The Fair Labor Standards Act (FLSA) was originally enacted in 1938 to ensure employees a “fair wage for a fair day’s work,” and it has been amended several times since then. The FLSA establishes standards for:
While the FLSA requires employers to pay a minimum wage and overtime to many employees, it also contains numerous exemptions from these requirements. These subjects, among others, are addressed in this chapter.
Most states have enacted their own overtime laws whose provisions sometimes differ from those of the FLSA. For example, Minnesota Fair Labor Standards Act currently sets the minimum wage dependent upon whether it is a “large employer” (whose gross volume of sales made or business done is $500,000 a year or more) or a “small employer” (whose gross volume of sales made or business done is less than $500,000 a year). Although most employers and their employees in Minnesota are governed by the federal FLSA, Minnesota’s FLSA provisions apply if they are more favorable to the employee. Applicable Minnesota laws are also discussed in this chapter.
Employers are required to comply with federal, state, and local wage and hour laws wherever they operate. Therefore, if a state or local law imposes a higher minimum wage or makes overtime exemptions more restrictive, the employer must comply with the most stringent of the laws that apply.
The FLSA applies to enterprises, or a company as a whole, with related operations performed for a common business purpose, including all operations regardless of whether performed at the same location. For example, all departments of a store or plant and all stores and plants within a company are included in the “enterprise.” Independent contractors and certain independent retail and service establishments are not included within the enterprise. A business that is a covered enterprise is subject to the FLSA with respect to all of its employees. To qualify as a covered enterprise, a company must have both:
In addition, the FLSA applies to some organizations regardless of their sales volumes.
Hospitals and institutions primarily engaged in the care of the sick, aged, mentally ill, or disabled who reside on the premises are covered by the FLSA.
Public employers have been covered under the FLSA since 1986, subject to certain exceptions. These exceptions include higher overtime eligibility levels and longer work periods in which to calculate overtime for law enforcement and fire protection employees.
Elected officials and their personal staff members and appointees, as well as members of the legislative branch, are excluded from the FLSA’s coverage of public agencies.
Preschools (including child care facilities), elementary schools, secondary schools, institutions of higher education, and schools for gifted or handicapped children are covered by the FLSA.
Public utilities are covered under the FLSA.
Even if an organization is not a covered enterprise as outlined previously, its individual employees may still be covered by the FLSA. An individual is covered if the individual is engaged in interstate commerce, produces goods for interstate commerce, or performs activities closely related and directly essential to the production of goods for commerce.
The FLSA covers certain domestic service workers, such as day workers, housekeepers, chauffeurs, cooks, or full‑time babysitters, depending on the amount of cash wages they receive from one employer in a calendar year, or if they work a total of more than eight hours a week for one or more employers.
Employers covered by the FLSA are required to display an official poster outlining FLSA provisions. This poster is available through the U.S. Department of Labor (DOL) by calling (866)-4USWage (866-487-9243) and it is available electronically for downloading and printing at:
As of this writing, the federal minimum wage is $7.25 per hour.
As of January 1, 2021, the Minnesota minimum wage is $10.08 per hour for large employers (grossing $500,000 a year or more) and $8.21 per hour for small employers (grossing less than $500,000 a year), with certain exceptions. Increases are planned annually, and the amounts of these future increases are actually stated in Minnesota statutes.
In addition, as of July 1, 2021, the minimum wage for the city of Minneapolis is $12.50 per hour for small employers (100 or fewer employees) and $14.25 per hour for large employers (more than 100 employees). On July 1, 2022, the minimum wage will increase to $13.50 per hour for small employers and $15.00 for large employers.
For the city of St. Paul, the minimum wage is $12.50 per hour for macro businesses (10,001 or more employees); $12.50 for large businesses (101-10,000 employees); $11.00 for small businesses (6-100 employees) and $10.00 micro businesses (5 or fewer employees). On July 1, 2022, the minimum wage will increase to $15.00 per hour for macro businesses (10,001+ employees); $13.50 for large businesses (101 to 10,000 employees), $12.00 per hour for small businesses (6-100 employees) and $10.75 per hour for businesses with five or fewer employees.
Minnesota’s FLSA requires the payment of a minimum wage dependent upon the size of the employer and overtime pay after 48 hours in a week to most employees of private-sector employers. This is more restrictive than the FLSA, which allows a training wage at 85% of the federal minimum wage rate to be paid for up to 90 days of employment.
Under the FLSA, restaurants and other employers with tipped employees may qualify for the tip credit. Tipped employees must be permitted to keep the tips they receive and tips must be voluntarily given by the customer in order to qualify. The employer must be able to demonstrate that the employee receives at least the minimum wage each hour of work when tips and direct wages are combined. There are no “tip credits” in Minnesota. Employers in Minnesota must pay minimum wage even to employees who earn tips. No employer may require tip employees to share gratuities in Minnesota.
On January 1, 2014, IRS regulations went into effect that treat any automatic or forced gratuity payments – common in the restaurant and hospitality industries for larger parties – as a “service charge” that must be factored into the hourly rate paid to employees and cannot serve as a component of a tip credit to meet minimum wage requirements.
Minnesota statues provide for a lower “youth wage” for employees younger than 18 years of age. As a result, employees younger than the age of 18 may be paid a minimum hourly wage of $8.21 in Minnesota only if the employee is not covered by federal law. This rate is $8.42 per hour as of January 1, 2022.
Minnesota employers can hire individuals younger than age 20 and pay them at a rate of $8.21 per hour ($8.42 per hour as of January 1, 2022) for the first 90 days of employment. After the initial 90-day period, the employee’s hourly rate must be increased to at least the current state minimum wage. Employers cannot take any actions against current employees, including a reduction of their hours or wages, in order to take advantage of the youth opportunity wage.
The Minnesota FLSA authorizes the Commissioner of Department Labor and Industry to conduct investigations and inspections to determine whether an employer is in compliance and to bring actions on behalf of aggrieved employees. Any employer that violates the minimum wage, overtime or anti-retaliation provisions of the applicable Minnesota FLSA may be held liable for back pay, civil fines and attorneys’ fees and costs.
