By Abena Sanders Horton
The Fair Labor Standards Act (FLSA) of 1938 is a federal wage and hour statute that transformed the American workplace from Upton Sinclair’s The Jungle to the relatively comfortable existence we know today. The FLSA established a national minimum wage, guaranteed time-and-a-half pay for overtime, and forbade oppressive child labor. Altogether, the FLSA is a statute with its heart in the right place. However, that doesn’t mean there aren’t administrative hassles involved for employers.
Enforcement of the FLSA is governed by the US Department of Labor, which has become exponentially more aggressive in pursuing FLSA matters. Recently, President Obama expanded funding to the Department of Labor for the specific purpose of hiring at least 250 more wage-and-hour investigators. To give you a sense of how popular FLSA proceedings and lawsuits have become, nearly 8,000 lawsuits involving the FLSA have been filed so far in 2013. It should be your goal to avoid becoming a part of these statistics.
Does the FLSA Apply to My Company’s Employees? The FLSA applies to you if the annual dollar volume of your call center’s business is $500,000 or more and your company has at least two employees. If this is the case, company employees may be covered by the FLSA on an “enterprise” basis. An enterprise may consist of one or several establishments.
Alternatively, if the dollar volume of the call center does not meet the $500,000 annual threshold, employees still may be covered if they engage in “interstate commerce,” which includes activities such as transacting business through interstate telephone calls, the Internet or the U.S. Postal Service, or ordering goods from an out-of-state supplier. This means that if a call center representative fields a single call from an out-of-state customer, the FLSA could be invoked. The Department of Labor has taken a very expansive view of what it considers to be interstate commerce.
How Do I Classify My Employees? Even if an employee is technically covered by the FLSA, he or she must be classified as “non-exempt” or “exempt” from its provisions for wage-and-hour purposes. The FLSA was conceived to protect the most vulnerable type of worker – those in low-wage, hourly, non-managerial jobs. Covered, non-exempt employees must be paid at least the federal minimum wage, as well as overtime at time-and-a-half their regular rate of pay for all hours worked over forty hours in a particular workweek.
In a simpler world, classifying an employee’s status would also be simple. Hourly employees would be governed by the FLSA (non-exempt) and salaried employees would not (exempt). However, the reality is far more difficult. The mere fact that an employee draws a salary does not exempt the employee from the minimum wage or overtime provisions of the FLSA. Whether employees are exempt from the FLSA depends on their specific job duties and responsibilities, as well as their salary. In call centers, even certain salaried employees do not meet all the requirements specified by FLSA regulations to be considered exempt. For example, many salaried employees who make under $455 per week will not be exempt, particularly if they are not executive, administrative, or professional employees (such as computer professionals).
Assume that the FLSA applies to your employees unless you can establish otherwise and pay employees at appropriate rates. As an employer, it is your responsibility to justify your employee classification. If you have a difficult case of a low-salaried employee with non-traditional job duties, consider consulting an attorney to assist you with the classification. Such action would likely be less expensive than paying back pay to the employee later.
Common Problems to Avoid: One of the most popular types of FLSA lawsuits relates to time allegedly worked “off the clock.” The FLSA provides that covered employees must be paid for all hours worked in a workweek. Hours worked include all time an employee is obligated to be on duty (or on the employer’s premises) from the beginning of the first principal activity of the workday to the end of the last principal activity.
For example, the first principal activity of the day for many representatives working in call centers includes starting the computer to download work instructions, replying to emails, skip tracing, or accessing computer applications. In 2008, a collective action brought by employees of IBM’s Atlanta facility alleged that call center representatives were not paid for time spent booting up their computers at the start of their shifts. Employers should be aware that many courts consider these types of activities to be compensable work time.
Another area of concern involves employee rest and meal periods. Most call center employers permit short rest periods (usually under twenty minutes) to promote good workplace morale and efficiency. Such rest periods should typically be counted as hours worked. However, bona fide meal periods generally should not be compensated as work time as long as the employee is released from duty so that he or she can eat a regular meal.
Conclusion: Whether you know it or not, the FLSA likely applies to your workplace. For example, you may have salaried employees who are actually entitled to the federal minimum wage and to time-and-a-half for overtime work. The Department of Labor is increasingly interested in FLSA cases, and defending such cases has become expensive for all employers, including call centers. Being aware of the issues specific to your industry is an important step in protecting yourself from future lawsuits.
Abena Sanders Horton is an attorney with Fisher & Phillips, LLP, one of the nation’s leading labor and employment law firms representing employers. You may reach Abena at 404-231-1400 or firstname.lastname@example.org.
[From Connection Magazine – September 2013]