The federal Fair Labor Standards Act (FLSA) was passed in an effort to set a minimum wage and maximum hour requirement for hardworking Americans. Since 2009, the federal minimum wage has been stuck at just $7.25 per hour.
While most Americans now earn at least the federal minimum wage, millions do not and Jay Forester has prosecuted numerous class actions throughout the United States for egregious minimum wage violations.
Many Americans do not stop at 40 hours but work overtime. It surprises many of our clients to learn, however, that most Americans are entitled to overtime pay. Common mistakes we find among people who contact us is that companies are
- Paying you on an exempt or salary basis when the law requires someone in your position to be paid hourly with overtime pay.
- Treating you like an “independent contractor” when the law says you are actually working as an employee and must be paid minimum wage and overtime.
- Making you work off-the-clock in an intentional effort to pay you less.
- Miscalculating overtime owed.
While this law covers the majority of Americans, there are a few exceptions that make employees exempt from these standards:
As a salaried employee you are paid a fixed amount of money each year, regardless of how many hours you worked. These employees are considered “exempt” from the minimum wage and overtime way regulations. Job titles don’t determine exempt status, in order to be considered exempt employees/employers must meet certain standards to be covered legally. Some employers intentionally or accidentally overlook these extra standards meaning many salaried employees are misclassified and aren’t actually ‘exempt’ and should be eligible for overtime pay.
Employers are expected to pay their employees minimum wage but can get away with paying a reduced hourly wage by using what’s called a tip credit. You’ve probably heard of this before in reference to restaurant workers or delivery drivers. Employees can be paid below the hourly minimum wage because the expectation is that they will make up this loss in tips. These employees hourly wages + tips must still add up to at least the federal minimum wage each paycheck. It’s important to note that these tips fully belong to the employee and the employer is prohibited from using these tips for anything other than towards the tip credit.
An Independent Contractor is someone who is not dependent on the business. Contractors work as needed for a company and are most likely subject to law/instruction from a staffing agency. As a non-employee independent contractors must pay their own taxes and are subject to self-employment taxes. But, just because you’ve been told by your employer that you’re an independent contractor, been given a 1099, or signed paperwork agreeing to be an independent contractor, does not mean you are legally an independent contractor under federal law. In fact, many employers have illegally and incorrectly classified their workers as independent contractors. Take a look at the fallout that Uber and Lyft and Microsoft faced after misclassifying their employees.