Wage and Hour Law
The exam tests the FLSA's minimum wage, overtime, exemption, and recordkeeping rules, and whether you can compute damages when a classification fails.
Core rules
- Overtime is 1.5 times the regular rate for hours over 40 in a workweek. The regular rate includes nondiscretionary bonuses, commissions, shift differentials, and production incentives; it excludes gifts, expense reimbursements, and truly discretionary bonuses.
- White-collar exemptions require all three: salary basis, a salary level (the 2019 figure of $684 per week is again controlling after the 2024 increase was vacated nationwide - verify the current number), and the duties test.
- Executive: primary duty of management, two or more full-time equivalents supervised, real hiring/firing input.
- Administrative: office work directly related to management or general business operations plus discretion on matters of significance.
- Professional: learned or creative.
- Also exempt: computer employees, outside sales, and highly compensated employees meeting the total-compensation threshold.
- Hours worked: on-duty waiting time is compensable; off-duty on-call is not if the employee can use the time freely; security screening and de minimis donning/doffing generally are not; meal periods count unless the employee is completely relieved for at least 30 minutes.
- Enforcement: two-year limitations period, three years for willful violations; liquidated damages equal to unpaid wages absent good faith; §216(b) collective actions require employees to opt in.
Worked example
An assistant store manager earns a $55,000 salary, opens the store, and spends about 80% of her time stocking shelves and running a register. Salary basis is satisfied. The duties test is not: manual stocking is not office work related to general business operations, and she has no authority over matters of significance. She is nonexempt. Regular rate = $55,000 ÷ 2,080 = $26.44; each overtime hour carries a half-time premium of $13.22. If payroll knew of the misclassification, the three-year willful period applies to the back wages and an equal amount in liquidated damages.
Traps
- Assuming a salary alone creates an exemption.
- Omitting nondiscretionary bonuses from the regular rate.
- Auto-deducting meal periods the employee actually worked.
- Offering "comp time" instead of overtime in the private sector - unlawful.
- Forgetting that state law may set a higher threshold or different regular-rate rules.