Who is Covered?

All employees of certain enterprises having workers engaged in interstate commerce, producing goods for interstate commerce, or handling, selling, or otherwise working on goods or materials that have been moved in or produced for such commerce by any person are covered by FLSA. A covered enterprise is the related activities performed through unified operation or common control by any person or persons for a common business purpose and --

whose annual gross volume of sales made or business done is not less than $500,000 (exclusive of excise taxes at the retail level that are separately stated); or
is engaged in the operation of a hospital, an institution primarily engaged in the care of the sick, the aged, or the mentally ill who reside on the premises; a school for mentally or physically disabled or gifted children; a preschool, an elementary or secondary school, or an institution of higher education (whether operated for profit or not for profit); or
is an activity of a public agency.

Construction and laundry/dry cleaning enterprises, which had been previously covered regardless of their annual dollar volume of business, became subject to the $500,000 test on April 1, 1990. Any enterprise that was covered by FLSA on March 31, 1990, and that ceased to be covered because of the $500,000 test, continues to be subject to the overtime pay, child labor and recordkeeping provisions of FLSA. Employees of firms which are not covered enterprises under FLSA still may be subject to its minimum wage, overtime pay, and child labor provisions if they are individually engaged in interstate commerce or in the production of goods for interstate commerce, or in any closely-related process or occupation directly essential to such production. Such employees include those who: work in communications or transportation; regularly use the mails, telephones, or telegraph for interstate communication, or keep records of interstate transactions; handle, ship, or receive goods moving in interstate commerce; regularly cross State lines in the course of employment; or work for independent employers who contract to do clerical, custodial, maintenance, or other work for firms engaged in interstate commerce or in the production of goods for interstate commerce. Domestic service workers such as day workers, housekeepers, chauffeurs, cooks, or full-time babysitters are covered if:

their cash wages from one employer are at least $1,000 in a calendar year (or the amount designated pursuant to an adjustment provision in the Internal Revenue Code), or
they work a total of more than 8 hours a week for one or more employers.

Source: http://www.dol.gov/esa/regs/compliance/whd/hrg.htm#1

Wages

Owners should learn the rules and regulations regarding employee pay. This page offers: minimum wage laws, competitive wages, workers compensation, and Department of Labor resources. http://www.business.gov/topics/employees/wages/index.html

U.S. Dept of Labor Wages Resources

Department of Labor's wages resource page: http://www.dol.gov/dol/topic/wages/index.htm

The Department of Labor enforces the Fair Labor Standards Act (FLSA) which sets basic minimum wage and overtime pay standards. These standards are enforced by the Department's Wage and Hour Division a program of the Employment Standards Administration. Workers who are covered by the FLSA are entitled to a minimum wage of not less than $5.15 an hour. Overtime pay at a rate of not less than one and one-half times their regular rate of pay is required after 40 hours of work in a workweek. Certain exemptions apply to specific types of businesses or specific types of work.

Back Pay

A common remedy for wage violations is an order that the employer make up the difference between what the employee was paid and the amount he or she should have been paid. The amount of this sum is often referred to as "back pay." http://www.dol.gov/dol/topic/wages/backpay.htm

Commissions

A sales commission is a sum of money paid to an employee upon completion of a task, usually selling a certain amount of goods or services. Employers sometimes use sales commissions as incentives to increase worker productivity. A commission may be paid in addition to a salary or instead of a salary. The Fair Labor Standards Act (FLSA) does not require the payment of commissions. http://www.dol.gov/dol/topic/wages/commissions.htm

Educational Level & Pay

Generally speaking, jobs that require high levels of education and skill pay higher wages than jobs that require few skills and little education. Statistics from the Department of Labor's Bureau of Labor Statistics (BLS) validate this viewpoint by revealing that the unemployment rate among people who have a professional degree is significantly lower than that of people who have a high school diploma or less than a complete high school education. In addition, earnings increase significantly as a worker's degree of education rises. http://www.dol.gov/dol/topic/wages/educational.htm

