Federal wage laws, like the Fair Labor Standards Act (FLSA), apply to employers across the nation. But when you have employees in a state like Hawaii that has its own wage laws, how do you know which one applies to you?
Before we dig into what to do, let’s quickly define what the FLSA is all about.
FLSA: Understanding the Basics
The FLSA, first enacted back in 1938, is a federal law that sets wage and hour standards for basic minimum wage and overtime, but also child labor, recording keeping, and more. It affects nearly all employers. Do you have two or more employees? Then the FLSA applies to you.
So what do you need to know about this federal law? Here’s the 1,000 foot overview of the FLSA and its four main components:
1. Minimum wage
One of the major guidelines set out by the FLSA is that all workers, except those that are exempt, must be paid a national minimum wage. This federal minimum wage is the lowest* possible amount an employer can pay its hourly employees. It officially took effect in 1938, when the FLSA was signed into law. In the 81 years since its debut, the federal minimum wage has increased from $.25 to $7.25 per hour today.
* Many states, including Hawaii, also have minimum wage laws. Continue reading to make sure you know what to do when employees are subject to both state and federal minimum wage laws. (Hint: It’s not okay to pay $7.25 per hour in Hawaii).
2. Overtime pay
The FLSA also sets standards and rules for overtime pay. This is where you start to hear a lot about the two basic types of employees: “exempt employees” and “non-exempt employees.” This is a critical employee classification that affects whether or not an employee qualifies for minimum wage or overtime pay. That’s because the term “exempt” means exempt from being paid overtime.
So how do you know if an employee is exempt or not-exempt from overtime pay? It depends on specific criteria set by the FLSA around:
- How much money the employee is paid ($$$ earned per week*)
- How the employee is paid (hourly vs. salary)
- Job duties, or the nature and responsibilities of the work they do, and their level of decision-making (executive, administrative, professional, outside sales).
In general, an employee must meet specific criteria in all three areas in order to be exempt from receiving minimum wage and overtime pay.
* Like minimum wage, Hawaii law also has slightly different requirements that employers here need to follow. For example, according to the FLSA, exempt employees must earn at least $455 per week. However, according to Hawaii Wage and Hour law, employees must earn $2,000 per month. Psst…Are you making these common wage and hour mistakes?
3. Child labor
The FLSA also protects the rights of those under the age of 18 by establishing how businesses can employ minors so that when they work, the work is safe and does not jeopardize their health, well-being, or educational opportunities. Are you employing 14 and 15 year olds? What about 16 or 17 year olds? There are different requirements by their age. You can learn more about the details on child labor here.
4. Recordkeeping & Reporting
Lastly, the FLSA establishes the type of information employers must maintain about their workers (e.g. Employee’s full name, SSN, total hours worked each week, basis on which employee’s wages are paid, etc.), and how long they must keep these records. You can read the full list of requirements here. Hawaii law also has its own provisions for recordkeeping also.
State requirements: Hawaii Wage & Hour Laws
Now that you have a general idea about the federal Fair Labor Standards Act, what about state requirements? What are they? Which laws have more authority? And what should employers do when these laws conflict?
Let’s dig in.
Some states, like Hawaii, have their own wage and hour laws, which provide greater protection for employees than what is provided under federal law. Hawaii is a prime example. Under Hawaii Wage and Hour laws, we provide protections and benefits to employees that go above and beyond what’s covered in the FLSA.
For starters, Hawaii Wage and Hour law applies to any employer with one or more employees in the State of Hawaii, whereas the FLSA applies to any employer in the country that has two or more employees, as well as to companies with $500,000 or more in annual revenue, or companies engaged in interstate commerce.
What to do when FLSA and Hawaii labor laws differ
So what should employers do?
Generally, when state and federal labor laws differ, employers must defer to the law that is more beneficial to the employee it governs.
- Example #1: Minimum wage is a good, easy example. Hawaii’s minimum wage is now $10.10 per hour, which is almost 40 percent higher than the federal minimum wage of $7.25 per hour. That said, employers must defer to our state minimum wage instead of the federal wage simply because it’s more generous.
- Example #2: Recordkeeping is another good example. While FLSA requires employers to keep payroll records for three years, Hawaii law is stricter: six years for payroll records, and 7-10 years for medical records. To be safe, it’s recommended that Hawaii employers keep all records for seven years, and medical records for the full 10. Records that are part of an ongoing legal matter must be kept until the issue is resolved.
Minimum wage and recordkeeing are just two (of numerous) examples.
While the myriad of state and federal labor laws might seem daunting, employers can protect themselves and keep headaches to a minimum by understanding the requirements and being prepared. And, if you need extra support, an HR partner can help.
Download our free ebook to learn how an HR partner can help employers stay compliant with local and federal laws with ease.