The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping and youth employment standards affecting employees in the private sector and in federal, state and local governments. Covered non-exempt workers are entitled to a minimum wage of not less than $7.25 per hour effective July 24, 2009. Overtime pay at a rate not less than one and one-half times the regular rate of pay is required after 40 hours of work in a work week.
FLSA determines whether employees are subject to or exempt from overtime provisions. If employees are determined to be serving in a non-exempt position, overtime pay or compensatory time must be provided for working more than 40 hours in a defined work week. When non-exempt employees work over 40 hours during their scheduled work week, they are entitled to time and a half pay or compensatory time calculated at time and a half for all hours actually worked in excess of 40 hours.
Exempt - Employees who are exempt from overtime will receive a salary which is intended to compensate them for all hours worked. This salary will be established at the time of hire or when the employee becomes classified as an exempt employee. While the salary may be subject to review and modification from time to time, such as during salary review times, the salary will be a predetermined amount that will not be subject to deductions for variations in the quantity or quality of the work performed. Exempt employees will receive full salary for any work week in which work is performed. However, under federal law, an employee’s salary may be subject to certain deductions.
Non-Exempt - Non-exempt employees are eligible for overtime pay or compensatory time for hours worked in excess of 40 in a defined work week. Non-exempt employees should not work any hours outside of their scheduled work day unless the supervisor has authorized the unscheduled work in advance. Non-exempt employees should not start work early, finish work late, work during a meal break or perform any other extra or overtime work unless authorized to do so in advance and that time is accurately recorded in the timekeeping system. Employees are prohibited from performing any “off-the-clock” work. “Off-the-clock” work means work performed but not reported. Any employee who fails to report or inaccurately reports any hours worked will be subject to disciplinary action, up to and including termination.
For additional information, please see the FLSA FAQ's and refer to SAM 02.B.07, Fair Labor Standards Act.