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Wage Pay and Benefits

The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and child labor standards affecting full-time and part-time workers in the private sector and in Federal, State, and local governments. Covered nonexempt workers 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 rates of pay is required after 40 hours of work in a workweek.
Federal Minimum Wage:
? $4.75 per hour beginning October 1, 1996
? $5.15 per hour beginning September 1, 1997
Employees under 20 years of age may be paid $4.25 per hour during their first 90 consecutive calendar days of employment with an employer.
Certain full-time students, student learners, apprentices, and workers with disabilities may be paid less than the minimum wage under special certificates issued by the Department of Labor.
Tip Credit: Employers of "tipped employees" must pay a cash wage of at least $2.13 per hour if they claim a tip credit against their minimum wage obligation. If an employee's tips combined with the employer's cash wage of at least $2.13 per hour do not equal the minimum hourly wage, the employer must make up the difference. Certain other conditions must also be met.
Overtime Pay: At least 1½ times an employee's regular rate of pay for all hours worked over 40 in a workweek.
Child Labor: An employee must be at least 16 years old to work in most non-farm jobs and at least 18 to work in non-farm jobs declared hazardous by the Secretary of Labor. Youths 14 and 15 years old may work outside school hours in various non-manufacturing, non-mining, non-hazardous jobs under the following conditions:

No more than -
? 3 hours on a school day or 18 hours in a school week;
? 8 hours on a non-school day or 40 hours in a non-school week.
Also, work may not begin before 7 a.m. or end after 7 p.m., except from June 1 through Labor Day, when evening hours are extended to 9 p.m. Different rules apply in agricultural employment.

ENFORCEMENT: The Department of Labor may recover back wages, either administratively or through court action, for the employees that have been underpaid in violation of the law. Violations may result in civil or criminal action.

Fines of up to $10,000 per violation may be assessed against employers who violate the child labor provisions of the law and up to $1,000 per violation against employers who willfully or repeatedly violate the minimum wage or overtime pay provisions. This law prohibits discriminating against or discharging workers who file a complaint or participate in any proceedings under the Act.

Note:
? Certain occupations and establishments are exempt from the minimum wage and/or overtime pay provisions.
? Special provisions apply to workers in American Samoa.
? Where state law requires a higher minimum wage, the higher standard applies.
FOR ADDITIONAL INFORMATION, contact the nearest Wage and Hour Division office -- listed in most telephone directories under United States Government, Labor Department.

Workplace Posters
? Fair Labor Standards Act (FLSA) Minimum Wage Poster http://www.dol.gov/esa/regs/compliance/posters/flsa.htm
? Cartel del Salario Federal Minimo bajo la Ley de Normas Justas de Trabajo (Spanish language FLSA Poster) http://www.dol.gov/esa/regs/compliance/posters/flsaspan.htm
? Notice to Workers with Disabilities/Special Minimum Wage Poster http://www.dol.gov/esa/regs/compliance/posters/pdf/disabc.pdf
? Aviso para Trabajadores con Impedimentos/ Cartel de Sueldos Mínimos Especiales
(Spanish language Workers with Disabilities/Special Minimum Wage Poster) http://www.dol.gov/esa/regs/compliance/posters/disabspan.htm



What is the 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. 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.
Various minimum wage exceptions apply under specific circumstances to workers with disabilities, full-time students, youth under age 20 in their first 90 consecutive calendar days of employment, tipped employees and student-learners.
What is the minimum wage for workers who receive tips?
The Fair Labor Standards Act (FLSA) sets a federal minimum wage of $5.15 per hour for covered, nonexempt employees. An employer of a tipped employee is only required to pay $2.13 an hour in direct wages if that amount plus the tips received equals at least the federal minimum wage, the employee retains all tips and the employee customarily and regularly receives more than $30 a month in tips. If an employee's tips combined with the employer's direct wages of at least $2.13 an hour do not equal the federal minimum hourly wage, the employer must make up the difference.
Some states have minimum wage laws specific to tipped employees. When an employee is subject to both the federal and state wage laws, the employee is entitled to the provisions which provides the greater benefits.
Must young workers be paid the minimum wage?
The federal minimum wage is $5.15 per hour. However, a special minimum wage of $4.25 per hour applies to employees under the age of 20 during their first 90 consecutive calendar days of employment with an employer. After 90 days, the Fair Labor Standards Act (FLSA) requires employers to pay the full federal minimum wage.