Minnesota law also prohibits retaliation against employees who testify in investigations or proceedings related to the Minnesota’s minimum wage.
The FLSA also permits the employment of certain individuals at wage rates below the statutory minimum wage, so long as employers obtain certificates issued by the Department of Labor, including:
The FLSA exempts some employees from its overtime pay and minimum wage provisions (total exemptions), and it also exempts certain employees from the overtime pay provisions alone (partial exemptions). Most of these exemptions relate to specific jobs or industries. Non-exempt employees are paid overtime compensation for all hours worked in excess of 40 per week and must be paid, at a minimum, the hourly wage set by federal law. Many changes to the FLSA overtime rules are currently developing, so careful attention should be paid to this topic in coming years to ensure compliance with any updated requirements.
Minnesota does not have the exact same exemptions to its minimum wage and overtime requirements as the FLSA. Minnesota law provides that the following employees are exempt from both the minimum wage and overtime provisions:
The following employees are exempt from the overtime provisions of Minnesota law:
The Commissioner of the Department of Labor and Industry is also authorized to establish lower wage rates under special certificates for students, learners, and workers suffering from physical or mental disabilities.
It is important to note that these exemptions are different (and usually more narrow) than federal law.
There are six principal white-collar exemptions to the FLSA law:
To determine whether any position is exempt under one of the white-collar exemptions, the employer must apply both the salary test and the duties test.
An employee is paid on a “salary” basis if, for each week the employee works, the employee receives a predetermined salary (exclusive of board, lodging, or other facilities). The salary cannot be subject to reduction based upon the quality or quantity of work performed. Therefore, before an employer takes a deduction from an exempt employee’s salary, it must look closely at whether that deduction might negate the exemption and subject the employer to overtime liability.
If an employer makes improper deductions from salary, it may lose the exemption if the facts show it did not intend to pay its employees on a salary basis. An actual practice of making improper deductions shows that the employer has violated the salary basis test.
An isolated or inadvertent partial-day deduction generally can be corrected and usually will not jeopardize the exemption except in the workweek for which it was taken. However, if the error is repeated or systemic, the exemption could be lost on a far broader scale. For instance, if an employer regularly sends non‑exempt, salaried employees home early for lack of work and then deducts the partial-day absences from their salaries, the employer is engaging in a repeated and widespread, although inadvertent, violation of the law. Those employees will not be properly paid on a salary basis and will not be considered exempt from overtime laws. The likely outcome is that all employees in that job category will be considered non-exempt for the time period that the policy existed (subject to the statute of limitations).
The DOL provides the following sample salary basis policy on its website at:
Currently an employee can be exempt under the executive exemption from the minimum wage and overtime provisions of FLSA law if the employee is paid a salary of at least $684 per week and the employee meets the following additional criteria:
The executive employee exemption also includes any employee who owns at least a bona fide 20% equity interest in the enterprise in which the individual is employed. In addition, the exemption includes an employee who is in sole charge of an independent establishment or a physically separated branch establishment and who meets all other criteria for the executive exemption.
The administrative exemption applies to an employee who is paid at least $684 per week on a salary basis who meets the following criteria:
Examples of administrators include:
Examples of non-administrators include:
The professional exemption, which includes both learned professionals and creative professionals, applies to an employee who is paid at least $684 per week on a salary or fee basis. However, teachers, lawyers, and physicians are excluded from the salary requirement and have their own duty requirements for this exemption.
Professional employees must spend their primary duty in the performance of professional work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction.
A prime characteristic of professional work is that the employee applies specialized knowledge or talents with discretion and judgment. Mechanical or routine work is not considered professional work.
The professional exemption employee must be engaged in work that is predominantly intellectual and varied, as opposed to routine mental, manual, mechanical, or physical work. This test applies to the type of thinking that must be performed by the employee in question.
Examples of learned professionals include the following (provided the professional has attended a four-year accredited institution in their field):
Creative professionals perform work in creative fields including music, writing, acting, and the graphic arts. The employee must perform work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor as opposed to routine mental, manual, mechanical or physical work.
The computer employee exemption applies only to a highly-skilled employee who is compensated on a salary or fee basis at a rate of not less than $27.63 per hour (or approximately $57,460 per year), and whose primary duties consist of one or more of the following:
Computer employees can also be either professional or administrative employees if they are paid on a salary. Employees whose computer-related duties are directly related to management policies and the implementation of business operations, may be exempt as administrative employees.
For the outside sales employee exemption to apply, the employee must be customarily and regularly engaged away from the employer’s place of business or away from an in-home office in making sales or obtaining orders for services or the use of facilities. Outside sales must be the employee’s primary duty. There is no salary requirement for this exemption.
Under the exemption for highly compensated employees, an employee with a total annual compensation of at least $107,432 is considered exempt if all of the following are true:
The following are some categories of employees who are either exempt from the minimum wage and/or overtime requirements of the FLSA laws. This is not an exhaustive list. The exemptions are many, but narrowly defined. An employer should consult an attorney if they feel their business may be exempt.
Independent contractors are not subject to FLSA laws.
Seasonal employees of educational or organized camps are exempt from state law as long as the camp grosses less than $500,000 annually or is a nonprofit organized camp. They are exempt from federal law if they also do not operate more than seven months in a calendar year and the average receipts for any six months of the preceding calendar year may not be more than 33 1/3% of the average receipts of the remaining months of that year.
Companions to the elderly or infirm, working in or about the private home of the person by whom the companion is employed, are exempt from both state and federal laws.
Under federal law, only casual babysitters employed in the house of the child are exempt. Casual means “employment which is irregular and intermittent and which is not performed by an individual whose vocation is providing domestic services.” Therefore, a babysitter who works on other than a casual basis, must be paid the federal minimum wage rate, and overtime based on a rate not less than one and one half times the federal minimum wage rate.
