Wage and Hour Information

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Overview of the FLSA

Exempt Employees

Non Exempt Employees

Legal considerations


Overview of the FLSA

The Fair Labor Standards Act of 1938 established federal requirements for the payment of minimum wages, overtime pay, record keeping, and child labor standards for employees covered by the Act and not exempt from specific provisions.  Initially, the FLSA applied only to private sector employers.  However, in 1985 the U.S. Supreme Court concluded that Congress could apply the FLSA to state and local government under the Commerce Clause of the Constitution.  Since 1985, cities and towns also had to comply with the FLSA.  The Equal Pay Act of 1963 amended the FLSA to prohibit pay differences based on differences in sex.  The FLSA regulates employee wages and hours in the following areas:

  • Minimum Wage
  • Child Labor
  • Equal Pay
  • Record Keeping
  • Overtime Pay

Minimum wage

Generally, where state and federal laws differ, the law requires that the one that is more favorable to the employee must be put into practice.  As of this update, the state minimum wage was higher than the federal minimum wage.

Supervisor’s Note:  All employees, including student workers and temporary employees should be paid at least minimum wage to remain in compliance with the federal minimum wage standard.

Child labor

The Fair Labor Standards Act imposes certain restrictions on the employment of minors under 18 years of age.  Most student workers at SPU are exempt from child labor restrictions listed in the FLSA. 

Supervisor’s Note:  If you plan to hire a minor, please contact the Office of Human Resources at (206) 281- 2809.

Equal Pay

No employer subject to the Equal Pay Act can discriminate between employees on the basis of sex by paying wages "at a rate less than the rate at which he pays wages to employees of the opposite sex in such establishments for equal work on jobs the performance of which require equal skill, effort, and responsibility, and which are performed under similar working conditions," Equal Pay Act, 29 U.S.C. x 206 (d)(l).

Supervisor’s Note: In recommending and evaluating wages or wage increases for employees in jobs that require equal skill, effort, and responsibility (not necessarily an identical job), be certain to make pay decisions without reference to a person’s sex.

Record keeping

State and federal laws and regulations require the employer to collect and maintain certain employee information such as name, address, occupation, birthdate, sex, etc.

Supervisor’s Note: Generally, the Office of Human Resources and the Payroll Department will take care of these details through our normal paperwork processes (for example, time sheets, PAF’s, appointments, I-9’s). Supervisors need to be aware of the requirements and understand that prompt collection of this information is required by federal law.

Overtime pay

The FLSA requires employees who are not exempt from the Act (nonexempt or "classified" staff) to be paid at one-and-one-half times the regular rate of pay for any hours over 40 worked in a workweek.  Overtime pay is based on the normal wage rate.


Non Exempt Employees

Call in and Waiting time

Determining whether waiting time constitutes "hours worked" requires a case-by-case analysis. The key question is whether the employee is able to effectively use the time for his or her own purposes.  Relevant factors to this question include:

  • the employment agreement and the parties’ conduct under it;
  • the relationship between the waiting time and the job in question;
  • whether the employee is completely relieved of all duties until a specified time in the future;  
  • whether the employee may leave the work site during the waiting time;
  • the duration of the waiting time; and  
  • the degree of predictability associated with the waiting time.

Supervisors Note: Periods during which an employee is completely relieved of duty and which are long enough to enable the employee to use the time effectively for the employee’s own purposes, are not hours worked.

Combining nonexempt and exempt work

When nonexempt "hourly" employees are asked to do additional work for the same employer, if the combined total hours worked goes over forty (even if the additional work is exempt in nature) hours worked over forty must be compensated at time-and-one-half of the regular hourly wage rate.

Time off in lieu of cash payments for overtime

People are placing an increasingly high value on time spent away from work. Many times employees would choose to take time off from work instead of receiving overtime pay. Supervisor’s can work with employees to support this preference where possible, but it must be done within legal boundaries.

