Employment Law Information Center
Wages and Benefits - An Overview
The laws and regulations that govern wages and benefits in employment are complicated and difficult to understand, often involving federal, state and even local requirements. An employment law attorney can help you cut through the confusion and clarify your rights.
Originally designed to curb oppressive working hours and decrease poverty among Depression-era workers, the Fair Labor Standards Act of 1938 (FLSA) is still today the main federal legislation regulating minimum wage and overtime pay. Each state also has its own wage-and-hour laws that sometimes provide added advantage and protection to workers.
The FLSA minimum-wage or overtime provisions do not apply to all workers and the legal question of determining who benefits from these federal protections can be complex. An overly simplified view is that most private and public employers are required to apply FLSA standards to employees paid by the hour. Broadly, categories of workers exempt from the FLSA requirements include trainees; independent contractors; volunteers; particular people with disabilities; student learners; executive, administrative and professional employees (so-called white-collar exemptions); certain computer programmers; and outside sales people. The FLSA also exempts employers within certain industries and some small family businesses. Additionally, other laws usually apply to government-contract workers.
For employees to whom the FLSA applies (nonexempt employees), the federal minimum wage has been $7.25 per hour since July 2009. Employees falling under the overtime provisions must be paid time-and-one-half for hours worked over 40 in a workweek. Almost all states have set their own minimum-wage rates and overtime standards that apply when workers do not fall under the federal law or when the state law is more generous than the federal.
Unfortunately, many employers fail to comply with wage-and-hour laws. Common violations include:
- Not paying the minimum wage
- Paying the lower rates allowed for trainees or workers with certain disabilities to workers who should be paid the regular rate
- Not paying overtime
- Making employees work off-the-clock or wrongly classifying them as volunteers and not paying them for their work
- Deducting more for tips than the employer is allowed
- Excessively deducting for wages customarily paid in kind, such as meals or housing
Benefits in the employment context broadly encompass things that an employer does for or gives to its employees, other than money wages. Some benefits may be required by law, depending on the size and type of employer, conditions of employment or the applicable state laws, including:
- Medicare and Social Security contributions
- Unemployment-compensation taxes
- Workers' compensation
- Time off to vote
- Time off for jury duty
- Temporary disability benefits
- Leave for military service
- Unpaid family or medical leave
- Time off for religious observance
- Severance pay for factory closure
If you are an employee covered by a law that requires a certain benefit, such as leave for certain purposes, your employer must allow you to take advantage of that benefit with no penalty to you.
Employers usually provide additional benefits voluntarily to attract and retain good employees. Large employers usually have pre-established benefit packages, but if you are an executive or going to work for a relatively small employer, you may have some room to negotiate for benefits. The government encourages the provision of some types of benefits, such as medical insurance, by providing tax incentives to employers.
In addition to medical benefits, other types of optional benefits may include:
- Dental insurance
- Vision insurance
- Pension plans, contributions to retirement savings plans like 401(k) plans or other retirement benefits
- Legal-services insurance
- Discounts on employer goods or services
- Discounts on consumer goods or services
- Educational benefits
- Paid or unpaid time off for holidays, vacations, sickness, funerals or professional-accreditation activities
- Life insurance
- Short-term or long-term disability insurance
Most of these types of optional benefits are heavily regulated by complex federal and state laws and may not be administered in a discriminatory fashion.
Speak to an Employment Lawyer
Understanding your rights under the laws that govern wages and benefits is not an easy task. The rules are complicated and easily violated, even unintentionally. An attorney with experience in employment law can educate you about what you are entitled to receive and about what laws impact your optional benefits.
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