labor lawAdivision of labor law center

On July 24, 2009 the federal minimum wage increases from $6.55 to $7.25 per hour. This is the third and final annual increase under the Fair Minimum Wage Act of 2007.

Many employers consider this increase bad timing, considering the current economic conditions. However, when the Fair Minimum Wage Act was passed in 2006, during an unprecedented bubble in the stock market and real estate market.

For ten years, while the federal minimum wage sat at $5.15 an hour, members of Congress voted themselves raises that hiked their salaries by an average of $31,600 each.

That changed with the Fair Minimum Wage Act of 2007. According to the new Act, the minimum wages of American workers were increased by 70 cents an hour every year for three years, for a total increase of $2.10 per hour.

Each hike comes on July 24, and in 2007 on that date the hourly rate went from $5.15 an hour to $5.85. The next was from $5.85 to $6.55 an hour.

The third and final increase comes July 24, 2009, when the minimum wage rises from $6.55 to $7.25. Over the three years, the total increase per worker is $84 per week or $4,368 yearly.

The federal minimum wage law is the FLSA or Fair Labor Standards Act. It applies only to those employers who have more than 50 workers or who earn revenues of more than a half-million dollars a year. It also regulates the pay of employees in businesses that engage in interstate commerce. A business engages in interstate commerce when it mails to potential out-of-state customers, makes goods sold out of state, or buys its supplies from vendors who are outside their state.

Across the nation, more than half of all states nationwide have passed  laws that establish a higher minimum wage than the federal rate. Employees in those states are legally entitled to the higher rate.

Paying less than the minimum wage, the U.S. Department of Labor reminds employers, is against the law. It violates the Fair Labor Standards Act of 1938, also known as the FLSA. The DOL’s Wage and Hour Division enforces the act, which also says that all workers must receive their wages by their regular paydays.

At $5.15 an hour, supporters of the increased federal minimum noted, a worker had less purchasing power than he or she would have had in 1968, when the minimum was $1.60 an hour. To be equal to purchasing power, they pointed out, the minimum wage would actually have to be $9.12 an hour in 2006. Although the new 2009 minimum wage is higher, it has not yet reached that level.

Employers may need to implement new payroll procedures due to a recent 8^th U.S. Circuit Court of Appeals ruling on overtime.

In a Nebraska lawsuit against Famous Dave’s restaurant chain, the appeal court upheld the lower court ruling that the employer should have known that employees were working a more than one Famous Dave’s location.

The restaurant chain is based in Minnesota and has both franchise and company-owened locations throughout the Midwest.

The court found that most Omaha restaurants had policies prohibiting employees from working at more than one location. When an employee had permission to work at several locations, the employer had a system in place to combine the employees hours to calculate overtime.

However, Famous Dave’s  had no policy prohibiting employees from working at more than one location. A number of employees did work at two or more locations. Their hours were not combined to calculate overtime, (more…)

In an effort to reduce costs, many employers are considering furloughs – unpaid leave – for exempt employees. However, furloughs can be a legal minefield, if not handled properly, according to the SHRM, the Society of Human Resource Management.

According to the U.S. Department of Labor regulations issued in 2007, an exempt salaried employee is entitled to his or her full salary in any week in which the employee does any work at all – regardless of the number of hours that the employee works.

Under the federal FairPay regulations , an exempt employee who works for 10 minutes during the week is entitled to the same salary as if he or she worked 100 hours during the week.

Also under the FairPay regulations, if an exempt employee is ready, willing and able to work on a particular day, but no work is available, the employer must pay the worker for that day. For example, if the business in Kentucky is closed by a massive power outage, exempt employees must still be paid for that day. Hourly or non-exempt salaried employees need not be paid, under the FLSA or Fair Labor Standards Act.

This means that an employer cannot furlough an exempt employee (more…)

The U.S. Department of Labor or DOL announced on January 15, 2009 that Sandia Corp. has agreed to pay more than $2 million in back wages for unpaid overtime.

In an interesting wrinkle, the Albuquerque employer apparently tried to avoid overtime payments for non-exempt employees by setting no fixed payroll week.

Under the federal FLSA or Fair Labor Standards Act, employers must pay an employee overtime when the employee works more than 40 hours in the payroll week.

Information on the FLSA requirements for overtime are included on the federal minimum wage poster that every employer must prominently display in the workplace.

By not having a fixed payroll week, Sandia averaged the employees’ hours over two or more weeks. Under the FLSA, an employer can establish any fixed payroll week that the employer likes. The payroll week can run from Sunday to Saturday, or from Monday to Sunday, or from Thursday to Wednesday. Under some circumstances, an employer can change the payroll week, as long as employees are given advance notice.

However, the employee’s workweek must be a fixed and regularly recurring period of 168 hours, (more…)

Employers have already been warned that the state minimum wage will increase with the new year in Oregon, Washington, Florida, New Mexico, Vermont, Colorado, Arizona, Missouri, Montana, Ohio and Connecticut.

However, employers in other states also have to contend with minimum wage increases this year.

Even if an employer has no minimum wage employees, each increase means the employer must update his or her minimum wage posters. By law, employers are required to display a variety of labor law posters prominently in the workplace. Failure to do so can result in fines, penalties and citations.

On July 1, 2009 the Illinois minimum wage will increase by 50 cents, from $7.50 to $8.00 per hour. This is the final step in a 3-tiered increase introduced by the now-infamous (more…)