FAIR LABOR STANDARDS ACT - FLSA (USA ONLY)#
The Fair Labor Standards Act (FLSA) establishes a federal minimum hourly wage that requires the payment of overtime compensation at one-and-half times an employee’s “regular rate” for all hours worked in excess of 40 per week. This ruling is generalized and must be revised for those occupations that work irregular shifts such as police and firefighters.FLSA Rules#
- Work Week
- The term “Work Week” for FLSA purposes means a fixed, recurring 168-hour period, consisting of seven consecutive 24-hour periods. There are exceptions to this rule, so the FLSA period may be defined in a user defined calendar. The work week (or user defined FLSA period) is the basic time unit used to measure whether an employer’s compensation payments to workers comply with FLSA’s minimum wages and overtime pay requirements. The work week (or user defined FLSA period) is set by an employer and this need not coincide with the calendar week and may begin any day of the week.
- Covered Employers and Employees
- An “Employer” is defined as anyone “acting directly or indirectly in the interest of an employer in relation to an employee”. Included in this definition are individuals, corporations, partnerships, associations, or other groups or entities, such as agents or managers, who act for or are authorized to act for an employer.
- All hours and earnings MUST be recorded on a FLSA period basis at a minimum. FLSA legislation requires that records be kept on a FLSA period basis and all assessment is done period-by-period. Those hourly employees that are paid other than weekly will have multiple assessments done per pay period, with each assessment based on a week or the FLSA period.
- It is also possible to have an FLSA period greater in length than a pay period. In this case, not all pays will assess FLSA.
- Exempt Employees
- In general, exemptions are available for transportation, agriculture, and seasonal recreational establishments, as well as small public telephone companies and local newspapers. Other exemptions are also available as described in the Fair Labor Standards Act.
- Regular Rate
- An employee’s “regular rate” is the base rate for calculating overtime pay required by the FLSA. Under FLSA, employers must pay employees overtime compensation at a rate of at least one and one-half times their “regular rate” for each hour worked in excess of the excess limit during a given workweek/FLSA period.
- An employee’s regular rate is an hourly rate calculated by totaling the employee’s workweek/ FLSA period remuneration and dividing it by the number of hours worked during the workweek/ FLSA period.
- Personality then takes the FLSA Regular Earnings Element and divides those earnings by the total of the four hours elements. The FLSA Regular Earnings Element should include ONLY those earnings paid at a regular rate; for example, do not include earnings paid at double time.
General FLSA Logic#
The FLSA legislation governs minimum wage as well as compensation for excess overtime hours. The FLSA logic described here deals with overtime only and not with minimum wage payments.- All FLSA calculations (accumulations and payouts) are integrated into the pay cycle during execution of UPCALC.
- Since the FLSA record keeping is performed during UPCALC, records are ‘Backed out’ when an ‘Active’ payrun is ‘Cancelled’ through UPUNDO.
- For Pay Detail and Premiums, the Pay Detail effective date is used to determine the FLSA period.
- The amount paid to an employee computed by the ‘FLSA Processor’ during UPCALC is called the ‘FLSA Premium’ amount.
- FLSA premium amounts are given to the employee (during UPCALC) in the pay period in which the FLSA period ends.
- Only the amount over and above that, which has already been paid, will be given. For example, if the employee is paid for 50 hours in one week and the FLSA premium is to be calculated at time and a half, the FLSA premium will be calculated as 10 hours at half time.
- Negative adjustments are never paid since they would create ‘Negative Deductions’, which can cause problems in situations where there are insufficient earnings, or arrears. These adjustments will be indicated in the UPCALC report and must be dealt with manually.
- The use of FLSA in Personality requires that all remuneration paid for overtime hours be stored into a separate pay component from regular earnings. This restriction will ensure that overtime premiums already paid in an FLSA period, are taken into consideration when calculating the FLSA premium amount.
- All PC amounts referenced in the FLSA elements are assigned to an FLSA period based on the Pay Line Start Date. This means that an amount coming from a User Calc will be assigned to the Pay Period Start Date and will fall in the FLSA period that contains this date.
- If an FLSA User Calc is used,Personality executes the FLSA logic, executes the FLSA User Calc, then re-runs the FLSA logic in order to consider the results of the FLSA User Calc.
Groups#
Most FLSA definitions will be established at the group level. The following information is recorded on the Maintain Group (IDGR) form (date sensitive).Work Rules tab#
- This field shows the base hours after which the FLSA calculation will begin.
- Any time worked over the indicated hours within the calendar period (or seven days if no calendar is indicated) will be paid at the FLSA Factor rate.
- Four digit/ four decimal field no greater than 500
- 40 hours, 212 hours per period etc.
- The rate at which earnings for time over the indicated base hours is to be paid.
- 1.5
- If a UserCalc is needed to enhance the FLSA process, it needs to be indicated here. The UserCalc will have access to the FLSA calculated values:
- Regular Hours
- Overtime Hours
- Leave Hours
- Other Hours
- Total Hours
- Regular Rate
- Premium Factor
- FLSA Hours, and
- Calculated Premium Amount.
- This information is available in addition to all other data previously available.
