for eligibility apply to airline flight attendants and crew members due to the non-traditional nature of their work schedules.

Donor Leave

All federal employees are eligible to use up to 7 days of paid leave each calendar year to serve as a bone marrow donor. An employee also may use up to 30 days of paid leave each calendar year to serve as an organ donor. Leave for bone marrow and organ donation is a separate category of leave that is in addition to annual and sick leave. 5 USC 6327 – Sec. 6327.

Last updated on: August 7th, 2020