Garnishment

Wage garnishment is a legal procedure in which a persons earnings are required by court order to be withheld by an employer for the payment of a debt such as child support. Title III of the Consumer Credit Protection Act (CCPA) prohibits an employer from discharging an employee whose earnings have been subject to garnishment for any one debt, regardless of the number of levies made or proceedings brought to collect it. http://www.dol.gov/dol/topic/wages/garnishments.htm ; http://www.dol.gov/asp/programs/guide/garnish.htm

Government Contracts

Prevailing wage requirements of various laws applicable to government contracts are enforced by the Employment Standards Administrations Wage and Hour Division. http://www.dol.gov/dol/topic/wages/govtcontracts.htm

Hazard Pay

Hazard pay means additional pay for performing hazardous duty or work involving physical hardship. Work duty that causes extreme physical discomfort and distress which is not adequately alleviated by protective devices is deemed to impose a physical hardship. The Fair Labor Standards Act (FLSA) does not address the subject of hazard pay, except to require that it be included as part of a federal employee's regular rate of pay in computing the employee's overtime pay. http://www.dol.gov/dol/topic/wages/hazardpay.htm

Holiday Pay

The Fair Labor Standards Act (FLSA) does not require payment for time not worked, such as vacations or holidays (federal or otherwise). These benefits are generally a matter of agreement between an employer and an employee (or the employee's representative). http://www.dol.gov/dol/topic/wages/holiday.htm

Industrial Homework/Piecework

Under the Fair Labor Standards Act (FLSA), industrial homework (also called "piecework") means the production by any covered person in a home, apartment, or room in a residential establishment, of goods for an employer who permits or authorizes such production, regardless of the source (whether obtained from an employer or elsewhere) of the materials used by the homeworker in producing these items. The performance of certain types of industrial homework is prohibited under the FLSA unless the employer has obtained prior certification from the Department of Labor. Restrictions apply in the manufacture of knitted outerwear, gloves and mittens, buttons and buckles, handkerchiefs, embroideries, and jewelry, if there are no safety and health hazards. The manufacture of women's apparel (and jewelry under hazardous conditions) is generally prohibited. All individually covered homework is subject to the FLSA's minimum wage, overtime, and recordkeeping requirements. Employers must provide workers with handbooks to record time, expenses, and pay information. http://www.dol.gov/dol/topic/wages/industrialhomework.htm

Last Paycheck

Employers are not required by federal law to give former employees their final paycheck immediately. Some states, however, may require immediate payment. If the regular payday for the last pay period an employee worked has passed and the employee has not been paid, contact the Department of Labor's Wage and Hour Division or the state labor department. http://www.dol.gov/dol/topic/wages/lastpaycheck.htm

Merit Pay

Merit pay, also known as pay-for-performance, is defined as a raise in pay based on a set of criteria set by the employer. This usually involves the employer conducting a review meeting with the employee to discuss the employee's work performance during a certain time period. Merit pay is a matter between an employer and an employee (or the employee's representative). The Fair Labor Standards Act (FLSA) does not require or address the issue of merit pay. http://www.dol.gov/dol/topic/wages/meritpay.htm

Minimum Wage

The federal minimum wage for covered, nonexempt employees is $5.15 per hour. The federal minimum wage provisions are contained in the Fair Labor Standards Act (FLSA). Many states also have minimum wage laws. In cases where an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher of the two minimum wages. The FLSA does not provide wage payment or collection procedures for an employee's usual or promised wages or commissions in excess of those required by the FLSA. However, some states do have laws under which such claims (sometimes including fringe benefits) may be filed. The Department of Labors Wage and Hour Division administers and enforces the federal minimum wage law. http://www.dol.gov/dol/topic/wages/minimumwage.htm

