The Fair Labor Standards Act regulates the hours and wages of employees. Employers subject to its provisions must pay their employees specified minimum wages and overtime compensation. The FLSA,		however, does not preempt state law. If an employer resides in a state such as Oregon it must pay a minimum wage of $6.50 per hour rather than the FLSA imposed $5.15 per hour.

 If you are an "employer" as defined by the FLSA you must comply with its requirements. The Act broadly defines an "employer." It includes significantly more individuals and entities than traditional common law definitions. For example, the 9th Circuit determined that a corporate officer who controlled an employee's working conditions and company policy was an "employer." So, if you think you might be an "employer" then you almost certainly are for FLSA purposes.

The term "employee" is also defined in a broad sense to include any individual employed by an employer. The FLSA's definition encompasses many persons and relationships that would not have been considered employer-employee relationships prior to its enactment. When a person "suffers or permits" another to work, an employment relationship results, even if the parties never intended to create one. Whether there is such a relationship is determined on a case-by-case basis with examination of the "economic realities" of the situation.

Overtime Requirements
If there is an employer-employee relationship the FLSA requires that employees who are not exempt from the Act's coverage be paid 1½ times their regular rate of pay for hours worked that exceed 40 per week. If such employees are paid in an unusual manner (e.g. piecemeal) the statute provides methods for determining their "regular rate" of pay.

In determining the 40-hour mark, it does not matter if the employee is paid bi-weekly or monthly. Each week is considered separately, such that if employees worked only 30 hours one week and but 50 the next, they must be paid overtime for 10 hours despite the fact that they worked an average of 40 hours per week.

Exemptions
The FLSA is riddled with exemptions from coverage, going so far as to exclude from its requirements "homeworkers" who make wreaths composed primarily of natural holly, pine, cedar, or other evergreens. Thus, inquiry about the exact status of your employee is wise if you believe there is any possibility that he or she falls into one of the numerous exemptions.

Of particular importance is the "white collar exception" to the minimum wage and overtime compensation. It applies to individuals employed in a bona fide executive, professional, or administrative capacity. Application of this exemption is determined not only by the fact that an employee is well paid or has a certain job title, but also by reference to the specific duties of the employee. White collar workers can work a whole lot more than 40 hours a week without remuneration.

Employees who are considered "executives" are also exempt. If an employee's primary duty consists of management of an enterprise or a division thereof, and the employee regularly directs the work of two or more other employees, he or she is considered an executive under the statute.

Employees are also exempted as "professionals" if their primary duties are teaching or performing work that requires knowledge customarily acquired by a prolonged course of specialized study, or that requires theoretical and practical application of highly specialized knowledge in computer systems. And finally, employees can be exempted as "administrative" if their primary duties are the performance of office or nonmanual work directly related to management policies, general business operations, or educational administration. The employees also must regularly exercise the use of discretion and independent judgment.

Employees exempt under the "white collar" exception must also be paid on a "salary basis." This means that employees, with very few exceptions, must receive a predetermined amount constituting all or part of their compensation, which is not subject to reduction because of variations in the quality or quantity of the work performed. Thus, the exemption will be lost if the employee's pay is docked because he or she goes home sick.

Liability
If an employer or supervisor "knew or should have known" that the FLSA regulations were being violated, and an adversely affected employee complains, the employer may be heavily penalized. These penalties include an award of backpay, civil penalties, double damages, attorney's fees, and possible criminal sanctions for knowing violations of the FLSA. Thus, a simple determination of the exact status of each of your employees is important to avoid needless liability.

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