Like many states that tie their minimum wage to the federal minimum wage, the Texas minimum wage rose to $6.55 per hour on July 24, 2008. This increase is directly related to the increase in the federal minimum wage as set forth in the Fair Minimum Wage Act of 2007. This act introduced a series of three increases, each of 70 cents over three years. The third and last increase will occur on July 24, 2009.
The Texas state minimum wage law is tied to the federal minimum. In fact, according to the US Department of Labor, the Texas law doesn’t even mention a dollar amount. Instead, it references the federal minimum wage amount and adopts that wage as its own.
In Texas, employers covered by the primary federal minimum wage statute, the FLSA or Fair Labor Standards Act, are exempt from the Texas state minimum. Companies included under FLSA are those which earn $500,000 or more annually, or which engage in interstate commerce.
The Texas Workforce Commission provides the business publication Texas Business Today. A recent issue of this publication states that in the age of the Internet, it’s nearly impossible for a company not to conduct business across states. Any company that uses the Internet, accepts credit cards or corresponds via email is engaged in interstate commerce, thereby qualifying it as an employer under FLSA.
Texas Payday Law requires employers to pay salaried workers at least twice per month. Other employees must also be paid at least twice a month, and at regular intervals. Employers are also required to display labor law posters informing workers what day they will be paid, and how often.
No overtime law exists on the Texas law books. Employers are required to follow the federal standard of 1.5 times the usual hourly rate for all time over 40 hours worked in one week.
Under Chapter 62 of the Texas Labor Code, known as the Texas Minimum Wage Act, the state minimum wage mirrors the federal minimum wage. On May 24, 2007 President Bush signed the Fair Minimum Wage Act of 2007 into law. That federal act provided for annual 70-cent increases in the minimum wage. The current increase is the second of three under the law. The federal (and Texas) minimum wage will increase again on July 24, 2009.
The Texas minimum wage will increase from $5.85 to $6.55 per hour on July 24, 2008. This 70-cent increase mirrors the increase in the federal minimum wage under the Fair Minimum Wage Act of 1007 on the same day. Under that bill, the federal minimum wage is scheduled to increase a total of 3 times between 2007 and 2009. Each increase is 70 cents. This brings the federal minimum wage from $5.15 per hour to $7.25 per hour.
The McLane Company agreed to pay $1,559,316 in overtime wages to more than 500 employees nationwide. The employees were retail merchandising specialists. According to the U.S. Department of Labor investigators, the company improperly classified the employees as outside sales persons or executives and did not pay overtime, as required under the FLSA.
“Workers are entitled to the wages they’ve earned,” said U.S. Secretary of Labor Elaine L. Chao. “We have secured more than $1.5 million in back wages for these workers, and the employer is on notice to properly compensate its employees in the future.”
The McLane Company was founded by grocer Robert McLane in 1894. The company grew to over 50,000 customers nationwide, including movie theaters, fast food, drug stores and convenience stores.
The primary issue in this case was the classification as “outside sales person.” Under the FLSA, outside sales people can legitimately be exempt from the federal minimum wage and overtime laws. However, to qualify for the outside sales exemption, an employee’s primary duty must be making sales (as defined in the FLSA), or obtaining orders or contracts. Those orders and contracts may be for goods, services, or the use of facilities. A consumer or client must pay for the orders or contracts. In addition, the sales person must be “customarily and regularly” engaged away from the employer’s place of business.
The investigators found that while the McLane Company employees normally worked away from the office, they were not engaged primarily in soliciting orders for the company. Instead, they merely demonstrated the company’s products.
In addition to outside sales people, employees in several other occupations may be exempt under the FLSA overtime provisions, minimum wage laws, or both. Some employers erroneously believe that all salaried employees are exempt from overtime. This is not true. The determining factor is the employee’s usual job duties, not the title or salaried status.
The Fair Labor Standards Act of 1938 or FLSA requires most U.S. employers to pay 1.5 times the usual hourly rate, when an employee works more than 40 hours in a payroll week. The law, which also establishes the minimum wage, applies to employers with more than $500,000 in annual revenue. It also applies to employers who do business across state lines, or individual employees who do business across state lines.
McLane Co., a wholesale distributor of food and grocery products, erroneously classified retail merchandising specialists as outside sales employees exempt from FLSA coverage. In addition, the company did not keep accurate records of hours worked, as required by the FLSA of all employers.
