Harris, Finley & Bogle, P.C. is a full
service law firm. We are equipped to
address your legal needs, whether
they
involve
appeals,
banking,
corporate, criminal, employment law,
estate planning, oil and gas, personal
injury, real estate, or state or federal
court trials.
Jim Griffis practices in the area
of employment law.
He
advises
clients on employment handbooks,
employment agreements, covenants
not
to
compete,
confidentiality
agreements,
employment
litigation,
and other human resources issues
that
occur
in
the
context
of
employment relationships.
Mac Smith is a life-long resident of
Weatherford and Parker County. He is
a former Parker County District Attorney and former
Weatherford City Attorney, and works with HFB's trial
team representing clients in a broad range of litigation
matters, including
corporate
governance,
criminal,
employment, oil
and
gas,
insurance,
probate,
and personal injury litigation.
James E. Griffis and Mac Smith
777 Main Street, Suite 1800 • Fort Worth, Texas 76102 • 817.870.8700
120 Palo Pinto Street • Weatherford, Texas 76086 • 817.550.6294
Fair Labor Standards Act 101
The Fair Labor Standards Act (“FLSA”) is a federal law that
establishes mini mum wage, overtime, record-keeping, and
child labor requirements for employees in private business
and in federal, state, and local governments. Most people
are familiar with the current federal minimum wage of $7.25
per hour and the overtime rate of 1.5 times a non-exempt
employee’s regular rate of pay for each hour worked over 40
in a workweek. However, there is much more to the FLSA than
just minimum wage and overtime. Here are some basic FLSA
concepts, common mistakes made by employers, and conse-
quences for making a mistake.
Exempt vs. Non-Exempt Employees
The FLSA makes a distinction between exempt and non-exempt
employees. Non-exempt employees must be paid at least mini-
mum wage for each hour worked, and 1.5 times their regular
rate of pay for every hour of compensable time worked over 40
hours per workweek (unless an overtime exemption applies).
Exempt workers do not have to be paid overtime, but must
generally receive a minimum salary and perform certain duties.
Some common exemptions are for executives (primarily
management), professionals (attorneys, accountants, engineers,
architects, etc.), highly-compensated employees (office or non-
manual workers who make at least $100,000), and administra-
tors (HR, accounting, and public relations).
Common Mistakes made by Employers under the FLSA
1. Misclassification of Workers. Employers sometimes misclas-
sify an employee as exempt, rather than as non-exempt.
Determining whether an employee meets a certain exemption
can be difficult in some situations, and employers can often
inadvertently misclassify an employee, resulting in a violation.
For example, employers will often label supervisors as exempt,
but if the supervisor’s actual duties and salary do not qualify
for an exemption, then there may be a violation of the FLSA.
2. Keeping Tipped-Employees’ Tips. The FLSA permits employ-
ers to take what is known as a “tip credit” and credit tips
received by an employee towards the minimum wage owed.
For example, in restaurants, many waiters and waitresses will
receive base pay less than minimum wage, and the employer
will use tips received by the employee to bridge the gap
between the base pay and minimum wage. An employer is not
allowed to keep tips received by its employees. For example,
if a waiter receives a base wage of $2.13 per hour and $10.00
in tips per hour, the employer can use $5.12 of the tips as a
credit towards the minimum waged owed the employee (e.g.,
$2.13 + $5.12 = $7.25). The employee also keeps the remain-
ing portion of the tip (e.g., $4.88).
3. Improper Calculation of Overtime. The general rule is
that all compensation an employee receives is included
when calculating his or her overtime rate. There are a few
exceptions to the rule,
and the burden is on
the employer to show
that the compensa-
tion meets one of these
exclusions. For exam-
ple, a non-discretionary
bonus received by an
employee is included
when calculating an
employee’s overtime rate, but a discretionary bonus is not. It is not
always easy to tell the difference between a discretionary and non-
discretionary bonus.
4. Improper Deductions from Employee’s Wages/Salaries. An
employer should be careful when making deductions from a non-
exempt worker’s wages. If the deduction is not a permitted deduc-
tion and reduces the employee’s wages below minimum wage, then
this will be a violation of the FLSA. An employer can obviously
make deductions for some items (such as the employee’s share of
social security and state unemployment insurances taxes), but not
others (such as cash register shortages) if the deduction reduces the
employee’s wages below minimum wage.
Employers are also not permitted to make certain types of deduc-
tions from exempt employee’s salaries. For instance, an employer
generally cannot make a deduction for damage or loss to company
equipment. Also, if an exempt salaried employee is absent from work
for less than a full day, an employer cannot make a deduction from
his or her salary.
Consequences of Errors
The consequences of making a mistake under the FLSA can be costly.
An employer can be investigated by the United States Department
of Labor and assessed fines and penalties. An aggrieved employee
can also bring a private action against an employer and recover back
wages for 2 to 3 years, liquidated damages in an amount equal to
the back wage award, and reasonable attorney’s fees and costs. The
employee can also bring a collective action lawsuit in which the
employee and all similarly-situated employees pursue their claims
together against the employer. In addition, some supervisors and
managers can be held personally liable for FLSA violations. Needless
to say, it is important for employers to comply with the FLSA.
This article is general in nature. If you need assistance in working your way through employ-
ment issues, you should contact an experienced labor and employment attorney.
This article is for informational purposes only and not for the purpose of providing legal
advice. You should contact an attorney to obtain advice with respect to any particular issue.
Jim Griffis is an attorney with Harris, Finley & Bogle, P.C. He concen-
trates his 15 year legal practice in labor and employment law. Mr.
Griffis represents both employers and employees in various labor and
employment matters.
10
True Representation
Straight Talk
By Jim Griffis, Attorney
Please visit us at 120 Palo Pinto Street in
Weatherford, or 777 Main Street, Suite 1800, in Fort Worth.
.
Working Through Common
Employment Law Issues (part II)
11