FLSA Overtime & Minimum Wage in Baytown, TX

Section 29 U.S.C.§201, et seq. sets out the Fair Labor Standards Act of 1938, as amended.  The most commonly relied upon sections of the Fair Labor Standards Act are §206, dealing with minimum wage, and §207, dealing with overtime hours.

• 206 sets out the general rule that “every employer shall pay to each of his employees who in any workweek is engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce, wages not less than $7.25 an hour (current on date of writing).

The language of §206 initiates several lines of questioning.  First, in addressing the language regarding engagement in commerce, an employee may gain coverage under the FLSA in two distinct ways.  First is Enterprise Coverage, where coverage is bestowed upon an employee due to the nature of the business for which he or she works.  With Enterprise Coverage, employees who work for businesses or organizations that have at least two employees and sales or business done of at least $500,000.  Enterprise Coverage also applies to hospitals, and other businesses in the medical field.  The second type of coverage is Individual Coverage.  Under Individual Coverage, employees are covered by the FLSA even if they don’t work for a covered enterprise, so long as they regularly work in commerce between the states.  Examples of this include workers who produce goods that will be sent across state lines, make phone calls to people in other states, etc.  We see that under one or both of these types of coverage, most workers will see initial coverage under the FLSA.

The next line of questioning spawned by the language of §206 is who is properly classified as an employer or employee.  §203 sets out definitions for each of these terms.  “’Employer’ includes any person acting directly or indirectly in the interest of an employer in relation to an employee…”  An “employee” is any individual employed by an employer.  In determining who is “employed by an employer,” courts have looked beyond job titles.  Similarly, they have determined common law standards relating to master and servant to be inapplicable in this context.  The employer-employee relationship under the FLSA is tested by “economic reality” rather than “technical concepts.”

The U.S. Supreme Court has indicated there is no single test for determining whether an individual is properly considered an employee under the FLSA.  Rather, the Court has looked to the totality of the situation between parties.  The Court has considered the following factors in reaching such decisions:

The extent to which the services rendered are an integral part of the principal’s business

1. The permanency of the relationship
2. The amount of the alleged contractor’s investment in facilities and equipment
3. The nature and degree of control by the principal.
4. The alleged contractor’s opportunities for profit and loss.
5. The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor
6. The degree of independent business organization and operation.

The Court has also named certain factors immaterial, such as the place where the work is performed, the presence or absence of a formal employment agreement, licensures, and the time or mode of pay. §206 lays out exemptions from minimum wage payments, centered around rare and fact specific instances, such as agricultural workers, and children working for parents.

• 207 requires the same analysis, and at this stage, employees who are covered under the FLSA for purposes of §206 are similarly covered for §207.  §207 sets the maximum hours an employee can work in a work week without the employer being subjected to paying that employee at time and a half the regular rate at which he is employed for all hours exceeding forty in a workweek.

Exempt or Non-Exempt Employees?

At this point, it is appropriate to determine whether an employee is properly classified as an “exempt employee” or a ”non-exempt employee.”  Employees are non-exempt, unless the particular facts of their employment bring the employee within a specific exemption.  An employee can fall into two categories of exemptions: §207 exemptions, which exempt the employee from the overtime protections of §207, and §213 exemptions, which exempt the employee from both §206 minimum wage protections and §207 overtime protections.

Some exemptions are listed below.  If a particular client or employee falls near any of the listed exemptions, it is appropriate to read the detailed language for that particular exemption to determine whether the employee or client is an exempt or non-exempt employee.

• 207 Exemptions:

-          Irregular Work Hours

-          Employment at Piece Rates

-          Retail or Service Employee on Commission

-          Employment with Hospital or similar Facility

-          Fire Protection or Law Enforcement

• 213 Exemptions:

-          Executive, Administrative, or Professional Capacity

-          Part-year Recreational Establishment or Camp

-          Fisherman

-          Agricultural Workers

-          Small Newspapers

-          Switchboard Operators

-          Babysitting or Care For Elderly

-          Criminal Investigators

-          Computer Workers

The most common employee exemption is found in §213(a)(1) [29 U.S.C. §213(a)(1)], which exempts employees in an executive, administrative, or professional capacity from the FLSA.

EXECUTIVE

-          The employee must be compensated on a salary basis at a rate not less than $455 per week

-          The employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;

-          The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and

-          The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight

ADMINISTRATIVE

-          the employee must be compensated on a salary or fee basis at a rate not less than $455 per week

-          the employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and

-          the employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance

PROFESSIONAL

-          the employee must be compensated on a salary or fee basis at a rate not less than $455 per week

-          the employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment

-          the advanced knowledge must be in a field of science or learning and

-          the advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction