William T. Wilson, Esquire

Understanding Pennsylvania's wage and hour protections can help employers avoid costly litigation

One of the very earliest employment statutes – part of the New Deal – is the Fair Labor Standards Act (FLSA). It requires employers engaged in commerce, or those who employ people who engage in commerce, to pay a certain minimum wage. The FLSA also requires employers to pay a premium of at least one and one half times the regular rate to employees whose workweek exceeds 40 hours. Many employees are exempt from the requirement to pay the overtime premium, and some are exempt from both requirements.

The FLSA allows states to require more of employers than the minimums required by its own terms. Some states, including Pennsylvania, have wage and hour protections for employees that add to the FLSA requirements. The Pennsylvania Minimum Wage Act duplicates the FLSA's minimum wage and premium pay requirements but has a slightly different list of exemptions.

A review of the following terms and concepts will help employers fully understand the implications of the law and avoid the possibility of paying damages to wronged employees.

Enterprise Engaged In Commerce
The FLSA's definition of an enterprise engaged in commerce is liberally interpreted to effectuate the policies of the act. Where a business has employees who handle goods or materials that have been moved in commerce, that business is engaged in interstate commerce. Where the business is comprised exclusively of retail establishments, it is covered by the FLSA only if it has annual gross sales in excess of $500,000, exclusive of excise taxes.

Employer Status
"Employer" under the FLSA is a broader concept than that of the common law employer. It includes any person acting directly or indirectly in the interest of an employer in relation to the employee. Most courts have held that this means that individuals who are sole owners and officers of a corporate employer, direct the employee in the performance of the job, or hire and fire are considered employers under the FLSA and can, therefore, be held liable for actions in which they were personally involved.

Work Time
The employer is responsible for payment for all time for which it allows the employee to work. If the employer is aware that the employee is working, even if the employee is violating some corporate policy by being on the job, the employer must pay the employee for that work. It is the employer's obligation to keep track of the employee's work time and to keep accurate records of that time. By failing to keep accurate records, the employer suffers the consequences of any uncertainty as to the actual amount of time for which the employee is to be compensated.

Certain types of time when the employee may not actually be performing work may nonetheless be considered work time for pay purposes. For example:

• Lunchtime: Normally, if the employee is off duty, lunchtime is excluded. However, if the employee is subject to frequent work-related interruptions or has to return to work before completing lunch, the time is considered work time.
• On-call time: On-call time may be work time if the employee's movements are significantly restricted.
• Travel time: Driving to and from work is not work time. Travel time during the workday from the employer's place of business to a customer's location is work time. And, if the employee is required to report to some designated assembly point before going to a moving work site, as is common in the construction industry, the travel time from assembly to the work site is work time.

Calculation of Pay
Time for salaried, non-exempt employees may be calculated according to three alternative methods: the flat method, the fluctuating workweek or half-time method, and the variable workweek.

When an employer violates the act, the calculation of liability is often complex, because the regular wage allows credit for all wages actually paid and is a separate calculation for each workweek.

Though the law requires that employers reasonably accommodate employee requests for compensatory time, it does not foreclose a mandatory comp
time policy.

Exemptions
The employer has the burden to prove that an employee meets all the requirements for an exemption. There are a number of employees who are exempt from the requirements. Administrative, executive, and professional employees who are paid a salary are the most commonly litigated exemption. The employee must spend no more than 20 percent of his or her time on
non-exempt work. Examples of other exemptions include:

• Employees of amusement or recreational establishments, organized camps, or religious or non-profit educational conference centers;
• Employees who catch, cultivate, or farm seafood or fish;
• Some agricultural employees;
• Seamen;
• Employees of small newspapers;
• Casual in-home domestic service employees;
• Motor carrier, rail and air carrier employees; and,
• Criminal investigators.

In most cases, certain conditions must also be met for the employees to be designated as exempt.

Violations and Remedies
An employer who violates the minimum wage or maximum hours provisions is liable for the amount of unpaid wages or unpaid overtime compensation. In addition, the employer is liable for an additional equal amount as liquidated damages. The FLSA also contains a section making it unlawful to retaliate against an employee for complaining about perceived wage and hour violations.

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