Chapter 22
THE FAIRS LABOR STANDARDS ACT
INTRODUCTION
This chapter focuses on the Fair Labor and Standards Act (FLSA). It begins with a discussion of the origins
CHAPTER OUTLINE
1. Background of the FLSA
1. The Davis-Bacon Act, passed in 1931, provides that contractors working on government
2. The National Industrial Recovery Act (NIRA), passed in 1933, provided for the development
1. However, the Supreme Court held the NIRA was an unconstitutional delegation of
congressional power in Schecter Poultry Corp v. U.S.
3. The Walsh-Healy Act, passed in 1936, sets minimum standards for wages for contractors
CASE 22.1 WEST COAST HOTEL CO. V. PARRISH
300 U.S. 379 (1937)
Facts: The State of Washington enacted labor laws to protect women and children. One of the laws
provided for a minimum wage for women. Parrish worked at West Coast Hotel as a chamber maid and
sued when she was not paid the minimum wage under Washington’s labor laws. The Supreme Court of
Washington held for Parrish, and the hotel appealed arguing the labor laws violated the Due Process Clause
of the Fourteenth Amendment by restricting the freedom to contract.
Issue: Are the State of Washington’s labor laws protecting women and children constitutional?
Decision: Yes. The Constitution prohibits the deprivation of liberty without due process of law. In
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2. Origin and Purpose of the Fair Labor Standards Act
1. Introduction
1. Schecter and West Coast Hotel were the main factors behind the FLSA.
1. Schecter forced the federal government to attempt direct regulation of hours
3. The FSLA deals with 4 areas: minimum wages, overtime pay, child labor, and equal
pay for equal work.
2. Coverage
1. 3 Bases of Coverage:
1. Employees who are engaged in interstate commerce.
2. In 1966, the FSLA was extended to cover some federal employees and to include
state and local hospitals and educational institutions.
3. In 1974, FSLA coverage was extended to most federal employees, to state and local
government employees, and to private household domestic workers.
4. The Congressional Accountability Act of 1995 extended the coverage of Fair
CASE 22.2 CHRISTENSEN V. HARRIS COUNTY
529 U.S. 576 (2000)
Background: The FLSA requires that hours worked in excess of 40 hours per workweek be compensated
at 1 ½ times the normal hourly wage. It also provides that governmental entities (such as municipal
employers) in lieu of paying overtime, may provide compensatory time at the 1 ½ times rate. The FLSA
expressly regulates some aspects of accrual and preservation of compensatory time. For example, the
FLSA provides that an employer must honor an employee’s request to use compensatory time within a
the termination of employment, as well.
Harris County became concerned it might not be able to pay monetary compensation to employees who
worked overtime beyond the statutory cap and to employees who left their jobs with sizable reserves of
accrued time. The County wrote to the U.S. Dept. of Labor’s Wage and Hour Division requesting whether
they could require non-exempt employees to take compensatory time. The Division replied that the County
Issue: Did Harris County’s policy of forcing employees to take compensatory time violate the FLSA?
Decision: Both parties conceded that the FLSA did not expressly prohibit the County’s policy, but the
employees argued that the FLSA implicitly prohibited the policy absent an agreement. The employees
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ANSWERS TO CASE QUESTIONS
1. The debate is age old: “the power to tax is the power to destroy” actually derives from an early case
Supreme Court case involving the first chief Justice, John Marshall, and a tax attempted by Maryland
against the Bank of the United States. The analogy to requiring state and local governments to pay
2. The dissenters of course take the opposite view. They reason that since public employers can only
institute a comp-time scheme with agreement of the employees or their collective bargaining agent,
the employees’ use of the accrued comp time cannot be mandated by the employer without the
consent of the other party.
3. Students may be invited to speculate. Some employees may prefer to earn more income rather than
4. Harris County might attempt to use a lay-off. But the US Department of Labor is vigilant with regard
to subterfuges aimed at circumventing the law, such as when employers have sought to have
5. A union, predictably, would support its members’ position. This would inevitably lead to an attempt
to negotiate a provision to the collective agreement forbidding the county from forcing the use of
comp time. Some compromise likely would be reached at the bargaining table.
3.