Other programs that allow for payment of less than the full federal minimum wage apply to workers with disabilities, full-time students, and student-learners employed pursuant to sub-minimum wage certificates. These programs are not limited to the employment of young workers.
What minimum wage exceptions apply to full-time students?
The Full-time Student Program is for full-time students employed in retail or service stores, agriculture, or colleges and universities. The employer that hires students can obtain a certificate from the Department of Labor which allows the student to be paid not less than 85% of the minimum wage. The certificate also limits the hours that the student may work to 8 hours in a day and no more than 20 hours a week when school is in session and 40 hours when school is out, and requires the employer to follow all child labor laws. Once students graduate or leave school for good, they must be paid $5.15 per hour.
There are some limitations on the use of the full-time student program. For information on the limitations or to obtain a certificate, contact the Department of Labor Wage and Hour Western Region Office at 525 S. Griffin Square, Suite 800, Dallas, TX, 75202, telephone: (972) 850-2601.
What minimum wage exceptions apply to student learners?
This program is for high school students at least 16 years old who are enrolled in vocational education (shop courses). The employer that hires the student can obtain a certificate from the Department of Labor which allows the student to be paid not less than 75% of the minimum wage, for as long as the student is enrolled in the vocational education program.
Employers interested in applying for a student learner certificate should contact the Department of Labor Wage and Hour Regional Office with jurisdiction over their state. The Regional Office addresses and telephone numbers are:
Northeast Region (Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Puerto Rico, Rhode Island, Vermont, Virgin Islands, Virginia, and West Virginia)
USDOL Wage and Hour Division
Curtis Center
170 South Independence Mall, West
Room 850, West
Philadelphia, PA 19106
(215) 861-5800
Southeast Region (Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee)
USDOL Wage and Hour Division
Atlanta Federal Center
61 Forsyth Street SW, Room 7M40
Atlanta, GA 30303
(404) 562-2202
Midwest Region (Illinois, Indiana, Michigan, Minnesota, Ohio, Wisconsin, Iowa, Missouri, Kansas and Nebraska)
USDOL Wage and Hour Division
230 South Dearborn Street
Room 530
Chicago, IL 60604-1591
(312) 596-7180
Southwest Region (Arkansas, Colorado, Louisiana, Montana, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, Utah, and Wyoming)
USDOL Wage and Hour Division
525 South Griffin Square, Suite 800
Dallas, TX 75202
(972) 850-2600
Western Region (Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon, and Washington)
USDOL Wage and Hour Division
71 Stevenson Street, Suite 930
San Francisco, CA 94105
(415) 975-4510
Other programs that allow for payment of less than the full federal minimum wage apply to disabled workers and full-time students employed pursuant to sub-minimum wage certificates.
How often does the federal minimum wage increase?
The minimum wage does not increase automatically. Congress must pass a bill which the President signs into law in order for the minimum wage to go up.
Who makes sure workers are paid the minimum wage?
The Wage and Hour Division of the U.S. Department of Labor is responsible for enforcing the minimum wage. Using both enforcement and public education efforts, Wage and Hour strives to ensure that workers are paid the minimum wage.
The Wage and Hour Division has offices throughout the country. The phone numbers and addresses for these offices may be found on the Internet at: http://www.dol.gov/esa/contacts/whd/america2.htm
To whom does the minimum wage apply?
The minimum wage law (the FLSA) applies to employees of enterprises that do at least $500,000 in business a year. It also applies to employees of smaller firms if the employees are engaged in interstate commerce or in the production of goods for commerce, such as employees who work in transportation or communications or who regularly use the mails or telephones for interstate communications. It also applies to employees of federal, state or local government agencies, hospitals and schools, and it generally applies to domestic workers.
The FLSA contains a number of exemptions http://www.dol.gov/elaws/esa/flsa/screen75.asp from the minimum wage that may apply to some workers.
The Wage and Hour Division has a Handy Reference Guide to the Fair Labor Standards Act http://www.dol.gov/esa/regs/compliance/whd/hrg.htm that explains how the law applies. Call 1-888-4-USWAGE (1-866-487-9243) for a printed copy of the guide.
What happens if state law requires a different minimum wage than federal law?
Where state law requires a higher minimum wage, that higher standard applies.
When are pay raises required?
Pay raises are generally a matter of agreement between an employer and employee (or the employee's representative). Pay raises to amounts above the federal minimum wage are not required by the Fair Labor Standards Act (FLSA).
Is extra pay required for weekend or night work?
Extra pay for working weekends or nights is a matter of agreement between the employer and the employee (or the employee's representative). The Fair Labor Standards Act (FLSA) does not require extra pay for weekend or night work. However, the FLSA does require that covered, nonexempt workers be paid not less than time and one-half the employee's regular rate for time worked over 40 hours in a workweek.
How are vacation pay, sick pay and holiday pay computed and when are they due?
The Fair Labor Standards Act (FLSA) does not require payment for time not worked, such as vacations, sick leave or holidays (federal or otherwise). These benefits are a matter of agreement between an employer and an employee (or the employee's representative).
How is severance pay calculated and when is it due?
The Fair Labor Standards Act (FLSA) requires payment of at least the minimum wage for all hours worked in a workweek and time and one-half an employee's regular rate for time worked over 40 hours in a workweek. There is no requirement in the 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.
When must breaks and meal periods be given?
The Fair Labor Standards Act (FLSA) does not require breaks or meal periods be given to workers. Some states may have requirements for breaks or meal periods. If you work in a state which does not require breaks or meal periods, these benefits are a matter of agreement between the employer and the employee (or the employee's representative).
The Industrial Welfare Commission may adopt working condition orders permitting a meal period to start after 6 hours of work if the commission determines that the order is consistent with the health and welfare of the affected employees.
Minimum Length of Meal Period Required Under State Law For Adult Employees in Private Sector
January 1, 2003
Table of Meal Period Requirements Under State Law For Adult Employees in Private Sector
Jurisdiction
2/
Basic Standard Prescribed By: Coverage 3/
Comments
California ½ hour, after 5 hours, except when workday will be completed in 6 hours or less and there is mutual employer/employee consent to waive meal period. On-duty meal period counted as time worked and permitted only when nature of work prevents relief from all duties and there is written agreement between parties. Employee may revoke agreement at any time.
The Industrial Welfare Commission may adopt working condition orders permitting a meal period to start after 6 hours of work if the commission determines that the order is consistent with the health and welfare of the affected employees. Administratively issued Industrial Welfare Commission Orders. Uniform application to industries under 14 Orders, including agriculture and private household employment. Under all Orders, except for private household employment, Division of Labor Standards Enforcement may grant exemption upon employer application on the basis of undue hardship, if exemption would not materially affect welfare or comfort of employees.
½ hour, to not more than 1 hour, after 6 hours, with subsequent meal periods required 6 hours after termination of proceeding meal period. On-duty meal period counted as time worked and permitted only when nature of work prevents relief from all duties and there is written agreement between parties. Applicable under motion picture industry.
Colorado ½ hour after 5 hours, except when workday will be completed in 6 hours or less. On-duty meal period counted as time worked and permitted when nature of work prevents relief from all duties. Administratively issued Wage Order for 7 industries Applicable to retail trade, food and beverage, public housekeeping, medical profession, beauty service, laundry and dry cleaning, and janitorial service industries. Excludes certain occupations, such as teacher, nurse, and other medical professionals.
Connecticut ½ hour after first 2 hours and before last 2 hours for employees who work 7½ consecutive hours or more. Statute Excludes employer who provides 30 or more total minutes of paid rest or meal periods within each 7½ hour work period.
Meal period requirement does not alter or impair collective bargaining agreement in effect on 7/1/90, or prevent a different schedule by written employer/employee agreement. Labor Commissioner is directed to exempt by regulation any employer on a finding that compliance would be adverse to public safety, or that duties of a position can be performed only by one employee, or in continuous operations under specified conditions, or that employer employs less than 5 employees on a shift at a single place of business provided the exemption applies only to employees on such shift.
Delaware ½ hour, after first 2 hours and before the last 2 hours, for employees who work 7½ consecutive hours or more. Statute Excludes teachers and workplaces covered by a collective bargaining agreement or other written employer/employee agreement providing otherwise. Exemptions may also be granted where compliance would adversely affect public safety; only one employee may perform the duties of a position, an employer has fewer than five employees on a shift at a single place of business; or where the continuous nature of an employer's operations requires employees to respond to urgent or unusual conditions at all times and the employees are compensated for their meal break periods. An administrative penalty of up to $1,000 for each violation may be assessed an employer who discharges or discriminates against an employee for complaining or providing information to the Department of Labor pursuant to a violation of this requirement.
Illinois 20 minutes, after 5 hours, for employees who are to work 7½ continuous hours or more. Statute Excludes employees whose meal periods are established by collective bargaining. Different requirements apply to employees who monitor individuals with developmental disabilities and/or mental illness.
Kentucky Reasonable off-duty period, ordinarily ½ hour but shorter period permitted under special conditions, between 3rd and 5th hour of work. Not counted as time worked. Coffee breaks and snack time not to be included in meal period. Statute and regulation Excludes employers subject to Federal Railway Labor Act. Meal period requirement does not negate collective bargaining agreement or mutual agreement between employer and employee.
Maine ½ hour, after 6 consecutive hours, except in cases of emergency and except where nature of work allows employees frequent breaks during workday. Statute Applicable to places of employment where 3 or more employees are on duty at one time.
Not applicable if collective bargaining or other written employer-employee agreement provides otherwise.
Massachusetts ½ hour, if work is for more than 6 hours. Statute Excludes iron works, glass works, paper mills, letter press establishments, print works, and bleaching or dyeing works. Labor Commissioner may grant exemption to a factory workshop or mechanical establishment, if in discretion of Commissioner, it is necessary by reason of continuous process or special circumstance, including collective bargaining agreement.
Minnesota Sufficient unpaid time for employees who work 8 consecutive hours or more. Statute Excludes certain agricultural and seasonal employees.
Meal period requirement does not prohibit different provisions under collective bargaining agreement.
Nebraska ½ hour, off premises, between 12 noon and 1 p.m. or at other suitable lunch time. Statute Applicable to assembly plant, workshop, or mechanical establishment, unless establishment operates three 8-hour shifts daily.
Nevada ½ hour, if work is for 8 continuous hours. Statute Applicable to employers of two or more employees.
Excludes employees covered by collective bargaining agreement Labor Commissioner may grant exemption on employer evidence of business necessity.
New Hampshire ½ hour, after 5 consecutive hours, unless feasible for employee to eat while working and is permitted to do so by employer. Statute Applicable to any employer.
New York 1 hour noon-day period Statute Factories Labor Commissioner may give written permission for shorter meal period under each standard.
30 minute noonday period for employees who work shifts of more than 6 hours that extend over the noon day meal period. Statute All other establishments and occupations covered by the Labor Law.
An additional 20 minutes between 5 p.m. and 7 p.m. for those employed on a shift starting before 11 a.m. and continuing after 7 p.m. Statute All industries and occupations.
1 hour in factories, 45 minutes in other establishments, midway in shift, for those employed more than a 6-hour period starting between 1 p.m. and 6 a.m. Statue See basic standard
North Dakota ½ hour, if desired, on each shift exceeding 5 hours. Administratively issued Minimum Wage and Work Conditions Order. Applicable when two or more employees are on duty. Collective bargaining agreement takes precedence over meal period requirement. Employees who are completely relieved of their duties but required to remain on site do not have to be paid.
Oregon ½ hour, with relief from all duty, for each work period of 6 to 8 hours, between 2nd and 5th hour for work period of 7 hours or less and between 3rd and 6th hour for work period over 7 hours; or, less than ½ hour but not less than 20 minutes, with pay, with relief from all duty, where employer can show that such a paid meal period is industry practice or custom; or, where employer can show that nature of work prevents relief from all duty, an eating period with pay while on duty for each period of 6 to 8 hours. Administratively issued Wage and Hour Commission rules. Applicable to every employer, except in agriculture and except employees covered by collective bargaining agreement. In absence of regularly scheduled meal periods, it is sufficient compliance when employer can show that the employee has, in fact, received the time specified (permitted only where employer can show that ordinary nature of the work prevents employer from establishing and maintaining a regularly scheduled meal period).
Rhode Island 20 minutes, after 6 hours, except on maximum 6 ½ hour shift ending by 1 p.m.; and except on maximum 7 ½ hour shift ending by 2 p.m. if employee has opportunity to eat during employment. Statute Applicable to factory, workshop, and mechanical or mercantile establishment, except for certain nighttime switchboard operators.
Tennessee ½ hour for employees scheduled to work 6 consecutive hours or more. Statute Applicable to every employer.