Immediate family members of agricultural employers, some employees of small farm operators, certain hand harvesters, and certain employees principally engaged in the range production of livestock are exempt from state and federal laws.
Golf caddies employed at a golf course in a supervised training program are exempt from state and federal laws.
Managers of multiunit accommodations designed to provide others with temporary or permanent lodging are exempt from state minimum wage and overtime. Assistant managers and maintenance employees who live on the premises are also exempt. Managers and maintenance personnel who reside in mobile home parks or manufactured dwelling parks are also exempt. However, all of these employees are subject to the federal and state minimum wage requirements, which in Minnesota may be higher.
Employees who want to volunteer time to their employer must meet all of the following criteria to be exempt from minimum wage and overtime laws:
The FLSA allows hospitals, nursing homes or other healthcare employers to adopt a 14-day payroll period and to pay overtime to employees who work in excess of 80 hours’ work over the two-week period or eight hours in a single day. This allows greater flexibility such as by scheduling employees for seven days on followed by seven days off. In Minnesota, an employer who operates a health care facility does not violate the Minnesota overtime rule if the employer and employee agree before performance of the work to accept a work period of 14 consecutive days in lieu of a workweek of seven consecutive days for the purpose of overtime compensation, and if for the employment in excess of eight hours in any workday and in excess of 80 hours in the 14-day period, the employee receives compensation at a rate not of less than one and one-half times the regular rate at which the employee is employed.
Employers often view volunteers and interns as a win-win for the company. The individual is able to receive a substantive work experience, and the employer is able to utilize these services for free. The Department of Labor (DOL), however, likes to look deeper than simply an intern’s offer to work without pay when classifying the individual as an intern or an employee. Like the employee-independent contractor determination, the employee-intern determination requires some analysis.
The FLSA defines the term “employ” very broadly as to “suffer or permit to work.” Individuals who are “suffered or permitted” to work must be compensated under the law for the services they perform for an employer. The DOL has established a seven-part test (described herein) relating to trainees. Interns in the “for-profit” private sector will most often be viewed as employees rather than trainees under federal and state law, so they typically must be paid at least the minimum wage and overtime compensation for hours worked over 40 in a workweek. There is considerable risk to employers who do not meet the minimum wage and overtime requirements related to interns. The FLSA makes a special exception under certain circumstances for individuals who volunteer to perform services for a state or local government agency and for individuals who volunteer for humanitarian purposes for certain private non-profit entities such as food banks. The DOL’s Wage and Hour Division (WHD) also recognizes an exception for individuals who volunteer their time, freely and without anticipation of compensation, for religious, charitable, civic, or humanitarian purposes to non-profit organizations. Unpaid internships in the public sector and for non-profit charitable organizations, where the intern volunteers without expectation of compensation, are generally permissible.
There are some circumstances under which individuals who participate in “for-profit” private sector internships or training programs may do so without compensation. The Supreme Court has held that the term “suffer or permit to work” cannot be interpreted so as to make a person whose work serves only the person's own interest an employee of another who provides aid or instruction. This may apply to interns who receive training for their own educational benefit if the training meets certain criteria. The facts and circumstances of each program will determine whether the internship or training program meets this exclusion.
In 2018, the U.S. Department of Labor updated its test for unpaid interns, and will now apply a "primary beneficiary test" consisting of the following seven criteria:
The DOL stated the "primary beneficiary test" is flexible, and no one factor is determinative in the outcome. Whether an intern is actually an employee will depend on the unique circumstances of each case. Some of the most commonly discussed factors for whether "for-profit" private sector interns are properly classified are discussed further.
Generally speaking, the closer an internship program is to a classroom or learning experience versus the performance of the employer’s actual operations, the more likely that the WHD would classify the program as an internship program eligible for “unpaid” status. An employer often seeks to partner with colleges and universities that assist with oversight of the programs and that provide interns with academic credit.
An individual will not be exempt from the FLSA if the internship simply provides the intern with a specialized skill set to perform a specific job for that particular employer. Under these circumstances, the fact that the individual is learning new skills and may receive some benefit from the experience would not be exempt from the FLSA requirement that the employer pay the minimum wage and any applicable overtime. Therefore, the more the internship provides the individual with skills that can be used in multiple employment settings, at various employers across the industry or several industries, the more likely the intern would be viewed as receiving training in an educational sense. In situations such as this, the intern is not learning only to perform specialized work for the employer on a regular and recurring basis, and the company is not using the internship as a substitute for its own training program.
If an employer uses interns as substitutes for regular workers or to supplement its existing workforce during specific time periods, these interns should be paid at least the minimum wage and overtime compensation for hours worked in excess of 40 in a workweek. If the employer would have hired additional employees or required existing staff to work additional hours had the interns not performed the work, then the interns will be viewed as employees and entitled to compensation under the FLSA. However, if the employer offers "job shadowing" opportunities that provide the intern the opportunity to learn certain functions under the supervision of regular employees and the intern performs no or minimal work, the activity is more likely to be viewed as an education experience. Keep in mind that if the intern receives the same level of supervision as the employer’s regular workforce, this would suggest an employment relationship, rather than training.
The internship should be for a set amount of time, established prior to the start of the internship. Further, unpaid internships generally should not be used by the employer as a trial period for individuals seeking employment at the conclusion of the internship. If an intern is placed with the employer for a trial period with the expectation that the intern will then be hired on a permanent basis, that individual generally would be considered an employee under the FLSA and subject to the wage and hour laws beginning with the period of training.
Both at the state and national levels, employers must be aware of the increasing requirements to provide employees with paid sick leave. Although the law continues to develop in this area, here are the employer requirements as of this writing.
As of January 1, 2017, Executive Order 13706 requires covered federal contractors and subcontractors to provide paid sick leave for their employees. The Executive Order provides the federal contractors who will be subject to the Order with some details and guidance regarding the implementation of this paid sick leave policy.