The settlement was reached after an in-depth investigation by the Dallas District Office of the U.S. Wage and Hour Division, Department of Labor. The Dallas investigation was sparked by an initial investigation of the McLane Company’s location in Nicholasville, Kentucky. Department of Labor officials in the Louisville Office conducted that inquiry.
The McLane Company cooperated with the investigation and has agreed to pay 570 employees back wages in full.
The FLSA requires that covered employees be paid at least the current federal minimum wage of $5.85 an hour for all hours worked, plus time and one-half their regular rates of pay for hours worked over 40 per week, unless otherwise exempt.
The federal minimum wage will increase to $6.55 per hour effective July 24, 2008, and to $7.25 per hour effective July 24, 2009. Under the FLSA, all employers must maintain accurate time and payroll records.
In 2007, the Wage and Hour Division concluded 30,467 compliance actions and recovered $220 million in back wages for more than 341,000 employees. That was a record-breaking year for the agency. Back wage collections in 2007 increased by 67% over back wages collected in 2001. The number of workers receiving back wages increased 58% since 2001.
Allied Home Mortgage Corp. has paid $1,855,518 to 588 branch managers, loan officers loan processors and clerks. The payout averages $3,156 per employee. Investigators determined that the employees, who were performing inside sales work, had not been properly paid.
“Among this department’s highest priorities is ensuring that workers are paid all the wages they have earned,” said Secretary of Labor Elaine L. Chao. “In this case, we have recovered almost $2 million in back wages for these workers, and their employer is on notice to properly compensate for overtime in the future.”
Over a period of more than two years, Allied Home Mortgage failed to pay overtime to commission-only employees.
Allied Home Mortgage is one of the largest privately held mortagege brokers in the country, with 700 offices in 49 states, plus Guam and the Virgin Islands. The company cooperated with investigators by conducting a self-audit and has agreed to comply with labor laws in the future.
The company has made written mortgages worth more than $15 billion, and writes about 12,000 new mortgages each month.
The Fair Labor Standards Act of 1938, or FLSA, requires that employees who work overtime be paid 1.5 times their usual rate for every hour in excess of 40 per week. When earnings are on a commission basis, the employer must pay the employee an overtime premium for each hour worked.
If a worker earns $500 in commission during a 50-hour week, he has averaged $10 per hour. He is entitled to an overtime premium of an additional $5 per hour for 10 hours, or $50 total, from the employer for the week.
In short, under this law, all commissions must be included in the employee’s average hourly rate. The employee must be paid 1.5 times the average hourly rate, for each hour in excess of 40 per week.
Under the FLSA, employees may be paid on a piece-rate, per hour, or salaried basis, but are still entitled to overtime payments. The FLSA does provide exceptions to the overtime provision for bona fide executive, administrative, professional employees, and for outside sales people. The exception does not cover inside sales people, such as those employed by Allied Home Mortgage.
A number of other prominent companies have had similar violations of the FLSA this year. Rather than face a federal suit, Wal-Mart agreed to pay $33 million in unpaid overtime wages to nearly 86,700 workers nationwide for violations of overtime laws.
That was just one of many cases of minimum wage and overtime violations that were revealed by the U.S. Department of Labor’s Wage and Hour Division. The company had wrongly declared some of its workers “salary-exempt,” even though they were entitled to pay for overtime. The company also admitted in some cases that it determined overtime pay according to the worker’s base hourly rate, not taking into account incentives and bonuses, as the law requires.
Some employers have the mistaken idea that all salaried workers are exempt from overtime. This is not true, except in cases of legitimate administrative, professional, executive, and outside sales jobs. They must meet certain job duty and pay guidelines to be overtime-exempt.
According to the Fair Labor Standard Act, most workers must get the minimum wage, which is now $5.85 an hour. They must also receive overtime pay – 1.5 times their regular rate – for every hour over 40 hours.
A total of 107 subcontractors of KBR, Inc. based in Virginia, were required by the Labor Department to pay roughly $1.5 million in back pay and benefits. The case applied to as many as 2,600 workers who were involved in Hurricane Katrina recovery. They were construction workers assigned to repairs at the Naval construction Battalion Center in Gulfport, Mississippi, and the Naval Air Station/Joint Reserve Base in Belle Chasse, Louisiana.