Minimum Wage Poster

http://www.dol.gov/esa/regs/compliance/posters/flsa.htm

Overtime Pay

An employer who requires or permits an employee to work overtime is generally required to pay the employee premium pay for such overtime work. Employees covered by the Fair Labor Standards Act (FLSA) must receive overtime pay for hours worked in excess of 40 in a workweek of at least one and one-half times their regular rates of pay. The FLSA does not require overtime pay for work on Saturdays, Sundays, holidays, or regular days of rest. Extra pay for working weekends or nights is a matter of agreement between the employer and the employee (or the employee's representative). The FLSA does not require extra pay for weekend or night work or double time pay. http://www.dol.gov/dol/topic/wages/overtimepay.htm

Recordkeeping & Reporting

The Department of Labor does not have jurisdiction over taxing employee's wages or providing W-2 Form forms to employees. The Internal Revenue Service has authority over these issues. Every employer covered by the Fair Labor Standards Act (FLSA) must keep certain records for each covered, nonexempt worker. There is no required form for the records, but the records must include accurate information about the employee and data about the hours worked and the wages earned. The following is a listing of the basic records that an employer must maintain:

Employee's full name and social security number;
Address, including zip code;
Birth date, if younger than 19;
Sex and occupation;
Time and day of week when employee's workweek begins. Hours worked each day and total hours worked each workweek.
Basis on which employee's wages are paid;
Regular hourly pay rate;
Total daily or weekly straight-time earnings;
Total overtime earnings for the workweek;
All additions to or deductions from the employee's wages;
Total wages paid each pay period;
Date of payment and the pay period covered by the payment.

http://www.dol.gov/dol/topic/wages/wagesrecordkeeping.htm

Severance Pay

Severance pay is often granted to employees upon termination of employment. It is usually based on length of employment for which an employee is eligible upon termination. There is no requirement in the Fair Labor Standards Act (FLSA) for severance pay. Severance pay is a matter of agreement between an employer and an employee (or the employee's representative). The Employee Benefits Security Administration (EBSA) may be able to assist an employee who did not receive severance pay required in his or her employment contract. http://www.dol.gov/dol/topic/wages/severancepay.htm

Subminimum Wage

The (FLSA) provides for the employment of certain individuals at wage rates below the minimum wage. These individuals include student-learners (vocational education students), as well as full-time students employed by retail or service establishments, agriculture, or institutions of higher education. Also included are individuals whose earning or productive capacity is impaired by a physical or mental disability, including those related to age or injury, for the work to be performed. Employment at less than the minimum wage is designed to prevent the loss of employment opportunities for these individuals. Certificates issued by the Department of Labors Wage & Hour Division are required for this type of employment. The youth minimum wage is authorized by the FLSA, which allows employers to pay employees under 20 years of age a lower wage for 90 calendar days after they are first employed. Any wage rate above $4.25 an hour may be paid to eligible workers during this 90-day period. http://www.dol.gov/dol/topic/wages/subminimumwage.htm

Tips

A tipped employee engages in an occupation in which he or she customarily and regularly receives more than $30 per month in tips. An employer of a tipped employee is only required to pay $2.13 per hour in direct wages if that amount combined with the tips received at least equals the federal minimum wage. If the employees tips combined with the employers direct wages of at least $2.13 per hour do not equal the federal minimum hourly wage, the employer must make up the difference. Many states, however, require higher direct wage amounts for tipped employees. http://www.dol.gov/dol/topic/wages/wagestips.htm

Competitive Wages

When deciding pay rates for skilled workers, it may be helpful to keep tabs on the going rates for your industry and area. The U.S. Department of Labor's Bureau of Labor Statistics website maintains a comprehensive list of median and mean salaries across the United States by occupation, industry, and area. http://www.bls.gov/bls/blswage.htm

Online Classroom for Child Support

Every U.S. employer, large and small, must comply with state and federal laws pertaining to child support enforcement. To learn more about an employer's duty with regard to child support enforcement, visit SBA's Online Classroom for Child Support. http://www.sba.gov/training/css/csstext.html

Workers' Compensation Programs

Learn the ins and outs of general federal and state workers' compensation rules or look up specialized programs to aid coal miners, longshoremen, and workers from other industries. http://www.dol.gov/esa/owcp_org.htm

Source: http://www.business.gov/topics/employees/wages/index.html, http://www.dol.gov/dol/topic/wages/index.htm

The Federal Wage Garnishment Law,

Consumer Credit Protection Act's Title 3 (CCPA)

This fact sheet provides general information concerning the amount that may be withheld from a person's earnings under the CCPA and the law's protection from termination because of garnishment for any single debt.