There is one exception to paying overtime as described above (see overtime pay). Under this exception, an employee may choose to take time off in lieu of receiving overtime pay as long as the following three conditions are met:

  1. The employee must specifically and voluntarily request to take time off in lieu of receiving overtime pay.  This must not be initiated or coerced by the supervisor.
  2. When converting overtime hours to time off, hours worked in excess of 40 hours in a work week must be multiplied by 1.5. For example, if an employee worked 42 hours in a single work week, the 2 hours of overtime multiplied by the 1.5 overtime conversion rate = 3 hours of paid time off. Employees who choose to use the time off option may reduce their work by three hours to offset the overtime.
  3. The time off must be taken within the same pay period that the overtime was earned. Time off that is unused prior to the end of the pay period will be paid as overtime.

Supervisor’s Note: The time off option may be implemented at the supervisor’s discretion as long as the above three requirements are met. It is very important that the employee voluntarily agrees to the time off option without feeling any pressure or obligation to do so. However, supervisor’s are under no obligation to approve this time off option, but may wish to do so for a number of reasons (budget concerns, cyclical nature of their department’s workload, the employee’s request for flexibility, etc.). If this option is exercised, time sheets must be marked clearly and appropriately to avoid overpayment and other related problems. Please call Human Resources at ext. 2809 or Payroll at ext. 2533 if you have questions regarding how to mark this option on the timesheet. This rule does not apply to exempt staff as they do not work on an hourly basis.

Lectures, meetings and training programs

If the four following criteria are met, the FLSA does not require employers to count as "hours worked" time spent attending lectures, meetings, training programs, or similar functions when:

  • Attendance is outside the employee’s regular working hours.
  • The employee does not perform any productive work while attending the program or function.  
  • Attendance is in fact voluntary. To meet this criterion, the employer cannot require the employee’s attendance; and the employee must not be led to believe that nonattendance would adversely affect his or her employment situation.  
  • The program or function is not directly related to the employee’s job.
  • Training is "directly related" to the employee’s job when it is designed to make the employee more effective at his or her present job.  
  • Training is not "directly related" to the employee’s job when it prepares the employee for a different job, including a promotion, or teaches the employee a new or additional skill.

This criterion (relationship of training to the employee’s job) is immaterial if the employee unilaterally decides to attend training offered by entities independent of the University.

Meal periods/rest periods

Nonexempt employees (regardless of status as full-time, part-time, or temporary employees), who work more than five consecutive hours must be allowed a meal period of at least 30 minutes beginning no less than two nor more than five hours from beginning of shift.  Employees who work more than three hours of overtime are required to have an additional 30 minute meal period, prior to or during the overtime period.  Neither state nor federal law requires that employers pay for these meal periods if the employee is completely relieved from duty during the break.

A nonexempt employee must be allowed a rest period of 10 minutes paid time for each four hours of working time.  Rest periods should be scheduled as close as possible to the midpoint of the work period.

Supervisor’s Note: Many conscientious nonexempt staff members are tempted to work through lunch and not take breaks due to the size of their workload.  Remember that work "suffered or permitted" is the responsibility of the supervisor, not the employee.  Seattle Pacific University’s standard work day starts at 8:00 AM and ends at 5:00 PM.  If an employee does not take a full hour for lunch, and does not take their required breaks, they are technically working more than an eight hour day for which they are paid.  Please be sure your nonexempt employees are following the above guidelines and are paid for all hours of work. Meal and rest periods are required and staff members must be allowed and should be strongly encouraged to take them.

On-call time

On-call time is a special type of waiting time. As with waiting time, the key question is whether the employee is able to effectively use the time for personal purposes. An employee who is not required to remain on the employer’s premises, but is merely required to leave word about where he or she may be contacted, does not constitute working on-call. Relevant "illustrative" factors include:  

  • the degree to which the employee’s movements are geographically restricted; the frequency of call-ins;  
  • how quickly employees are expected to respond to call-ins;  
  • the employee’s ability to trade on-call responsibilities with others;
  • whether a pager causes restrictions on the employee’s use of the time; and  
  • the employee’s actual activities during the time on-call.

