Fair Pay and Time Off FAQ

Frequently asked questions about the wage and hour laws that govern your pay and time off from work.

What's Below:

What laws govern wages and hours in my workplace?

How can I tell if I am entitled to overtime pay?

If I am entitled to overtime pay, how many hours do I have to work to get it?

If I work more than 40 hours in a week, can I get compensatory time instead of overtime pay?

If part of my income comes from tips (for example, if I am a restaurant server or bartender), can my employer pay me less than the hourly minimum wage?

What laws ensure my right to take vacations or paid sick days?

The major federal law governing wages and hours is called the Fair Labor Standards Act (FLSA -- 29 U.S.C. §§ 201 and following). It regulates how much workers must be paid, how many hours they can be required to work, and the special rules that apply to younger workers. The law includes provisions on:

• minimum wage
• hours worked
• overtime, and
• child labor.

The FLSA applies to most employers, including the federal government, state and local governments, schools, and virtually all private employers.

In addition, your state probably has its own wage and hour law that covers the same basic topics. Many state laws give workers more rights than the federal law, so it's always a good idea to become familiar with your state's rules. For example, many states have a higher minimum wage than the federal law. Your employer must follow whichever law is most beneficial to you.

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The first thing you must check is whether your employer is covered by the FLSA and/or your state’s wage and hour law. Because the coverage of these laws is so broad, you can be pretty safe in assuming that your employer must comply with them.

The next step is to see whether you are considered an "exempt" or a "non-exempt" employee under these laws. If you are exempt, then you are not entitled to overtime pay; if you are non-exempt, then you are entitled to overtime pay.

If you routinely exercise discretion, supervise other employees, and/or make high-level decisions, you are probably an exempt employee who is not entitled to overtime pay. To be one of these "administrative, executive, or professional" employees exempt from overtime under the law, you must be paid on a salary basis (at least $455 per week) and spend most of your time performing duties that require you to use your own discretion and independent judgment.

In addition, if you are one of the following types of professionals, you probably are not entitled to overtime pay:

• independent contractors
• volunteer workers
• outside salespeople (that is, employees who customarily and regularly work away from the employer’s business, selling or taking orders to sell goods and services)
• certain computer specialists (such as systems analysts, programmers, and software engineers) who earn at least $27.63 per hour
• employees of seasonal amusement or recreational businesses, such as ski resorts or county fairs
• employees of organized camps or religious or nonprofit educational conference centers that operate for fewer than seven months a year
• employees of certain small newspapers
• newspaper deliverers
• workers engaged in fishing operations
• seamen
• employees who work on small farms
• certain switchboard operators
• criminal investigators, and
• casual domestic baby sitters and people who provide companionship to those who are unable to care for themselves (but this exception does not include those who provide nursing care or to personal and home care aides who perform a variety of domestic services).

If you do not supervise others or make important decisions for your company, and if you do not fit into one of the professions described above, then you are probably entitled to overtime pay if you work more than 40 hours in a week or, in some states, more than eight hours in a day.

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Federal law and some state laws require employers to pay an overtime premium to their eligible employees who work more than a certain number of hours during a work period. Federal law and most states use 40 hours per week as the standard -- if you work more than 40 hours in a given week, you are entitled to overtime pay.

A few states, such as California, have a daily overtime standard, so that an employee who works more than eight hours in any given day must be paid overtime, with a few exceptions.

Under federal law, the overtime premium is 50% of the employee's usual hourly wage. This means that an employee who works overtime must be paid his or her usual hourly wage plus the 50% overtime premium -- or at least one and one-half times his or her usual hourly wage (often referred to as "time and a half") -- for each overtime hour worked.

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Most workers are familiar with compensatory, or "comp" time -- the practice of offering employees time off from work rather than pay for working overtime. What comes as a shock to many is that the practice is generally illegal under federal law, at least for private employers (state and local governments can offer comp time, in certain circumstances). The reason? Comp time policies prevent employees from collecting overtime premiums -- the 50% more of an employee's usual hourly wage he or she gets when earning time and a half during overtime.

When comp time is allowed, it must be awarded at the rate of one and one-half times the overtime hours worked -- and it must be taken during the same pay period that the overtime hours were worked.

If you are an exempt employee -- that is, you are not entitled to overtime pay under the FLSA -- you may legally work out a comp time arrangement with your employer.

Some states do allow private employers to give employees comp time instead of cash. But there are complex, often conflicting laws controlling how and when it may be given. A common control, for example, is that employees must voluntarily request in writing that comp time be given instead of overtime pay -- before the extra hours are worked. Check with your state's labor department for special laws on comp time in your area.

Many employers and employees routinely violate the rules governing the use of compensatory time in place of cash overtime wages. However, such violations are risky. Employees can find themselves unable to collect money due to them if a company goes out of business or they are fired. And employers can end up owing large amounts of overtime pay to employees, if an employee complains about the practice or the company faces a labor department audit.

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It depends on how much money you make in tips and on your state's laws. Generally, an employer must pay all employees covered by state and federal wage and hour laws the federal minimum wage (currently $5.15 an hour) or the state's minimum wage -- whichever is higher.

The law gets a bit trickier, however, when the employee earns tips. Under federal law, an employer is allowed to pay a lower minimum wage -- only $2.13 an hour -- if the employee routinely earns at least $30 per month in tips. But, the employer can do this only if the worker's wages plus tips add up to at least the minimum wage for each hour worked. If the worker ends up earning less than the minimum wage even when tips are figured into the bargain, the employer has to make up the difference.

But some states, including California, don't allow employers to pay tipped employees less than the minimum wage. And some states require employers to pay a higher hourly amount to tipped employees, though still less than the state or federal minimum wage. To find out about the rules for workers who earn tips in your state, contact your state's labor department or go to www.dol.gov/esa/programs/whd/state/tipped.htm on the U.S. Department of Labor's website.

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Here's a surprising legal truth that most workers would rather not learn: No federal law requires employers to provide you with paid days off, such as vacation days, sick days, or paid holidays. This means that if you receive paid vacation or sick days, it's because of custom, not law: Your employer chose to provide the benefits to care for its workers, to attract employees in a competitive market, or for other such reasons.

And just as vacation benefits are discretionary with each employer, so is the policy of how and when they accrue. For example, it is perfectly legal for an employer to require a certain length of employment -- six months to a year is common -- before an employee is entitled to any vacation time. It is also legal for employers to prorate vacations for part-time employees or to deny them the benefit completely. Employers are also free to set limits on how much paid time off employees may store up before it must be lost or taken.

(Note, however, that while the law may not require your employer to provide you with paid time off in the first place, once your employer agrees to do so on its own, your employer may be bound by contract law to honor any promises it made or policies it established related to paid time off.)

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