Washington
½ hour, if work period is more than 5 consecutive hours, to be given not less than 2 hours nor more than 5 hours from beginning of shift. Counted as worktime if employee is required to remain on duty on premises or at a prescribed worksite. Additional ½ hour, before or during overtime, for employees working 3 or more hours beyond regular workday. Administrative regulation Excludes newspaper vendor or carrier, domestic or casual labor around private residence, sheltered workshop, and agricultural labor. 2/ Director of Labor and Industries may grant variance for good cause, upon employer application.
West Virginia 20 minutes for employees who work 6 consecutive hours or more. Statute Applicable to every employer. Meal period is required where employees are not afforded necessary breaks and/or permitted to eat lunch while working.
Guam ½ hour, after 5 hours, except when workday will be completed in 6 hours or less and there is mutual employer/employee consent to waive meal period. Not considered time worked unless nature of work prevents relief from duty. Statute Excludes agriculture where fewer than 10 are employed, domestic employment, and fishing industry, among others.
Puerto Rico 1 hour, after end of 3rd but before beginning of 6th consecutive hour worked. Double-time pay required for work during meal hour or fraction thereof. Statute Excludes domestic service; and public sector employment other than agricultural, industrial, commercial or public service enterprises. Meal period may be shortened for convenience of employee by mutual employer-employee consent and with approval of Secretary of Labor. Such consent and approval not necessary if union and employer agree on shorter period.
Requirement for a second meal period for employees working up to 10 hours may be waived with approval of Secretary of Labor.
FOOTNOTES
1/The following 35 jurisdictions also have separate provisions requiring meal periods specifically for minors (when minors are covered by two provisions, employer must observe the higher standard): Alabama, Alaska, California, Colorado, Delaware, Florida, Hawaii, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, Nevada, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Utah, Virginia, Washington, West Virginia, Wisconsin, Guam, and Puerto Rico.

2/ In addition to the States with Standards of general application a 30-minute meal period is required for seasonal farm workers after 5 hours in Pennsylvania, and for migrant workers in Wisconsin after 6 hours. In Washington State, although agricultural labor is excluded from the listed requirement of general application, a separate regulation requires a 30-minute meal period after 5 hours in agriculture and an additional 30 minutes for employees working 11 or more hours in a day. In addition to the listed States with mandatory Standards, other provisions appear in two States:
New Mexico. A provision applicable to females and administratively extended to men does not require a meal period, but provides that when a meal period is granted (in industrial, mercantile and certain service industries), it must be at least ½ hour, not counted as time worked.
Wisconsin. By regulation, the recommended standard is ½ hour after 6 consecutive hours' work in factories, mechanical and mercantile establishments and certain service industries, to be given reasonably close to usual meal time or near middle of shift.

3/ Not displayed in table are exemptions for executive, administrative and professional employees, and for outside salespersons.
Of the 21 States or other jurisdictions with meal period requirements, 7 States also have rest periods requirements (California, Colorado, Kentucky, Minnesota, Nevada, Oregon, and Washington).
Overtime & Work Hours
When is overtime due?
For covered, nonexempt employees, the FLSA requires overtime pay at a rate of not less than one and one-half times an employee's regular rate of pay after 40 hours of work in a workweek. Some exceptions to the 40 hours per week standard apply under special circumstances to police officers and fire fighters employed by public agencies and to employees of hospitals and nursing homes.
Some states have also enacted overtime laws. Where an employee is subject to both the state and Federal overtime laws, the employee is entitled to overtime according to the higher standard (i.e., the standard that will provide the higher rate of pay).
How many hours per day or per week can an employee work?
The FLSA does not limit the number of hours per day or per week that employees aged 16 years and older can be required to work.
How many hours is full-time employment? How many hours is part-time employment?
The FLSA does not define full-time employment or part-time employment. This is a matter generally to be determined by the employer. Whether an employee is considered full-time or part-time does not change the application of the FLSA.
When can an employee’s scheduled hours of work be changed?
The FLSA has no provisions regarding the scheduling of employees, with the exception of certain child labor provisions. Therefore, an employer may change an employee's work hours without giving prior notice or obtaining the employee's consent (unless otherwise subject to a prior agreement between the employer and employee or the employee's representative).
When is double time due?
The FLSA has no requirement for double time pay. This is a matter of agreement between an employer and employee (or the employee's representative).
Is extra pay required for weekend or night work?
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. However, the FLSA does require that covered, nonexempt workers be paid not less than time and one-half the employee's regular rate for time worked over 40 hours in a workweek.
RECORDKEEPING AND NOTICES
Are pay stubs required?