Supervisor’s Note: The Office of Human Resources can assist you in determining whether waiting time or "on call" time constitutes "hours worked" that must be compensated.

Travel time

Federal regulations address various situations in which time spent traveling is or is not considered "hours worked" for purposes of the FLSA.  When travel time is integral to performing the employee’s job, the time must be treated as work time. When travel time is merely a normal incident of employment, it need not be treated as such. The situations addressed by the travel time regulations include:

  • Travel between Employee’s home and workplace: Ordinary home to work travel time need not be counted as "hours worked".  
  • Emergency Call-Outs: When an emergency call makes it necessary for the employee to travel a substantial distance from home to a place other than the employee’s normal work site, the travel time is time worked.
  • Travel between job sites during the workday: This time must be counted as "hours worked".
  • Business Trips:

    a.) One Day Business Trips:

    The employer need not count as work time those components of the travel time that could be regarded as ordinary travel between home and work (e.g., traveling from home to the airport).

    "Hours worked" includes travel time where the travel is performed for the employer’s benefit and at the employer’s special request to meet the needs of the particular and unusual assignment (e.g., driving to another city for a special one-day assignment).

    b.) Overnight Business Trips:

    The employer must count as "hours worked" the time the employee spends traveling during his or her regular hours of work (e.g., between 8:00 AM and 5:00 PM), regardless of whether the travel occurs on a normal workday or on an off day.

    The federal enforcement policy is to ignore time the employee spends as a passenger outside his or her regular working hours.

Vacation, Holiday or Sick hours

According to the Fair Labor Standards Act, nonexempt employees must be paid overtime at time and one-half their regular rate of pay for all hours actually worked over 40 in a single workweek. Thus, in calculating how many hours a nonexempt employee actually works in a week, the employer does not have to count the paid vacation or holiday time towards the 40-hour workweek.

For example, an employee normally works Monday through Friday, eight hours a day, and receives a paid holiday and does not work on the Monday. The employee then works Tuesday through Friday, eight hours a day, and is asked to work four additional hours on Saturday. The employee’s pay for the week would reflect a total of 44 paid hours, however since the employee actually worked only 36 hours, he would not receive any overtime pay.

Work "suffered or permitted"

The FLSA clearly states that it is the employer’s responsibility to enforce the overtime rules, not the employees.”  Overtime must be paid if the employer "knows or has reason to know" that the employee is working. The location of the work (e.g., at the job site or away from it) is immaterial if the employer knows or has reason to know of the employee’s work.

Supervisor’s Note: To prevent incurring wage liability for work time not requested or desired, supervisors should instruct nonexempt employees that any overtime must be approved by them in advance and in writing.  Good two-way communication about this is very important.

Workweek

The workweek at SPU is defined as 12:00 am Sunday, through 11:59:59 pm Saturday.

Volunteering

Employees frequently perform “volunteer work” that is obviously primarily for the benefit of the employer, by working through their lunch hours, coming into work early and staying late, and sometimes taking work home.  Frequently, the same employees do not record the extra time, and even resist employer requests that they do so.  When the employer requests, directs or controls or requires the employee to be on the employer’s premises, even when they are required to perform civic or charitable work, this would be considered as "hours worked" and must be paid as such.  

Examples of volunteer work as defined by a Wage and Hour Administrator:

  • The services are entirely voluntary, with no coercion by the employer, no promise of advancement, and no penalty for not volunteering.
  • The activities are predominately for the employee's own benefit.
  • The employee does not replace another employee or impair the employment opportunities of others by performing work which would otherwise be performed by regular employees.  
  • The employee serves without contemplation of pay.  
  • The activity does not take place during the employee's regular working hours or scheduled overtime hours.  
  • The volunteer time is insubstantial in relation to the employee's regular hours.