What is a wage garnishment?

A wage garnishment is any legal or equitable procedure through which some portion of a person's earnings is required to be withheld by an employer for the payment of a debt. Most garnishments are made by court order. Other types of legal or equitable procedures include IRS or state tax collection agency levies for unpaid taxes and federal agency administrative garnishments for non-tax debts owed the federal government. Wage garnishments do not include voluntary wage assignments - that is, situations in which employees voluntarily agree that their employers may turn over some specified amount of their earnings to a creditor or creditors.

Which Federal law regulates wage garnishment?

Title III of the Consumer Credit Protection Act limits the amount of an employee's earnings that may be garnished and protects an employee from being fired if pay is garnished for only one debt. Title III is administered by the Wage and Hour Division of the Department of Labor's Employment Standards Administration. The Wage and Hour Division has no other authority with regard to garnishments. Questions over issues other than the amount being garnished or termination should be referred to the court or agency initiating the withholding action. For example, questions regarding the priority given to certain garnishments over others are not matters covered by Title III and may be referred to the court or agency initiating the garnishment action.

To whom does the law apply?

The law protects everyone receiving personal earnings, i.e., wages, salaries, commissions, bonuses, or other income - including earnings from a pension or retirement program. Tips are generally not considered earnings for the purposes of the wage garnishment law. The law applies in all 50 states, the District of Columbia, and all U.S. territories and possessions.

What is the protection against discharge when wages are garnished?

The CCPA prohibits an employer from firing an employee whose earnings are subject to garnishment for any one debt, regardless of the number of levies made or proceedings brought to collect that debt, because of the single garnishment. The Act does not prohibit discharge because an employee's earnings are separately garnished for two or more debts.

What are the restrictions on wage garnishment?

The amount of pay subject to garnishment is based on an employee's "disposable earnings," which is the amount left after legally required deductions are made. Examples of such deductions include federal, state, and local taxes, the employee's share of State Unemployment Insurance and Social Security. It also includes withholdings for employee retirement systems required by law. Deductions not required by law - such as those for voluntary wage assignments, union dues, health and life insurance, contributions to charitable causes, purchases of savings bonds, retirement plan contributions (except those required by law) and payments to employers for payroll advances or purchases of merchandise - usually may not be subtracted from gross earnings when calculating disposable earnings under the CCPA. The law sets the maximum amount that may be garnished in any workweek or pay period, regardless of the number of garnishment orders received by the employer. For ordinary garnishments (i.e., those not for support, bankruptcy, or any state or federal tax), the weekly amount may not exceed the lesser of two figures: 25 percent of the employee's disposable earnings, or the amount by which an employee's disposable earnings are greater than 30 times the federal minimum wage (currently $5.15 an hour). For illustration, if the pay period is weekly and disposable earnings are $154.50 ($5.15 X 30) or less, there can be no garnishment. If disposable earnings are more than $154.50 but less than $206.00 ($5.15 X 40), the amount above $154.50 can be garnished. A maximum of 25 percent can be garnished, if disposable income earnings are $206.00 or more. When pay periods cover more than one week, multiples of the weekly restrictions must be used to calculate the maximum amounts that may be garnished. The table and examples at the end of this fact sheet illustrate these amounts.

What about child support and alimony?