The FLSA does require that employers keep accurate records of hours worked and wages paid to employees. However, the FLSA does not require an employer to provide employees pay stubs.

What notices must be given before an employee is terminated or laid off?
The FLSA has no requirement for notice to an employee prior to termination or lay-off. In some situations, the WARN Act provides for notice to workers prior to lay-off. Some states may have requirements for employee notification prior to termination or lay-off.

Impact of Minimum Wage Increase on Special Minimum Wage Rates
The Wage and Hour Division issues certificates authorizing the employment of workers with disabilities at special minimum wage rates which are less than the minimum wage established by section 6 of the Fair Labor Standards Act (FLSA). These special minimum wage rates are based on the prevailing wage rates paid experienced workers in the area. To ensure that workers receive their proper compensation, certificate holders must review the special minimum wage rates for employees paid on an hourly basis at periodic intervals, not to exceed six months as per Regulations, 29 CFR 525.9(b)(1). In addition, the wages for all employees must be adjusted at least once each year to reflect changes in prevailing wage rates paid to experienced nondisabled individuals employed in the locality for essentially the same type of work as per Regulations 525.12(f).
The September 1, 1997 increase in the minimum wage to $5.15 per hour will most likely impact the prevailing wages being paid in your area. This is true even if the current prevailing wage rates exceed the new statutory minimum wage rate. To ensure that your employees are properly paid and that you remain in compliance with the provisions of your certificate, you should review the prevailing wage rates that you use to determine the commensurate wage rates paid to your employees with disabilities. After this review, you are required to adjust the commensurate wage rates to reflect any increases in the prevailing wage rates. Rather than conduct a prevailing wage survey at this time, you may choose to simply raise your prevailing wage rates by the percentage of increase in the minimum wage (or 8.4%), and adjust commensurate wage rates paid workers with disabilities accordingly.
How can an increase in the minimum wage affect wages being paid to workers with disabilities in my facility?
The certificate which authorizes you to pay special minimum wages requires that workers with disabilities receive wages commensurate with those paid experienced nondisabled workers. An increase in the minimum wage will most likely affect the prevailing wage rates paid to these workers. In order to assure continued payment of proper commensurate wage rates you should review these guidelines and take measures to determine if there is an increase in the prevailing wage rates. The mere adjusting of prevailing wage rates that are below $5.15 an hour beginning September 1, 1997, may not be sufficient for compliance under section 14(c) of the FLSA. You must consider all of the appropriate issues discussed here.
What if my current computed prevailing wage rates are less than $5.15 an hour?
Commensurate wage rates that are based on prevailing wage rates less than $5.15 an hour will have to be adjusted upward to at least that level effective September 1, 1997, and you need to compute commensurate wage rates based on the new (higher) prevailing wage rates. Section 525.10(h) of the regulations prohibits a prevailing wage rate that is less than the minimum wage specified in section 6(a) of the FLSA.
For example, if the current prevailing wage rate being used is $4.75 an hour, that rate will have to be adjusted to at least $5.15 beginning September 1, 1997. Commensurate wage rates paid workers with disabilities must reflect this increase for all hours worked on or after September 1, 1997.
What if my current prevailing wage rates already exceed $5.15 per hour?
Because the scheduled increases in the FLSA minimum wage will probably impact most prevailing wage rates, including those already greater than $5.15 per hour, certificate holders will still be required to review, and adjust if necessary, the prevailing wage rates used to determine commensurate wage rates.
How do we determine what the new prevailing wage rates are in our area?
As mentioned above, all prevailing wage rates will need to be reexamined to assess the impact of the increase in the minimum wage. Your facility should contact the sources from which you originally obtained prevailing wage rate information to determine the effect of the increase of the statutory minimum wage, or, if necessary, obtain this information from new sources. Once you have this information, you should adjust the wage rates of workers with disabilities no later than the next full pay period after the prevailing wage rates are reexamined. You should make sure that the data you collect on wage rates reflects the changes in the statutory minimum wage and advise the sources accordingly. As with all prevailing wage surveys, you should also document these contacts and have this information available for review by the Wage and Hour Division. These procedures are required under sections 525.9(b)(2), 525.10, 525.12(f), and 525.16(c) of the regulations.
What if we just conducted a survey and it is not convenient to make a new survey at this time? Is there any alternative method for adjusting commensurate wage rates?