[Opinion WH-369, signed by  Acting Wage Hour Administrator Warren D. Landis, December 3, 1975]

Supervisor’s Note: SPU offers opportunities for employees to "volunteer" their time. Volunteer time should not be counted as "hours worked" so long as the work is truly charitable, and civic (QUEST, phone-a-thon), and there is no perception that the employee’s decision not to "volunteer" would adversely affect his or her employment situation.  Employees often avoid recording hours worked that are outside of their normal schedule. You must always insist that employees record time in an accurate manner.  An employee’s refusal to follow these rules may constitute insubordination, and should be dealt with accordingly.  The Office of Human Resources is available to assist you in this area.


Exempt Employees

Exempt employees are not covered under the Fair Labor Standards Act minimum wage or overtime provisions. The theory behind exempt employees is that they should be paid a set salary to get the job done, regardless of the amount of time involved, and that hourly reduction of an exempt employee’s pay is inconsistent with the salary status.  In order to fall under one of the "white collar" exemptions, employees must satisfy a stringent duties and salary test as described below:

I. Duties test

Because the "duties" determination is an individual one and depends on the nature of the duties performed by the particular employee, the employee’s actual duties and qualifications determine the employee’s status rather than the particular title assigned to the employee’s position. There are five categories of exemptions briefly categorized as follows (although the regulations provide a "long" and "short" test for each category of exemption):  

Administrative: Generally includes individuals whose primary duty consists of "office or non-manual work" which:

  • is "directly related to management policies or general business operation" of the employer (activities must be "administrative" as opposed to "production; general business operations" oriented.
  • More than 50% of their work requires the "exercise of discretion and independent judgment"; and
  • regularly and directly assists an employee employed in a bona fide executive or administrative capacity; 
  • or who executes special assignments and tasks under only general supervision or performs (under only general supervision) work along specialized or technical lines requiring special training, experience or knowledge.

Executive: Includes individuals whose:

  • primary duties consist of the management of the business enterprise or one of its components or departments and
  • who customarily and regularly directs the work of two or more employees and
  • who has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring or firing and as to the advancement and promotion or any other change of status of other employees will be given particular weight; and
  • who customarily and regularly exercises discretionary powers; and
  • who does not devote more than 20 percent, or, in the case of an employee of a retail or service establishment who does not devote as much as 40 percent, of their hours of work in the workweek to activities that are not directly and closely related to the performance of the work described in paragraphs (a) through (d).

Outside Salesperson:  Requirements include:

  • Employee works no more than 20 percent of any workweek in non exempt activities, and;
  • Employee regularly works away from the employer’s work place in making sales.

Professional: Requirements include:

  • Generally, includes individuals whose primary duties consist of work requiring knowledge of an advanced type in a field of science or learning customarily acquired through a prolonged course of specialized intellectual instruction and study, as distinguished from a general academic education and from an apprenticeship, and from training in the performance of routine mental, manual, or physical processes or;
  • Work that is original and creative in character in a recognized field of artistic endeavor.
  • Teaching, tutoring, instructing, or lecturing in the activity of imparting knowledge and who is employed and engaged in this activity as a teacher in the school system or educational establishment or institution by which they are employed, or;
  • Work that requires theoretical and practical application of highly specialized knowledge in computer systems analysis, programming, and software engineering, and who is employed and engaged in these activities as a computer systems analyst, computer programmer, software engineer, or other similarly skilled worker in the computer field.

Supervisor’s Note: Most of SPU’s exempt staff are categorized under the FLSA’s "Administrative" and “Executive” exemptions. SPU currently refers to these staff as "Exempt Staff.”  Faculty fall under the FLSA’s "Professional" exemption. All employees are categorized according to the regulations of the FLSA.  The Office of Human Resource compares detailed job descriptions with FLSA definitions to determine the employee’s exempt or nonexempt status.

II. Salary test

Exemption categories share a common requirement: the employer must pay the exempt employee on a "salary basis.”  To meet the "salary basis" requirement, the federal regulation requires that the employee be paid:

  • a predetermined amount;
  • an amount that is "not subject to reduction because of variations in the quality or quantity of the work performed"; and
  • generally, the employee must receive his or her full salary for any week in which he or she performs any work, "without regard to the number of days or hours worked".
  • However, reductions in salary are permitted for full day absences when accrued sick or vacation leave is not available.