4. Minimum Wages
1. Government regulation of the *minimum wage is an attempt to reduce poverty and
bring the earnings of workers closer to the cost of living. Originally it was also an
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2. Although seemingly simple, the minimum wage is hard to administer because of the
wide variation in compensation methods used by employers. Atypical compensation
CASE 22.3 TERRY V. SAPPHIRE GENTLEMEN’S CLUB
336 P.3d 951 (Nevada Supreme Court 2014)
Facts: The performers also agree to abide by certain “house rules,” including a minimum standard of
coverage by their costumes and a minimum heel height; payment of a “house fee,” which ranges in amount,
any night they work; and performing two dances per shift on the club stage unless they pay an “off–stage”
fee. Sapphire does not pay wages to the performers, whose income is entirely dependent upon tips and
dancing fees paid by Sapphire patrons. The performers filed suit against the Sapphire challenging their
work arrangements, claiming that they were “employees” within the meaning of state minimum wage laws
and were thus guaranteed a minimum wage.
Issue: Are the performers at Sapphire Gentlemen’s Club employees within the meaning of the state
minimum wage laws and thus entitled to the minimum wages guaranteed by state and federal law?
Decision: The court then held that, based on the review of the totality of the circumstances of the working
ANSWERS TO CASE QUESTIONS
1. As independent contractors, rather than employees, Sapphire would not be obliged to pay the dancers
2. In the words of the court, “The signed entertainment agreement, which describes in detail the terms
under which Sapphire permits the performers to dance at its facility, is an express contract of hire,
3. The economic realities test fashioned by the federal courts examines the totality of the circumstances
and determines whether, as a matter of economic reality, workers depend upon the business to which
they render service for the opportunity to work.
1.
2. Another difficult issue is the time required for an employee to prepare to perform the
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1. The shifts of incoming and outgoing retail clerks must effectuate a transfer
of the store’s cash register between their shifts;
2. Miners and factory workers must don uniforms or equipment in a locker
room at the start of their shifts and perhaps shower and change at the end of
their workdays.
3.
CASE 22.4 SALAZAR V. BUTTERBALL, LLC
644 F.3d 1130 (10th Cir. 2011)
Facts: This is a recent example of a classic FLSA issue: workers spend time preparing for and/or winding
up their shifts. Here the plaintiffs banded together and prosecuted their claim that the time they spent each
work day putting on and taking off their work clothes ought to be paid by their employer.
Issue: Is the time spent donning and doffing clothing compensable under the FLSA in this case?
Decision: The term “changing clothes” in the FLSA provision that excludes this activity from
2. Overtime Pay
*Overtime pay: Employees covered by the FLSA are entitled to overtime pay at 1/12 times their regular rate
for hours worked in excess of 40 hours per workweek.
*Workweek: A term the FLSA uses to signify 7 consecutive days; the law does not require the workweek
start or end on any particular day of the calendar week.
1. The starting day of a workweek may be changed, provided that the purpose of the
change is not to avoid the requirements of the law.
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ETHICAL DILEMMA
Convenience Store Clerk’s Conundrum
College sophomore Suzy Smart works part-time in the Handi Mart convenience store near campus. The
manager at Handi Mart requires that each clerk arrive fifteen minutes prior to the start of the shift so that
duty may not punch her timecard and start earning wages until the process is completed.
This semester, Suzy is taking a course on labor and employment law. After reading the text chapter
concerning minimum wage and overtime rules under the FLSA, she realizes that the store manager is
violating the law by not allowing the oncoming clerk to punch the time clock as soon as she arrives. She
ANSWER TO QUESTION:
Suzy is presented with an ethical question of whether she should report the company’s violation of FLSA
knowing that it may have an adverse impact on the employees. Reviewing of the sales figures and cash
3.
4. Exemptions from Overtime and Minimum Wage Provisions
*Exempt employee: Employee whose hours of work and compensation are not stipulated by the FLSA.
1. There are 4 types of exempt employees:
1. Executive Employees – The FLSA regulations provide this test:
1. Employee is compensated on a salary basis at a rate of not less
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2. Administrative Employees – The FLSA regulations provide this test:
1. Employee is compensated on a salary or fee basis at a rate of not
less than $455 per week (or $380 per week, if employed in
American Samoa by an employer other than the Federal
Government), exclusive of board, lodging, or other facilities;
3. Professional Employees – The FLSA regulations provide this test:
1. Employee is compensated on a salary or fee basis at a rate of not
2. Her/his primary duty is the performance of work:
1. Requiring knowledge of an advanced type in a field of
4. Outside Salespeople – The FLSA regulations provide this test:
1. Employee’s primary duty is:
1. making sales within the meaning of section 3(k) of the
Act, or
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2. S/he is customarily and regularly engaged away from the
employer’s place or places of business in performing such primary
duty.