It should also be noted that not all federal contractors are subject to this Executive Order. Only contractors dealing with the following subject matters fall within the scope of the Order’s coverage:
Both Minneapolis, St. Paul and Duluth have enacted “Sick and Safe Time” ordinances that require employers to provide paid sick and safe time to employees.
The Minneapolis and St. Paul ordinances apply to all employers with employees working within the geographic boundaries of either of those cities for at least 80 hours in a year. The Duluth ordinance applies to any employer with at least five employees whether or not all of the employees work in the city. Both full- and part-time employees are included in this determination.
All employees are eligible for the benefit, including full-time, part-time, and temporary workers. Employees earn and accrue sick and safe time at the commencement of their employment, and for every 30 hours worked, the employee accrues one hour of earned sick and safe time that can be used beginning 90 days after employment commences for absences relating to:
Employees can accrue up to 48 hours of earned sick and safe time each calendar or fiscal year, and accrued time can carry over from year to year. Carry-over accrued time is, however, capped at 80 hours.
Earned sick and safe time must be provided upon the request of an employee, but, for absences of more than three consecutive days, it is permissible for the employer to require reasonable documentation that the sick and safe time is being used for appropriate purposes.
Employers must provide eligible employees in Duluth with one hour of earned sick and safe time leave for every 50 hours worked or front load 40 hours at the beginning of each year.
Independent contractors, student interns and seasonal employees are all exempt from coverage under the ordinance. Employees who reside in Duluth and work from home are covered.
More information can be found at:
Minnesota provides employees with a statutory remedy when an employer breaches its contractual obligation to pay wages.
Minnesota law defines an employer as any individual, partnership, association, corporation, business trust, or any person or group of person acting directly or indirectly in the interest of an employer in relation to an employee.
The term “wages” is broadly defined as compensation due to an employee by reason of employment. “Wages” can include unused, accrued vacation or PTO unless the employer has implemented a written policy stating that all unused, accrued vacation and/or PTO will be forfeited at the time of termination.
Every employer must pay all wages earned by an employee at least once every 31 days on a regular payday designated in advance by the employer regardless of whether the employee requests payment at longer intervals. Unless paid earlier, the wages earned during the first half of the first 31-day period become due on the first regular payday following the first day of work. If wages earned are not paid, the commissioner of the Department of Labor and industry or the commissioner’s representative can demand payment on behalf of an employee. If payment is not made within 10 days of demand, the commissioner may charge and collect the wages earned and a penalty in the amount of the employee’s average daily earnings at the rate agreed upon in the contract of employment, not exceeding 15 days in all, for each day beyond the 10-day limit following the demand. Money collected by the commissioner must be paid to the employee concerned. This section does not prevent a school district, other public school entity, or other school from paying any wages earned by its employees during a school year on regular paydays in the manner provided by an applicable contract or collective bargaining agreement, or a personnel policy adopted by the governing board.
For purposes of this section, “employee” includes a person who performs agricultural labor. For purposes of this section, wages are earned on the day an employee works.
A written contract may be entered into between an employer and an employee wherein the employee authorizes the employer to make payroll deductions for the purpose of paying union dues, premiums of any life insurance, hospitalization and surgical insurance, group accident and health insurance, group term life insurance, group annuities or contributions to credit unions or a community chest fund, a local arts council, a local science council or a local arts and science council, or Minnesota benefit association, a federally or state registered political action committee, or participation in any employee stock purchase plan or savings plan for periods longer than 60 days, including gopher state bonds.
Employers must obtain the employee’s advance written consent before directly depositing an employee’s net wages in a bank or other financial institution.
The U.S. Consumer Financial Protection Bureau (CFPB) asserts that it has jurisdiction over payroll cards and prohibits employers from exclusively paying wages through payroll cards or from paying wages through those cards without the employee’s consent (after full disclosure is given to the employee). The CFPB also noted that employers may run afoul of FLSA minimum wage requirements if the fees on the payroll cards cause an employee’s wages to fall beneath the statutory minimum. Employers should use caution when using this method of payroll distribution.
Employees terminated, discharged or fired are due all wages and commissions within 24 hours of written demand for payment. Employees who voluntarily leave employment are due all wages and commissions on the next regularly scheduled payday. If the payday is within five days of the last day of work, the employer has up to 20 days to make final payment.
When any employer employing labor in Minnesota discharges an employee, the wages or commissions actually earned and unpaid at the time of the discharge are immediately due and payable upon written demand of the employee. Wages are actually earned and unpaid if the employee was not paid for all time worked at the employee’s regular rate of pay or at the rate required by law, including any applicable statute, regulation, rule, ordinance, government resolution or policy, contract, or other legal authority, whichever rate of pay is greater. If the employee’s earned wages and commissions are not paid within 24 hours after demand, whether the employment was by the day, hour, week, month, or piece or by commissions, the employer is in default. In addition to recovering the wages and commissions actually earned and unpaid, the discharged employee may charge and collect a penalty equal to the amount of the employee’s average daily earnings at the employee’s regular rate of pay or the rate required by law, whichever rate is greater, for each day up to 15 days, that the employer is in default, until full payment or other settlement, satisfactory to the discharged employee, is made. In the case of a public employer where approval of expenditures by a governing board is required, the 24-hour period for payment does not commence until the date of the first regular or special meeting of the governing board following discharge of the employee. An employee’s demand for payment under this section must be in writing but need not state the precise amount of unpaid wages or commissions. An employee may directly seek and recover payment from an employer under this section even if the employee is not a party to a contract that requires the employer to pay the employee at the rate of pay demanded by the employee, so long as the contract of any applicable statute, regulation, rule, ordinance, government resolution or policy, or other legal authority requires payment to the employee at the particular rate of pay. The employee shall be able to directly seek payment at the highest rate of pay provided in the contract or applicable law, and any other related remedies as provided in this section.
The wages and commissions must be paid in the usual manner of payment unless the employee requests that the wages and commissions be sent through the mail. If, in accordance with a request by the employee, wages and commissions are sent through mail, the wages and commissions are paid as of the date of their postmark.
