Federal Labor Laws for Hourly Employees
- Any employee may be paid an hourly wage at the employer's discretion. Receptionists, service workers, bank tellers, store clerks and factory workers are common examples of hourly wage jobs. Skilled trades such as carpenters, construction workers and plumbers also are typically hourly employees. However, the FLSA excludes specific job classes as exempt from overtime pay, so an employer is not required to pay time-and-a-half to these employees for overtime. These commonly include executive, administrative, outside sales, computer and other professionals such as physicians, lawyers, teachers, engineers, clergy and scientists.
- FLSA covers all workers in publicly traded, privately owned and non-profit organizations. Hourly workers are classified as non-exempt; they are entitled to overtime pay for hours worked in excess of a 40-hour work week; They must be paid at least the federal minimum wage. Some states have higher minimum wages and, in these states, employees must be paid the higher state minimum.
- The law does not set a limit on the number of hours an employee can work in a week. However, hourly employees must be paid time-and-a-half for every hour over 40 worked in a week. All non-exempt employees are entitled to overtime pay, regardless of their regular hourly pay rate.
- Under the FLSA, an authorized coffee or rest break of five to 20 minutes is considered time worked and must be included in calculating regular and overtime pay. When hourly workers take meal breaks of 30 minutes or more, they typically clock out before the break and clock in after. Meal breaks are not considered time worked.
- Bonuses are either discretionary or non-discretionary. Discretionary bonuses are not based on objective criteria and are not given on a regularly basis. These bonuses are not included in the employees' hourly and overtime pay rates. Discretionary bonuses include stock options, profit sharing, birthday or holiday gifts and vacation and sick pay, if the employer provides it. Non-discretionary or incentive plan payments are tied directly to productivity, customer service scores or other measurable criteria. They are paid on a regular basis, depending on performance and must be included in the calculation of regular and overtime pay.