1. The term “primary duty” is defined at Section 541.700. In
determining the primary duty of an outside sales
employee, work performed incidental to and in
2. The requirements of subpart G (salary requirements) of
2. States may supplement federal wage and hour laws and regulations, provided state
law expands the rights accorded to workers by the federal scheme. This can raise
some issues when a state has expanded the law in this area. For example, what if
workers from New Mexico and Arizona are sent to do a job in California? Which law
should apply?
1. The Ninth Circuit addressed this issue. It initially awarded overtime pay to
out-of–state workers based on California’s wage and hour laws. It withdrew
3. The Ninth Circuit sought guidance on three issues from the California
Supreme Court:
1. Do the California Labor Code’s overtime provisions apply to out-
of-state employees working overtime in California for a
California-based employer in the circumstances of this case?
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does not require overtime pay for more than eight hours worked
in a day, but only for more than 40 hours worked in a week)?
THE WORKING LAW
Presidential Memorandum—Updating and Modernizing Overtime Regulations
From a memorandum for the Secretary of Labor:
“…I hereby direct you to propose revisions to modernize and streamline the existing overtime regulations.
5. Limitations on Child Labor
1. The social and economic problems of child labor were recognized by government;
2. Congress made several attempts to enact federal limitations on child labor.
1. In 1916, a law prohibiting the shipment in interstate commerce of goods
produced by factories or mines employing child labor was passed. The
*National Industrial Recovery Act (NIRA): An act primarily designed to regulate and revitalize industry;
promoted fair trade practices.
3. In 1936, the Walsh-Healy Act prohibited contractors under government
contracts from using child labor to produce, manufacture, or furnish
materials for the contract.
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3. The FLSA and Child Labor
1. The FLSA does not prohibit all child labor; rather, it proscribes only
“oppressive” child labor.
1. The act prohibits the interstate shipment of goods from
2. The definition of “oppressive child labor” is crucial to the administration
of the act. The act defines oppressive child labor by using age restrictions
and identifying hazardous occupations. Employing minors under age
eighteen in any occupation identified as hazardous by the secretary of
labor is prohibited. At present, a number of occupations have been
identified as hazardous by the secretary of labor, including the following:
1. coal mining or mining other than coal;
6. occupations of motor-vehicle operator or helper;
7. occupations involving operation of power-driven woodworking
machines;
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3. Minors aged sixteen to eighteen may work in certain nonhazardous
occupations, and minors aged fourteen to sixteen may be employed in non–
4. Specific exemptions from the category of oppressive child labor include
the employment of:
1. newspaper carriers who are engaged in delivering papers to
consumers;
CASE 22.5 SOLIS V. LAURELBROOK SANITARIUM AND SCHOOL, INC.
642 F.3d 518 (6th Cir. 2011)
Facts: This case raises another “hot” issue under the FLSA. The proliferation of unpaid interns in the
wake of the 2008-09 Great Recession has led the DOL to promulgate rules aimed at determining when
such college students are in fact employees of the companies that accept them for such on-the-job
experiences. The NLRB is wrestling with a similar issue: are graduate assistants, who fill the classrooms
and labs of our nation’s large universities, primarily students or principally employees? This case offers a
variation on these themes. Here the students in a boarding school studies four hours a day and worked four
hours each day… ostensibly acquiring practical skills.
Issue: Does the student vocational training practiced at Laurelbrook violate the child labor provision of
the FLSA?
Decision: The district court applied the proper test when it asked which party to the relationship received
the judgment of the district court is affirmed.
6.
7. Enforcement and Remedies Under the FLSA
1. The FLSA is enforced by the Department of Labor (DOL). The Wage and Hour
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3. Criminal proceedings for willful violations may be instituted by the Department of
Justice.
extended to three years.
6. The Supreme Court in McLaughlin v. Richland Shoe Co. defined “willful” as “that
the employer either knew or showed reckless disregard as to whether its conduct
was prohibited by the FLSA.”