- UserCalcs will be able to record additional hours or dollars into the last day of the FLSA period by using the existing ‘LET’ command. On return from the UserCalc, the FLSA assessment program will record these values and then reassess the entire FLSA period.
- This of course may result in a different premium calculation.
- To accomplish this, UPCALC actually performs the FLSA calculation twice, once before and again after the USERCALC.
- If FLSA is to be calculated over more than 7 days, a calendar must be set up in the Business Calendars (IDCL) form to indicate the cycle.
- If not provided, then a seven-day FLSA calendar will be used. The default for FLSA legislation is seven days. This seven-day cycle begins on the ‘first day of week’ as provided in the work rule (IDWR) for the group.
Elements tab#
FLSA elements will be defined at the group level through use of the 'Group Elements'.- FLSA Regular Earnings(Mandatory)
- This element is used to compute the employee’s normal rate of pay and should include only pay components containing regular earnings (only include overtime at straight time), bonus, etc.
- FLSA Gross Earnings(Mandatory)
- This element is used to compute the employee total earnings and should include all regular, overtime (‘expanded’ – 1.5, 2.0, etc.), bonus, etc.
- The only difference between FLSA Regular Earnings and FLSA Gross Earnings Elements should be the ‘expanded’ overtime dollars and the FLSA Premium Pay Components.
- FLSA Regular Hours*
- FLSA Overtime Hours*
- FLSA Leave Hours*
- FLSA Other Hours*
- FLSA Rate Modifier
- *At least one of 0210, 0211, 0212, or 0213 must be provided.
- The total of the four elements will be used in the FLSA premium calculation.
- If a pay component in any of the four hours elements is entered in ‘Days’ or ‘Weeks’, then the time is converted to ‘Hours’ before updating the FLSA amounts.
- The 'Hours per Day’ and ‘Hours per Week’ are retrieved from the primary assignment record for this conversion.
- It is NOT advisable to use pay components entered in ‘Weeks’, since those hours would all be recorded on a single day (the effective date of the PAYDETAIL).
- The time converted is only for FLSA purposes and is not touched in the pay amounts or the pay detail records.
Work Rules#
The ‘seven-day’ cycle begins on the ‘first day of week’ as provided in the work rule (defined in IDWR) for the group.- FLSA Method
- This field is an optional field tied to the X_FLSA_CALC_METHOD lexicon. The user may select any of the following methods:
- Actual Hours Worked(normally used)
- The standard hours used for FLSA calculation of overtime/premiums will be based on the total of the elements indicated for all hours Group Element Types (see ‘Elements’ tab of IDGR).
- IDGR FLSA Hours
- The standard hours used for FLSA calculation of overtime/premiums will be based on the FLSA Hours field of the group (defined in IDGR).
- Use Reg Hrs, etc.
- The standard hours used for FLSA calculation of overtime/premiums will be based on the total of the elements indicated for all hours Group Element Types excluding ‘FLSA Overtime Hours’ (see ‘Elements’ tab of IDGR).
- Do Not Calculate
- If ‘Do Not Calculate’ is selected, the FLSA pay lines will not be inserted during the UPAUDT process and no FLSA will be calculated.
Business Calendar#
FLSA periods do not necessarily coincide with pay periods. FLSA periods are required to allow the Time Generation program to create earnings and time into the correct FLSA period.To accommodate this need and to facilitate FLSA record keeping, FLSA calendars must be set up through the Business Calendars (IDCL) form.
The length (number of days) in an FLSA period can be any number, however, each FLSA period must be exactly the same length; there can be no gaps.
The beginning of the next FLSA period immediately follows the end of the prior period.
Pay Points#
FLSA will be invoked during UPCALC based on the FLSA pay point task defined in the Pay Point (IPPP) form.This task can be placed on any of the existing ‘Pay Point Types’, but should be before legislation (tax calculations).
This task will validate FLSA set up and issue appropriate exception messages if set up is incomplete. Inadequate set up will NOT abort the pay run, but will result in exceptions for each employee in a group with inadequate set up.
Pay Components#
PC usage ‘7002-FLSA Premium’ is mandatory if FLSA is to be calculated.This pay component must be included in the ‘Gross’ element as well as the FLSA gross element.
All calculated premiums are recorded into the pay component assigned to this usage.
When FLSA assessment is done, all earnings indicated are taken into consideration when calculating any premium to be paid. For this reason, the FLSA premium itself must be included in the gross.
If an invoked User Calc needs to adjust the premium, the User Calc simply stores an amount into the FLSA premium pay component. On return from the User Calc, FLSA assessment will be made with this money taken into consideration.
PC usage ‘7001-FLSA Premium Hours’ is optional. All calculated premium hours are recorded into the pay component assigned to this usage.
The pay component with the usage ‘7001-FLSA Premium Hours’ must NOT be included in any of the FLSA Hours elements since they are not really hours worked. This pay component will simply hold the number of hours used in the FLSA premium calculation.
The number of excess hours over and above the regular FLSA hours is logged in the Pay if the Usage 7001 is set up. It is recorded ONLY if the FLSA premium is NOT zero. Previously it was recorded even when the FLSA premium was zero.
