Worker Status
The Fair Labor Standards Act (FLSA)
The FLSA is the most general federal labor law. It contains the minimum wage provisions, Equal Pay Act, child labor restrictions, and a variety of other federal labor and employment law sections. A key provision of the Act is that most employees must be paid time and one-half for all overtime "hours worked."
The United State Department of Labor
The Department of Labor fosters and promotes the welfare of the job seekers, wage earners, and retirees of the United States by improving their working conditions, advancing their opportunities for profitable employment, protecting their retirement and health care benefits, helping employers find workers, strengthening free collective bargaining, and tracking changes in employment, prices, and other national economic measurements. In carrying out this mission, the Department administers a variety of Federal labor laws including those that guarantee workers’ rights to safe and healthful working conditions; a minimum hourly wage and overtime pay; freedom from employment discrimination; unemployment insurance; and other income support.
The Federal government and U.S. have set a minimum wage for nonexempt workers. If the state minimum wage exceeds the federal, employers are required to follow state minimum wage laws, and vice versa. The minimum wage applies to workers' hourly compensation, not to their net pay. Thus, after deductions, a worker's take-home pay may legally fall below the required minimum wage.
Worker Status
Employers must make two distinctions when classifying workers. A worker can be an employee or an independent contractor. Employees can be exempt or non exempt.
First, you need to determine who is an employee and who is not. Every worker is not necessarily an employee. Is the part-time secretary in marketing an employee? How would you classify the free-lance artist who has handled all your firm's graphics for the last five years (and regularly attends the holiday party)? What is the status of a 16-year-old summer worker in shipping or a commission-only salesperson? These questions aren't academic. The answers determine whether the company must withhold taxes and pay overtime.