CASE 22.6 MUMBY V. PURE ENERGY SERVICES
636 F.3d 1266 (10th Cir. 2011)
Facts: This was a collective action by a group of employees for wages due under the FLSA. The company
concocted its own definition of the “day rate” under which it paid its roustabouts.
Issue: Was the court within its discretion in awarding the plaintiffs liquidated damages?
Decision: The court found that Pure Energy failed to compensate the plaintiffs for weekly overtime despite
ANSERS TO END OF CHAPTER PROBLEMS
QUESTIONS
1. It should come as no surprise that the Obama Administration has increased the federal bureaucracy’s
enforcement activities across the board. This is typical of a Democratic, as compared to a Republican,
2. Liquidated damages require a showing of willful violation of the act. As the Mumby case illustrates,
the courts look for indicia of reckless disregard of the rules and regulations on the employer’s part.
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exemptions are:
1. The regulations under the FLSA provide the following test:
(1) Employee is compensated on a salary basis at a rate of not less than $455 per week (or $380
per week, if employed in American Samoa by an employer other than the Federal Government),
2. The regulations under the FLSA set out the following test:
(1) Employee is compensated on a salary or fee basis at a rate of not less than $455 per week
3. Professional employees must meet one of several tests under the FLSA regulations:
4. The regulations under the FLSA exempt outside salespeople from both the overtime and minimum
wage provisions. To be exempt, the following requirements must be met:
(1) Employee’s primary duty is:
(a) making sales within the meaning of section 3(k) of the Act, or
(b) obtaining orders or contracts for services or for the use of facilities for which a
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4. Oppressive child labor under FLSA involves child labor in a hazardous occupation, or employing a
5. The W&H Division of the DOL applies pretty nearly the same test applied by the NLRB in
determining if graduate assistants at private universities are primarily employees or students. The
6. Remedies for violations of overtime and minimum wage provisions include back pay, liquidated
damages (unless the court finds the employer acted in good faith), and injunctions. If individuals file
CASE PROBLEMS
7. The Wage & Hour Division ruled that, while ordinarily the house managers perform too large a
8. The Wage & Hour Division ruled that the two firms were joint employers and therefore the workers
9. Since these employees perform the “same type of services” they must be paid premium (overtime) pay
10. Provided the bonus is genuinely discretionary the employer can exclude it from the calculation of the
11. The court held that the “mere fact” that the workers were restricted to the employer’s premises did not
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12. The court notes that the only restraint upon a public employee’s use of comp time is that it not cause
an “undue disruption” in the employer’s delivery of its services to the public. The FLSA provides no
13. The court found that, because the chances of detection by the INS in the absence of the employer’s
14. Because the floating pharmacist was paid on an hourly basis his professional status was destroyed for
15. The court concluded that the case turned upon who received the primary benefit of the
arrangement…the college or its male guards. If the college received the primary benefit then the
16. Because the bus company permitted its local passengers to ‘beef up’ their tickets and use the same
tickets then to ride the company’s interstate buses across the state line to New York destinations, the
of Transportation. Consequently, the carrier was exempt from the overtime requirements of the FLSA.
HYPOTHETICAL SCENARIOS
17. Yes. Clara should be exempt because of her status as an executive employee. According to FLSA
regulations you are considered an executive employee if you: are compensated more than $455 per
18. Yes. The Court in Hiner declared that on-call time is not compensable when the time spent is
predominantly for the employee’s benefit. The court noted that an individual plaintiff’s
compensated down-time is not considered working time under the FLSA in cases where an
19. Yes. Under FLSA, outside salespeople are exempt from FLSA. A person is considered an outside
salesperson under subsection (b) when the employee’s primary duty is obtaining orders or contracts
for services for which a consideration will be paid by the client or customer; and she is customarily
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20. Probably. Under the FLSA, voluntary status will be granted under the following circumstances: the
services are entirely voluntary, with no coercion by the employer, no promise of advancement, and
no penalty for not volunteering; the activities are predominately for the employee’s own benefit;
21. No. Maggie’s work is not subject to the FLSA’s child labor provisions or FLSA’s minimum wage
requirements. FLSA does not prohibit all child labor; rather, it proscribes only “oppressive” child
labor. The definition of “oppressive child labor” is crucial to the administration of the act. The act