Fair Labor Standards Act

by Alvin J. Keller Fiscal Management Advisor Illinois Department of Local Government Affairs

The 1974 F.L.S. Act amendments have now included employees of state and local governments. Elected officials, executives, administrators, professionals and certain seasonal employees, are exempt from its provisions.

Even though the law is being contested in the Supreme Court, it behooves local government to determine work periods, hourly rates and to keep good records as this act can be determined to be retroactive.

The Fair Labor Standard Act has been in force since 1938, but government was exempt.

In 1966 state hospitals and schools were brought under the Act.

Since 1966, 5 separate attempts were made by Congress to bring government under the Act.

In 1973 Congress passed the act placing governmental employees under the Act but this legislation was vetoed by President Nixon.

In the spring of 1974, the U.S. Senate passed a version bringing police and firemen into the Act at 40 hrs. figure. The House version exempted police and firemen. The ultimate compromise was passed and signed into Public Law 93-259 by President Nixon.

This Act provides that all employees shall receive a minimum wage of $1.90 per hour in the period ending December 31, 1974, $2.00 per hour during the period ending December 31,1975, $2.20 per hour during period ending December 31, 1976 and $2.30 per hour after December 31, 1976. It further provides that all hours worked over 40 hours in any workweek shall be compensated at the rate of not less than one and one half times the regular rate. Policemen and Firemen are exempt from the 40 hours provision but are covered in Sec. 7k of the Act.

The concept of overtime (11/2 times regular pay) is not meant as a reward to the employee but as a penalty to the employer. The incentive is to hire additional employees if the work load demands that these hours be worked. It is intended to provide more jobs.

Exempted are certain employers, executives, administrators and professionals.

The regulations pertaining to the Act are contained in the 500 Series in the Code Book. Many of these are individually printed in pamphlet form and are free from the Department of Labor.

The statements of general policy or interpretations not directly related to regulations are contained in the 700 Series in the Code Book.

Exemptions other than the executive, administrator and professional are recreational employee or employees where the establishment is not open over 7 months of the year. Bonafide volunteers are also exempt from the Act.

The philosophy of the Act is that coverage is to be interpreted very broad and exemptions are to be interpreted very narrow. The Act is devised to protect the employee.

An executive is defined as an employee whose primary duty is management of an enterprise or of a customarily recognized department or subdivision. This could for example, carry out to units—police precincts. He must regularly have 2 or more employees whose work he directs. He must have authority to hire or fire or have right to so recommend. He must have discretionary powers and he must devote no more than 20% of his time in duties directly or closely related to the performance of the work. He must be compensated not less than $125.00 per week.

(Note: The broader exemptions come with the conjunctive (AND) ).

An administrative employee is one whose primary duty consists of performance of office or non-manual duties related to management policies and who regularly exercises discretion and judgment and who regularly assists the executive and who performs general supervisory work along specialized or technical lines and who does not devote over 20% of his time to activities directly or closely related to performance of work of the enterprise or department and who is compensated no less than $125.00 per week.

A professional employee is one whose primary duty consists of performance of work requiring knowledge of an advance type in a field of science or learning usually requiring a prolonged course of specialized instruction as distinguished from general academic education or work that is original and creative or teaching, tutoring or lecturing and whose work requires exercise of discretion and judgment in its performance and whose work is intellectual and varied and who does not devote more than 20% of his time to the normal work of the enterprise or department and who is compensated no less than $140.00 per week.

The key criteria for bonifide volunteers is whether or not he/she is paid a nominal sum. Nominal sum is really an offset to normal out-of-pocket expenses. A nominal sum on a call basis is $2.50 per call—uniform allowance, transportation reimbursement — not salary.

Employees "suffered or permitted" to work. If you have dedicated employees, this often rubs the wrong way. Time is working time. You must either pay a dedicated employee or tell him to go home. He may be a good employee and later get fired. He may then file claim for past work. He will have a record and you will not. An employee cannot waive his rights under Fair Labor Standards Act. An employee can come to work early as long as he does not work.

On duty need not mean actual work. If employee is required to be at a certain place and even though no work is ready, and employee is merely waiting, this is working time.

Rest periods must be counted as working time.

Bonafide meal times are not considered working time. However, if employee may be called to work during this time, it is working time. For example a switchboard operator who eats her meal at the switchboard.

Sleeping time, in most instances, where an employee is allowed to sleep while on duty, this constitutes working time. Amendments to the Police and Fire Section allow for exemption of sleep time if tour of duty exceeds 24 hours, if agreed by employee and employer.

Note at this time that the Police and Fire Wage Provisions have applied since May 1, 1974. Only the overtime provisions are being contested.

Training. If training is required as a condition of employment, then it is working time. If employee volunteers for training, it may not be counted. Some considerations are: Will there be a future reward? May later be a required thing and may later be dropped from employment if did not take the training—then this is working time.

Travel Time. Generally speaking, time going to and from work is not time worked. If you call employee from home then travel time is time worked.

Illinois Parks and Recreation 10 May/June, 1975

Home to work on special one day assignment to another city, all the time involved need not be counted if employee uses part of time for own pleasure ie. — early transportation schedule not used because did not suit employee's fancy.

Overtime. Regular rate and regular work week are important terms. Regular rate is not just salary-shift differential and bonus (ie. sharpshooter) is part of regular salary.

Declare a work week. Can do this in a number of ways: By ordinance, resolution, memoranda, "back of an envelope," as long as you have a record. It need not be uniform for all employees of the local government.

Regular rate is an hourly rate. You do not have to pay on an hourly rate but overtime determination will be on an hourly basis. The easiest way to keep records for governmental employees (if covered) is to have hourly rates. If on salary basis—as hours are reduced, the hourly rate automatically increases and overtime (1%) increases. If hourly rate is established as hours go down, there is no increase in liability. All record keeping must be done on an hourly basis.

There is no limitation on the number of hours an employee may work.

Sick time, vaction time, holiday pay, etc.—although they may be paid by you, there is no liability under the federal act and is not counted as included in the 40 hour liability. Actual work time only is counted in the federal requirements of overtime.

Record to be kept by employers. You have to have name, Social Security No. or employee no., home address, zip code, date of birth (if under 19 yrs. of age) sex, and occupation. For exempt employees (executive, administrator, professional) the work time record need not be kept but record of total wages paid is necessary.

Some records must be kept for three years and some for only two years.

Payroll records, certificates, agreements, plans, notices of collective bargaining agreements, employee contracts, etc., must be retained for three years.

Basic employment and earning records, wage rate tables, work time schedules must be retained for two years.

Illinois Parks and Recreation 11 May/June, 1975