Q. What is the Fair Labor Standards Act?
A. The Fair Labor Standards Act or FLSA is a federal statute that sets forth the requirements for employers to pay minimum wage and overtime to employees who are covered by the Act. Additionally, it defines the forty-hour workweek and places restrictions on child labor. The Wage and Hour Division of the U.S. Department of Labor enforces the requirements of FLSA.
Q. Are all employees covered by FLSA?
A. Not all employees are entitled to the wage protections of FLSA. There are certain categories of employees that are not covered, which means that FLSA’s minimum wage and overtime requirements do not apply to them. Whether or not an employee falls within an exemption is one of the most-often litigated wage issues.
These exemptions include exemptions for certain executive, administrative, and professional workers who earn weekly salaries of at least $455. They also cover certain highly compensated employees who perform office or non-manual labor and are paid an annual compensation of $100,000 or more. Certain outside salespeople who are paid primarily through commissions and require little or no direct supervision, and workers in the computer field who earn weekly salaries of not less than $455, may also be exempted from FLSA.
Q. What about independent contractors. Are they covered by FLSA?
A. No, independent contractors are not employees and therefore employers do not owe them minimum wage or overtime. However, whether a worker is an independent contractor or an employee is the subject of dispute and litigation. According to the Department of Labor, there are several factors that employers have to consider in determining whether a worker is an employee or an independent contractor. These are:
• Does the work performed by the employee form an integral part of the employer’s business? If so, it is more likely that the worker is economically dependent on the employer and is not an independent contractor.
• Does the worker’s opportunity for profit or loss depend upon his or her managerial skill? A worker in business for himself or herself faces the possibility of both profit and loss. The worker’s managerial skill will often affect opportunity for profit or loss beyond the current job, such as by leading to additional business from others or by reducing the opportunity for future work.
• What is the worker’s relative investment as compared with the employer’s investment? An independent contractor typically makes investments that support a business beyond any particular job. Employees, on the other hand, do not make such investments because they are largely dependent on the employer economically.
• How much and in what way does the employer control the worker? This goes towards the question of whether the worker is economically dependent on the employer or truly an independent entity. If the worker controls meaningful aspects of the work performed such that it appears he or she is conducting his or her own business, then the worker is likely an independent contractor.
• Does the worker and the employer have a permanent relationship? Permanency or indefiniteness suggests that the worker is an employee. Usually, a worker who is in business independently will not choose a permanent relationship with the employer.
FLSA is a complex area of law with plenty of nuances that can result in lasting disputes between employers and employees. The Law Office of Richard J. Arendt can help you if you are an employee seeking to vindicate your wage rights or an employer seeking to ensure compliance with FLSA’s requirements. Richard J. Arendt is dedicated to providing seasoned representation in the greater Chicagoland area, including Boone, Cook, Du Page, Kane, McHenry, Lake, and Will counties.
You may call us to schedule a no-obligation initial consultation at (312) 642-9606.