Minnesota employers that commit wage theft will be guilty of a crime. Wage theft requires that there be an “intent to defraud.” An employer could be deemed guilty of wage theft if it:
In general, the FLSA provides that time spent performing activities primarily for the employer’s benefit as compensable, while time spent primarily for the employee’s benefit is not. Time spent by employees engaging in incidental activities may or may not have to be treated as compensable time. The following information is an explanation of how this rule is applied to several specific situations.
Rest periods are commonly considered to be primarily for the employer’s benefit. Therefore, short periods of 20 minutes or less for breaks, such as for coffee and snacks, are compensable hours worked and may not be deducted. Additionally, Minnesota law requires employers to provide employees restroom time for each four consecutive hours to work.
If an employee does not punch in and out for an unpaid meal period during the work shift, the employer must ensure that the employee actually is relieved of duties for the entire meal period. Supervisors must be sure that employees actually take their scheduled meal periods. Where they do not, the time records must be marked accordingly. Meal periods not spent predominantly for the benefit of the employer are not compensable, while meal periods for the employer’s benefit are compensable. For example, an office employee who is required to eat at the employee's desk and answer telephone calls or a factory worker who is required to be at a machine is working while eating, and such time generally is compensable.
There is a distinct recordkeeping risk in allowing employees to eat at their workplace because the question arises as to whether they had an uninterrupted meal period.
In Minnesota, the statute provides that a meal break that is thirty minutes or longer would constitute a bona fide meal period and does not have to be paid. In certain circumstances, the meal period can be shorter.
In Minnesota, employers must provide “reasonable unpaid break time” each day to an employee who needs to express breast milk for her infant child. If possible, the break time must run concurrently with any break time already provided to the employee. The company is not required to provide break time if it would unduly disrupt the operations of the employer.
The Patient Protection and Affordable Care Act (PPACA) also contained an amendment to the FLSA requiring employers to provide “reasonable break time” for breastfeeding working mothers. The requirement applies to all employers, except those with 50 or fewer employees or who have a narrow undue hardship defense. The law requires that for a period of one year following the birth of the child, the employer must provide a private place, other than a restroom, which is shielded from view and free from intrusion, for those nursing mothers who need it. Employers do not need to compensate non-exempt employees for this time, regardless of its length. However, if the employer already provides compensated break periods, an employee who uses that break time to express milk must be compensated the same way that other employees are compensated for break time. The law does not specify what constitutes “reasonable” break time, nor does it place any limits on the number of breaks that a nursing mother may take during the workday.
When employees are idle during their regular workday because of interruptions beyond their control, the time spent waiting is counted as working time if it is unpredictable and short in duration such that employees are unable to use that time for their own purposes and it is instead controlled by the employer. Below are a few examples of compensable waiting times:
Employees on duty for 24 or more hours or who reside on the employer’s premises may agree in writing to have uninterrupted sleep time of up to eight hours per 24-hour period deducted from hours worked so long as adequate sleeping facilities are furnished by the employer.
In Minnesota, if the sleeping period is eight hours or more, the employer may only deduct eight hours. If the sleeping period is interrupted, the interruption must be counted as hours worked. If the period is interrupted and the employee cannot get a minimum of five hours' sleep, the entire period must be counted as hours worked.
Persons who reside on the employer’s premises also may sign agreements setting forth their work and nonwork time on a fair and reasonable basis. Such agreements are voluntary on the employee’s part. Under Minnesota law, if an employee is able to enjoy periods of complete freedom from all duties, those free periods are not considered hours worked.
Whether on-call time is compensable depends on the extent to which the employee’s personal time is restricted. The FLSA requires the payment of a minimum hourly wage to all employees engaged in commerce or in the production of goods for commerce and it also requires the payment of one and one half times the employee's regular rate of pay for all hours worked in excess of 40 hours per week.
Depending on the circumstances, on-call time may or may not be compensable time. Under both the federal and Minnesota FLSA, time spent on the employer’s premises without complete freedom from all duties is working time that must be counted as time worked for purposes of overtime compensation requirements. The Minnesota regulations state that an employee who is required to remain on the employer’s premises or so close thereto that the employee cannot use the time effectively for the employee's own purposes is working while “on call.” Conversely, an employee who is not required to remain on the employer’s premises but is merely required to leave word at home or with company officials where the employee may be reached is not working while on call.
Courts generally analyze a number of factors when determining whether on-call time should be compensated. Those factors include the following:
Carrying a cell phone or other device does not constitute hours worked, provided the employees are relatively free to come and go as they please or use the time for personal pursuits. The employees can be required to refrain from drinking alcoholic beverages during this period. Employees must be given sufficient time to report (generally 20 to 30 minutes, depending on geographic population density) so that they can be free to use time for their own benefit. Requiring an employee to stay at home or at work means that time spent is counted as hours worked. Placing an employee constantly on-call or frequently interrupting the on-call period may lead to a finding that the on-call time must be compensated as hours worked.
Cellphones and smartphones can be an easy and convenient way to reach employees after normal business hours. Calls, texts and emails after hours to employees to discuss and correspond regarding work matters may constitute work time. As such, cell/smartphones can create work hours for an employee that an employer either did not consider traditional work hours or wasn’t expecting to pay for as hours worked. Under the federal Fair Labor Standards Act and Minnesota Fair Labor Standards Act, all of these uses of time can be considered time worked for an employee and may result in overtime pay, depending upon the type of employee and the facts and circumstances surrounding the call, text or email.
As a result, employers must consider the purpose for which they are asking employees to use their personal cell/smartphones. Employers can curb liability and overtime by asking employees not to make work calls, texts, or emails outside of the office and by not calling, texting, or emailing certain employees after hours or on weekends.