Supervisor’s Note: The main point of the salary test is to avoid calculating an exempt employee’s pay on an hourly basis. Overtime exemptions may be jeopardized if the exempt employee's pay is calculated by an hourly rate (e.g. when additional hour for hour compensation is paid to salaried employees for work performed over the 40 hour work week).  However, not all forms of extra payment are prohibited. Bonuses and commissions are permitted in the regulations


Legal Considerations

It is important to remember that when an employer (or supervisor) "knew or should have known" that the FLSA regulations were being violated, and an affected employee complains, the employer may be heavily penalized. Such penalties include the following:

  • Back pay
  • Liquidated damages (double damages)
  • Attorney fees
  • Convictions and fines
  • Civil monetary penalties
  • Poor publicity
  • Persons who willfully violate the law are subject to fines and/or imprisonment.

Supervisor’s Note: You are the closest person to your staff’s work habits. Your understanding and application of this law in managing both your exempt and your nonexempt employees is critical to the University in terms of keeping the University free from liability and resulting penalties.  


Pay Deductions, Exempt Employees

The following pay deductions are permitted without negating the employee’s salaried status:

  • Deductions for personal absences other than for sickness or disability from work of one day or longer. Personal absences do not include those caused by the employer or the operating requirements of its business.
  • Deductions because of absences due to sickness or disability lasting one or more days "if the deduction is made in accordance with a bona fide plan, policy, or practice of providing compensation for loss of salary occasioned by both sickness and disability".
  • Deductions that serve as good-faith penalties "for infractions of safety rules of major significance".

The following pay deductions are not permitted. If taken, they could negate an employee’s exempt status:

  • Deduction for absences caused by the employer or its business operation requirement.
  • Deductions for absences caused by jury duty, attendance as a witness, and temporary military leave. The employer may, however, offset any compensation the employee receives for these activities against the salary the employer would otherwise pay.
  • Deductions for a partial day’s absence. Even when the absence is longer than a day, if the employer’s policy requires charging the absence to paid leave, but the paid leave falls slightly short of covering the entire absence, an impermissible pay deduction of less than one day’s pay may result. If this occurs, the employer may lose the overtime exemption. However, deductions from accrued leave for part-day absences are permissible so long as the employee receives in payment an amount equal to his or her guaranteed salary.
  • Deductions for disciplinary short term suspensions for less than a week (unless imposed because of major safety infractions). Therefore, disciplinary suspension (for other than major safety violations) should be for a full week or full multiple weeks. Payment of additional compensation to exempt employees Exemptions can be defeated when additional hour for hour compensation is paid to salaried employees for work performed over the 40 hour work week. Not all forms of extra payment are prohibited. Bonuses and commissions are permitted in the regulations

    Supervisor’s Note: Be careful not to treat exempt employees as you would nonexempt employees with regard to accounting for time off, paying additional compensation for extra work, or docking pay for any reason. One area we have trouble here at SPU is the idea of "comp time" where time off is given to exempt staff on an hour-per-hour basis for time worked over 40 hours. Any such treatment which mirrors treatment given to nonexempt staff may defeat the exemption. The exemption is given in the first place because the employee is paid for the work performed, not the hours worked.


Payment of additional compensation to exempt employees

Exemptions can be defeated when additional hour for hour compensation is paid to salaried employees for work performed over the 40 hour work week. Not all forms of extra payment are prohibited. Bonuses and commissions are permitted in the regulations

Supervisor’s Note: Be careful not to treat exempt employees as you would nonexempt employees in regards to accounting for time off, paying additional compensation for extra work, or docking pay for any reason. One area we have trouble here at SPU is the idea of "comp time" where time off is given to exempt staff on an hour-per-hour basis for time worked over 40 hours. Any such treatment which mirrors treatment given to nonexempt staff may defeat the exemption. The exemption is given in the first place because the employee is paid for the work performed, not the hours worked.