Specific restrictions apply to court orders for child support or alimony. The garnishment law allows up to 50 percent of a worker's disposable earnings to be garnished for these purposes if the worker is supporting another spouse or child, or up to 60 percent if the worker is not. An additional 5 percent may be garnished for support payments more than l2 weeks in arrears.

Are there any exceptions to the law?

The wage garnishment law specifies that the garnishment restrictions do not apply to certain bankruptcy court orders, or to debts due for federal or state taxes. If a state wage garnishment law differs from the CCPA, the law resulting in the smaller garnishment must be observed.

What about non-tax debts owed Federal Agencies?

The Debt Collection Improvement Act authorizes federal agencies or collection agencies under contract with them to garnish up to 15% of disposable earnings to repay defaulted debts owed the U.S. government. The Higher Education Act authorizes the Department of Education's guaranty agencies to garnish up to 10% of disposable earnings to repay defaulted federal student loans. Such withholding is also subject to the provisions of the federal wage garnishment law, but not state garnishment laws. Unless the total of all garnishments exceeds 25% of disposable earnings, questions regarding such garnishments should be referred to the agency initiating the withholding action.

Examples of amounts subject to garnishment based on the $5.15 an hour minimum wage:

The following examples illustrate the statutory tests for determining the amounts subject to garnishment.

An employee's gross earnings in a particular week are $235.00. After deductions required by law, the disposable earnings are $205.00. In this week $50.50 may be garnished, since only the amount over $154.50 may be garnished where the disposable earnings are $206.00 or less. The employee would be paid $154.50.
An employee's gross earnings in a particular workweek are $240.00. After deductions required by law, the disposable earnings are $210.00. In this week 25 percent of the disposable earnings may be garnished. ($210.00 X 25% = $52.50) The employee would be paid $157.50.
A garnishment order is received after the second work day of the week. It requires a garnishment based on wages earned up to that day be withheld. The employee is paid $60.00 a day. Since less than $154.50 has been earned, no garnishment is permitted. However, if another garnishment is received when the workweek is complete, or in states where continuing garnishments are issued, the employer will withhold on the basis of the earnings for the entire week.
An employee paid every other week has disposable earnings of $400.00 for the first week and $40.00 for the second week of the pay period, for a total of $440.00. In a biweekly pay period, when disposable earnings are above $412.00 for the pay period 25% may be garnished. It does not matter that the disposable earnings in the second week are less than $154.50 - 25% of the $440.00 ($110.00) is subject to garnishment.
An employee on a $320.00 weekly draw against commissions has disposable earnings each week of $285.00. Commissions, paid monthly, total $2,000.00 for July after deductions required by law. Each draw and the balance due at the monthly settlement are separately subject to the law's restrictions. Thus, 25% ($71.25 in this example) of each draw may be garnished. At the end of the month, the $1,140.00 previously drawn is subtracted from the $2,000.00 settlement figure, and 25% of the balance may be garnished. In this example, the garnishable amount is $215.00.
Pursuant to a garnishment order (with priority) for child support an employer withholds $90.00 a week from the wages of an employee who has disposable earnings of $240.00 a week. A garnishment order for the collection of a defaulted student loan is also served. The limit for normal garnishments of 25% applies to the debt for the outstanding student loan. Under the formula for normal garnishments, a maximum of $60.00 (25% of $240.00) is garnishable. The $90.00 support payments may be withheld, because the normal restrictions do not apply to court orders for support. No withholding for the defaulted student loan may be made, because the amount already withheld is more than the amount that may be withheld for normal garnishments. Additional withholdings could be made to collect support, delinquent federal or state taxes and certain bankruptcy court ordered payments.

Where to Obtain Additional Information

This publication is for general information and is not to be considered in the same light as official statements of position contained in the regulations. For additional information, visit our Wage-Hour website: http://www.wagehour.dol.gov/and/or call our Wage-Hour toll-free information and helpline, available 8am to 5pm in your time zone, 1-866-4USWAGE (1-866-487-9243).

Source: http://www.dol.gov/esa/regs/compliance/whd/whdfs30.htm