The use of an employer’s vehicle for travel by an employee and activities performed by an employee that are incidental to the use of such vehicle for commuting, such as getting a car washed or its oil changed, shall not be considered part of the employee’s principal activities if both:
Attendance at meetings, lectures, and training programs or courses is considered compensable hours worked unless all four of the following are met:
Time spent outside of normal work time in state or licensing agency mandated training such as to meet continuing education requirements is not hours worked.
Time spent in uniform changing activities or in putting on or taking off safety equipment (commonly known as donning and doffing) must be counted as hours worked if the employees must change at work and the employee cannot perform the job without the uniform. Union contracts may incorporate provisions on clothes changing time which will control whether or not the time is compensable under the FLSA. If protective gear consists of items commonly regarded as clothing, then the time spent can qualify for this exclusion on compensability. While broad, the definition of “clothes” excludes wearable accessories, tools, and equipment that are not commonly regarded as articles of dress. Likewise, because safety glasses, earplugs, and respirators do not satisfy this definition, time spent putting them on or taking them off must be compensated.
Time spent by employees in waiting for and receiving medical attention is compensable if the medical attention is received during normal work hours and either of the following criteria is relevant:
Time spent receiving a physical examination that is required for continued employment is compensable. Time spent on tests (such as drug screens) by applicants seeking employment is not compensable.
Time spent by employees working for public or charitable purposes at the employer’s request, or under its direction or control, or while the employee is required to be on the premises, is compensable hours worked. For example, an employee directed by the employer to attend a charitable function must be paid for that time. However, time spent voluntarily in such activities outside of the employee’s normal working hours is not compensable.
Time spent going through security checkpoints or procedures that are required by the employer is generally treated as preliminary or postliminary time and is not compensable. Time spent in security screenings is compensable only if it is “integral and indispensable” to the employees’ “principal activities.” Normal security screenings at the end of the workday to prevent theft do not qualify as working time under this test.
Public employees are able to engage in voluntary sporadic or occasional work for their employer in a different capacity without those hours being combined for overtime purposes. An example of a voluntary sporadic assignment would be a school clerk collecting tickets at a high school football game. There are also specific rules covering outside employment by law enforcement and fire protection employees.
In general, federal, state and local government employers, with the agreement of their employees, can give compensatory ("comp") time off (at time and one-half) rather than pay cash overtime. In other words, if an employee worked 60 hours in a week, the employee could get 30 hours of comp time off instead of 20 hours of overtime pay.
If the work done by an employee for which comp time may be provided includes work in a public safety activity, emergency response activity, or a seasonal activity, the employee can accrue up to 480 hours of comp time (320 hours of actual overtime worked). “Public safety activity” generally refers to law enforcement officers and firefighters. “Emergency response activity” generally refers to the dispatch of emergency vehicles, rescue work, and ambulance services. “Seasonal activity” typically includes work during periods of increased demand that are regular and recurring in nature. There is a 240-hour cap on comp time (160 hours of actual overtime worked) for all other types of work.
Compensatory time received by an employee in lieu of cash must be at the rate of not less than one and one-half hours of compensatory time for each hour of overtime work and must be under an agreement or understanding between the employer and employee prior to beginning the overtime. There is no specific time limit as to when a public employee may elect to use comp time earned. However, the public employer must permit the employee to use such time within a reasonable period after the employee requests time off, unless such use will unduly disrupt the government’s operations (which generally depends on the government’s workload and specific circumstances of each case). When an employee’s employment is terminated, the employee must be paid for all remaining comp time at the employee's current rate of pay.
Employers are required to maintain payroll records showing the following information:
For all employees:
For employees subject to minimum wage and overtime provisions of the FLSA:
For exempt employees:
Payroll records (such as ledgers, W-2 forms, and payroll registers), employment agreements, and sales and purchase records must be kept for three years. The FLSA does not require any particular form in which the records must be kept.
Supplementary basic records (such as time cards, worksheets, wage rates, and billing records) must be kept for two years.
At the end of each pay period, the employer shall provide each employee an earnings statement, either in writing or by electronic means, covering that pay period. An employer that chooses to provide an earnings statement by electronic means must provide employee access to an employer-owned computer during an employee’s regular working hours to review and print earnings statements.
The earnings statement may be in any form determined by the employer but must include:
An employer must provide earnings statements to an employee in writing, rather than by electronic means, if the employer has received at least 24 hours’ notice from an employee that the employee would like to receive earnings statements in written form. Once an employer has received notice from an employee that the employee would like to receive earnings statements in written form, the employer must comply with that request on an ongoing basis.
The principal risk to an employer in failing to maintain adequate or accurate employment records is that the employer will be held responsible for the information contained within such records. For instance, employee testimony as to hours worked generally will be believed in the absence of accurate records of such work. The courts and agencies maintain that the employer can hardly complain about this consequence because it could have been avoided easily by accurate recordkeeping.
Hours worked are all hours an employee is engaged to work, engaged to wait, or actually at work, whether or not authorized. If an employee starts work early or works beyond the end of the shift, such work must be compensated, whether or not it was authorized or even necessary. Employees, however, may be disciplined for unauthorized or unnecessary work.
Employers may keep track of employees’ time in any method they choose. Employers, for example, may use a time clock, have a timekeeper keep track of employees’ work hours, or tell their workers to write their own times on the records. Generally, any timekeeping plan is acceptable as long as it is complete and accurate.
Time clocks are not required, but can be used to record hours worked. If time clocks are used, rounding practices may be used. If the rounding method is followed, employers must ensure that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked. Employers should round employee time to the nearest increment (five minutes, ten minutes, but not exceeding 15 minutes).
The FLSA requires payment of an overtime premium for all hours worked in excess of 40 in a workweek, except where the employee is exempt from overtime under one of the groups that qualify for an exemption. Hours that are paid but not worked do not count as hours worked under the FLSA. Examples include:
The overtime pay rate is one and one-half times the employee’s regular rate. All compensation must be included in computing an employee’s regular rate unless specifically excluded by the FLSA.
In determining an employee’s regular rate for purposes of determining overtime, the employer must include the employee’s hourly wages and any incentive pay, commission or bonus (including attendance, production and incentive bonuses).