Yes, you may elect to make a blanket adjustment to prevailing wage rates based on the percentage increase in the statutory minimum wage. This change should be accomplished in the next complete pay period following the minimum wage increase. For example, the September 1, 1997, minimum wage increase from $4.75 an hour to $5.15 an hour is approximately 8.4%. Your facility may elect to adjust all prevailing wage rates by 8.4% beginning September 1, 1997, and not reexamine prevailing wage rates until your facility would be otherwise required to do so to maintain your authority to pay commensurate wage rates to workers with disabilities.
For instance, if the current prevailing wage rate used is $5.00 an hour and an hourly paid worker with disabilities paid under a special certificate currently receives one-half of that rate ($2.50 an hour), you could adjust the prevailing rate to $5.42 an hour ($5.00 X 8.4%), raise that worker's commensurate wage rate to $2.71 an hour (one-half of $5.42), and meet the requirements of the regulations.
To make this blanket adjustment to piece rates, simply multiply the existing piece rate by the increase in the minimum wage. For example, an existing piece rate is $0.05, based on a prevailing wage of $5.00 per hour and time studies which showed that nondisabled workers were able to produce 100 widgets in a "fifty-minute" hour, allowing 10 minutes per hour for personal time and fatigue ($5.00 divided by 100 = $0.05). To calculate the new piece rate using the blanket adjustment method, multiply $0.05 per piece x 1.084 (amount of the increase in the minimum wage). The product yields a new piece rate of $0.0542. It is suggested that your records show that the prevailing hourly rate used to establish the piece rate has been increased by 8.4%. It is also suggested that your records indicate that the new piece rate ($0.0542) is based on the adjusted prevailing wage of $5.42 ($5.42 divided by 100 = $0.0542).
How much time does an employer have to complete this process?
An employer may not base a commensurate wage rate on a prevailing wage rate that is less than the statutory minimum wage. Therefore, any prevailing wage rate less than $5.15 per hour must be raised to that level by September 1, 1997. It is anticipated that the "ripple effect" of the increased minimum wage will not take place immediately. Consequently, we are advising employers, who do not choose to use the blanket adjustment method of calculating commensurate wage rates, to reexamine all prevailing wage rates no sooner than 30 days and no later than 60 days after September 1, 1997. Upon completion of the survey process, any increases in prevailing wage rates must be reflected in the commensurate wage rates of workers with disabilities by the next complete pay period. If a facility decides to increase rates using the blanket adjustment percentage method described above, this should be completed by the next full pay period after the minimum wage increase occurs.
What will happen if these adjustments in wage rates are not completed in a timely fashion?
All adjustments to prevailing wage rates must be reflected by a corresponding increase to commensurate wage rates. These changes must be made no later than the next full pay period following the reexamination and/or adjustment of the prevailing wage rates. Failure to follow these procedures is likely to cause violations of the FLSA and affect the terms and conditions of your certificate authorizing the employment of workers with disabilities at commensurate wage rates. This may also result in the computation of back wages and a request for payment of any back wages due to such workers.
What about our other workers who do not have disabilities? Do we have to increase their pay also?
Workers without disabilities for the work to be performed must be paid at least the statutory minimum wage if they are performing work subject to the minimum wage provisions of the FLSA. These workers must receive at least $5.15 an hour beginning September 1, 1997. This includes both staff members and production workers.
How do I determine "commensurate wage rates"?
A commensurate wage rate is a special minimum wage paid to a worker with a disability which is based on the worker's individual productivity, no matter how limited, in proportion to the wage and productivity of experienced nondisabled workers performing essentially the same type, quality, and quantity of work in the geographic area from which the labor force of the community is drawn. An example of a commensurate wage rate would be as follows:
If an experienced nondisabled worker makes boxes and can produce 40 boxes in an hour, but a worker with a disability can only produce 10 boxes an hour; then, the worker with a disability is considered 25% as productive as the experienced nondisabled worker and should receive at least 25% of the prevailing wage rate for such work. If the prevailing wage rate is determined to be $6.00 an hour, the worker with the disability employed under a special certificate should receive at least 25% of that wage rate or $1.50 an hour for performing the box production work. This is an extremely simple example but it demonstrates the principle of commensurate wage rates.