Even if the employee will not receive a bonus until later (for example, a quarterly production bonus or an annual longevity bonus), the payments must be included in the overtime compensation determination – even if it means retroactively adjusting those computations once the amount of the bonus is determined. The FLSA provides special rules for retroactive adjustment of an employee’s regular rate. The regular rate need not include:
In December 2019, the DOL issued a final rule updating the FLSA definition of the regular rate of pay for the first time in more than 50 years. The final rule, which went into effect on January 15, 2020, clarifies that many benefits and perks should be excluded from the regular rate calculation, including (in addition to those listed above):
The final rule also includes guidance and fact-based examples of what types of bonuses are considered discretionary. Bonuses that may be discretionary include:
Such bonuses are usually not promised in advance, and the fact and amount of payment are in the sole discretion of the employer until at or near the end of the period to which the bonus corresponds.
Finally, the final rule updates the regulations regarding the “basic rate,” which is authorized under section 7(g)(3) of the FLSA as an alternative to the regular rate under specific circumstances. Under the current regulations, employers using an authorized basic rate may exclude from overtime computation any additional payment that would not increase total overtime compensation by more than $0.50 a week on average for overtime workweeks in the period for which the employer makes the payment. The final rule updates this regulation to change the $0.50 limit to 40% of the higher of the applicable local, state or federal minimum wage.
If a hospital, nursing home, or other health care provider has inpatients, then it may use a special option to calculate overtime. Instead of the 40 hour per week standard, eligible institutions with inpatient care for residents can elect to pay overtime based upon the “8 and 80” rule. Under this rule, if employees agree, they are eligible for overtime compensation if they work more than eight hours in a workday or in excess of 80 hours in a two-week work period.
Employers often want to enforce a “no overtime without prior authorization policy” to control costs. However, such a policy will not prevent employees from being entitled to overtime compensation. Overtime pay must be given, even if the time is not authorized. In such cases, employees should be told that working unauthorized overtime will lead to discipline (but not nonpayment). If employees continue to perform such work, they should be paid and disciplined.
There are a number of special circumstances under which the FLSA overtime provisions and regular rate of pay differ from the situations explained previously. A few examples of special plans for overtime compensation are discussed below.
Employees working two jobs at two different rates for their employer during the same workweek can be paid overtime earnings when the total hours worked exceeds the applicable overtime level according to two approaches.
Under this approach, the employee’s total earnings for the two separate jobs are divided by the total number of hours worked. That figure is the weighted average regular rate. Overtime will be payable at one and half this rate for hours in excess of 40.
An employee and the employer can agree prior to performance of the work that the employee will be paid overtime compensation based upon the rate of the job being performed during the overtime hours. This agreement should be in writing.
An employee may be employed on a salary basis but have hours that fluctuate from week to week. According to an agreement, the employee may be paid a fixed salary for each week worked, no matter how few or many hours. When the employee works overtime, the amount of overtime compensation is determined by dividing the salary by the total number of hours worked. This figure is multiplied by one-half times the number of overtime hours worked. The one-half figure is used because the salary is intended to provide the employee straight-time compensation for all hours worked, including overtime hours, so the employee only needs to receive the additional half-time for the overtime hours.
A Belo contract or plan is a very specialized guaranteed pay plan derived from a Supreme Court decision (Walling v. A.H.Belo Corp.). Such a plan only applies where an employee’s hours of work regularly fluctuate more or fewer than 40 hours per week for reasons beyond the employer’s control. An example of such an employee is a service technician who handles customer emergency equipment breakdowns. The guarantee may involve a straight-time and an overtime component for workweeks up to a certain number of hours (50 for example, but in no case more than 60) and a time and one-half payment for hours worked more than that limit. The regular rate used in such plans must be a bona fide rate and operative in determining compensation. Due to the complexity of these contracts, an attorney specializing in this area should be consulted before implementing one.
With many companies combining operations and centralizing staff functions and with prevalent mergers and acquisitions, joint employment issues are becoming more common under the FLSA. An employee working for two or more organizations at the same time (joint employers) is entitled to overtime after 40 hours of total work and cannot legally be required to work more than 40 hours of straight time for joint employers.
Specifically, the wage and hour regulations provide that where the employee performs work that simultaneously benefits two or more employers, or works for two or more employers at different times during the work week, a joint employment relationship generally will be considered to exist, and all employers are responsible, individually and jointly, for compliance with the overtime provisions of the FLSA. The following situations represent joint employment relationships:
As noted previously, the Wage and Hour Division of the DOL is the enforcement agency for the DOL on child labor, minimum wage and overtime provisions of the FLSA. Government investigators have authority to inspect and transcribe an employer’s records, to interview employees and to otherwise make determinations of FLSA violations. The DOL Secretary, an individual employee, or a group of employees may sue an employer to collect past due minimum wages or overtime compensation.
The statute of limitations to collect past-due wages is two years for ordinary violations and three years for willful violations.
Liquidated (predetermined) damages in an amount equal to back wages found due are available as a remedy, plus attorneys’ fees and costs. An injunction is also possible in court cases brought under the FLSA by the DOL. Attorneys’ fees can be recovered in successful actions. Civil fines of up to $2,050 also can be assessed by the DOL for repeated or willful violations.
Willful FLSA violations can result in criminal prosecution. First offenders are subject to a fine not to exceed $10,000. Second offenders are subject to a fine and maximum prison term of six months.
The FLSA is very complex and involves numerous detailed regulations. In addition, DOL investigators are quite experienced. Therefore, it is extremely important that employers consult an attorney at the earliest stage of any potential lawsuit or investigation involving wage and hour laws. Keep in mind that the information contained in this chapter only addresses a portion of the relevant laws and regulations related to wage and hour laws.