Properly established piece rates yield commensurate wage rates. A piece rate fixes a price on each completed unit of work. This rate is derived by dividing the prevailing wage rate by the average hourly production of individuals not disabled for the work to be performed. For example, if three nondisabled persons worked a total of ten "fifty-minute" hours and produced 2800 units in total, the average production would be 280 units per hour (2800 units divided by 10 hours). Assuming the test involved unskilled work, and the prevailing unskilled labor rate in the vicinity is $5.15 per hour, the piece rate would be $0.018393 per unit ($5.15 divided by 280 units). A disabled worker producing 185 pieces in an hour would earn $3.40 for that hour (185 pieces x $0.018393 = $3.40).
Where are the requirements for commensurate wage rates found in the federal regulations?
The requirements for setting commensurate wage rates are found in sections 525.9 and 525.12 of Regulations, 29 CFR Part 525; and the procedures for determining prevailing wage rates are found in section 525.10.
What conditions are considered "disabilities" for purposes of obtaining a certificate? What conditions are excluded?
Individuals are considered workers with a disability when their earnings or productive capability is impaired by a physical or mental incapacity for the work to be performed, including aged or injured workers. Disabilities which may affect earning or productive capacity include blindness, mental illness, mental retardation, cerebral palsy, alcoholism, and drug addiction. They also may include disabilities due to physical injuries to the head, spine, skeletal system, amputations or other losses of muscle, bone, etc. which may cause an individual to be incapable of meeting full productivity.
The following are not considered disabilities: vocational, social, cultural or educational disabilities; chronic unemployment; receipt of welfare benefits; nonattendance at school; juvenile delinquency; and correctional parole or probation. (However, these conditions taken together with some other mental, physical or psychological condition may be considered as a disability.)
U.S. DEPARTMENT OF LABOR EMPLOYMENT STANDARDS ADMINISTRATION WAGE AND HOUR DIVISION SECTION 14 SPECIALISTS- September 1997
NORTHEASTERN REGION
Boston Office - (Connecticut, Maine, Massachusetts,
New Hampshire, Rhode Island, Vermont)
JFK Building, Room 525
Boston, Massachusetts 02203
Margaret MacDonald
(617) 565-2092; FAX (617) 565-3700
Internet: mmm@bos.dol-esa.gov

New York Office- (New Jersey, New York,
Puerto Rico, Virgin Islands)
Room 750
201 Varick Street
New York, New York 10014
William Devins
(212) 337-2020: FAX (212) 660-6957
Internet: wcd@nyc.dol-esa.gov

Philadelphia Office- (Delaware, District of Columbia,
Maryland, Pennsylvania, Virginia, West Virginia)
Gateway Building, Room 15210
3535 Market Street
Philadelphia, Pennsylvania 19104
Vacant
(215) 596-1193; FAX (215) 596-1479
SOUTHEAST REGION
Atlanta Office- (Alabama, Florida, Georgia, Kentucky,
Mississippi, North Carolina, South Carolina, Tennessee)
Atlanta Federal Center
61 Forsyth St., Rm 7M40
Atlanta, Georgia 30303BR
Randy Davis
(404) 562-2202; FAX (404) 562-2218
MIDWEST REGION
Chicago Office - (Illinois, Indiana, Michigan,
Minnesota, Ohio, Wisconsin)
Federal Building, Room 816 & 820
230 South Dearborn St.
Chicago, Illinois 60604
Robert Halson
(312) 353-6966; FAX (312) 353-2539
Internet: bob@chi.dol-esa.gov
SOUTHWEST REGION
Dallas/Denver Office - (Arkansas, Colorado,
Louisiana, Montana, New Mexico, North Dakota,
Oklahoma, South Dakota, Texas, Utah, Wyoming)
525 S. Griffin Square, Room 800
Dallas, Texas 75202
Gary Edwards
(214) 767-6895 ext 242; FAX (214) 767-2730
Internet: gedward@dal.dol-esa.gov
KANSAS CITY REGION
Kansas City Office - (Iowa, Kansas, Missouri, Nebraska)
City Center Square Building
1100 Main St., Suite 700
Kansas City, Missouri 64105-2112
Anne Hayes
(816) 426-5424; FAX (816) 426-3482
Internet: mah@kcm.dol-esa.gov
WESTERN REGION
San Francisco Office - (Alaska, Arizona, California, Guam,
Hawaii, Idaho, Nevada, Oregon, & Washington)
71 Stevenson Street, Suite 930
San Francisco, California 94105
Diane Reese
(415) 975-4510; FAX (415) 975-4539
Internet: reese@sfc.dol-esa.gov

 
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