In general, there is no obligation to pay all employees the same rate even if they are performing the same job, but discrimination on the basis of any protected status is prohibited. The equal pay provisions of the FLSA (known as the Equal Pay Act or EPA) provide that persons performing jobs requiring equal skill, effort, and responsibilities at the same establishment may not be paid different wage rates based upon their sex. (Minnesota has a similar law prohibiting discriminatory wage practices based on sex.) Pay discrimination claims may also be brought under Title VII of the Civil Rights Act of 1964. Differences may be based upon seniority and bona fide merit systems. Both statutes are enforced by the Equal Employment Opportunity Commission (EEOC). Recently the EEOC has increased enforcement of this Act to bring wages of women more in line with those of men.
Pay discrimination claims may also be brought under Title VII of the Civil Rights Act of 1964 (Title VII). Differences may be based upon seniority and bona fide merit systems. Both Title VII and the EPA are enforced by the EEOC. Recently the EEOC has increased enforcement of this Act to bring wages of women more in line with those of men.
The Equal Pay Act has the same statute of limitations – two years for ordinary violations and three years for willful violations – as the FLSA. Liquidated (predetermined) damages are also available to claimants where the employer is unable to prove its actions were taken in good faith. The Lilly Ledbetter Fair Pay Act expanded the statute of limitations for pay discrimination claims brought under Title VII. Employees have 180 days from each paycheck that is the result of a discriminatory practice to file a charge with the EEOC; and employees can seek back pay for up to two years prior to the filing of the charge for any similar or related unlawful compensation decisions that may fall outside the 180 day limitation period.
There is no general prohibition against mandatory overtime under Minnesota law; however, Minnesota Statute 181.275 specifically prohibits health care employers from imposing mandatory overtime on certain employees at health care facilities except in very limited circumstances. Registered professional nurses, licensed practical nurses, or other individuals involved in direct patient care are covered by the law; physicians, physician assistants, and dentists are excluded from the limits. The statute defines “health care facility” to include private and public hospitals, nursing homes, and ambulatory surgical facilities, among others. Offices used primarily for private or group practice by health care practitioners are not covered. Nothing in the statute prohibits nurses from working overtime hours voluntarily, nor does it place any cap on the total number of hours nurses may work in a given period of time.
The prohibition on mandatory overtime requirements does not apply in the cases of unforeseeable emergent circumstance, which are defined to include any of the following:
The term does not include vacancies that arise as a result of chronic short staffing. Unless one of these emergency exceptions applies, nurses who refuse mandatory overtime are protected from accusations of patient neglect or abandonment. The law also specifically prohibits covered employers from requiring nurses to work more than their regularly-scheduled work hours. A health care employer may not use on-call time as a substitute for mandatory overtime.
After exhausting reasonable efforts to obtain other staffing, the health care facility or employer may mandate overtime for an unforeseeable emergency provided that it allows affected employees up to one hour to arrange for the care of the employee’s minor child or elderly or disabled family member. An employee who is required to work more than 12 consecutive hours per workday or who volunteers to work more than 12 consecutive hours is entitled to at least 10 consecutive hours of off-duty time immediately after the worked overtime.
Given the potential liability to employers and the level of back pay that can be awarded in a wage and hour investigation or lawsuit, periodic internal audits are often advisable. These audits should focus on:
The assistance of an outside attorney specializing in this field is advisable in such audits to allow the employer to eliminate compliance issues before becoming the subject of an investigation. However, these audits become valueless and may actually harm an employer if any compliance issues discovered during the audit are not promptly resolved.
In addition to the FLSA, other federal wage and hour laws may apply to employers that do business with the federal government, as set forth briefly in the following information.
Pursuant to Executive Order 13658, signed by President Obama, the minimum wage for all workers on federal construction and service contracts is $10.95 per hour effective January 1, 2021. (This rate is $11.25 as of January 1, 2022, for existing contracts and $15.00 for new or extended contracts.) Additionally, the minimum wage for all tipped employees performing work on or in connection with federally covered contracts is $7.65 per hour also effective January 1, 2021. (This rate is $7.90 as of January 1, 2022, for existing contracts and $10.50 for new or extended contracts.).
This Act sets basic labor standards for employers with federal government contracts to manufacture or supply articles with a value of more than $15,000. Under this law, government contractors are required to pay prevailing wage rates in addition to conforming to the requirements of the FLSA. The DOL enforces this statute. The amount recoverable includes the difference between the wages paid and the prevailing wage or benefit rate, and also includes liquidated (predetermined) damages to claimants. There is also the possibility of exclusion from government work.
This Act covers mechanics and laborers engaged in federal public buildings and work projects with a value of $2,000 or more. Under this law, government contractors are required to pay prevailing wage rates in addition to conforming to the requirements of the FLSA. This law is also enforced by DOL. Disqualification from government work is a possible sanction in addition to back wages for underpayments.
This Act covers employers with federal government service contracts worth $2,500 or more. Its provisions and enforcement are similar to the Walsh-Healey and Davis-Bacon Acts.
Similar in some ways to the federal Davis-Bacon Act, the Minnesota prevailing wage law Act requires that all workers on a “public work” project must be paid the prevailing wage comparable to wages paid for similar work in the area where the project is located. The act applies to commercial construction, highway and heavy construction, and residential or agricultural construction. It does not apply to laborers or mechanics who process or manufacture materials or products or to the delivery of materials or products by or for commercial establishments that have a fixed place of business from which they regularly supply processed or manufactured materials or products. Even if a public body is not party to the contract, the prevailing wage requirements will apply if the construction is financed in whole or in part with public funds. In Minnesota, the prevailing wage rates are determined by the commissioner of the Department of Labor and Industry and are updated.
Wage and hour enforcement activity has increased dramatically in the past few years. In addition to increased administrative enforcement, there have also been an increasing number of private lawsuits brought by individuals and groups of individuals. In the lawsuits, liquidated damages (double back pay) are sought often and the three-year statute of limitations for willful violations invoked. Thus, compliance with federal wage and hour laws is essential and self-audits should be conducted at regular intervals.
United States Department of Labor Wage and Hour division
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