Less Than Minimum Wage: Special Rules for Certain Workers

Workers employed in certain occupational categories can be paid less than minimum wage, can be denied overtime wages, or may otherwise be lawfully exempt from some of the requirements of Fair Labor Standards Act (FLSA). Each of these categories is subject to special statutory or regulatory requirements and may, in some instances, require special approval of the U.S. Department of Labor (DOL). The list includes the following:

  • Learners and Apprentices. Employers may seek approval from DOL to pay a sub-minimum wage to learners and apprentices.  DOL will issue a certificate approving this practice if convinced that doing so will prevent the curtailment of job opportunities for such workers.
  • Employers may also seek DOL certification to pay messengers less than minimum wage, provided that they are employed primarily in delivering letters and messages and a decreased wage rate will prevent the curtailment of job opportunities for such workers.
  • Full-Time Students. Full-time students may be employed at lower wages on a part-time basis in retail or service establishments or in agriculture, not to exceed 20 hours in any work week during the school year.  They may work full-time during school vacations at a wage not less than 85 percent of the applicable minimum wage.  No special age requirements are imposed for full-time students, provided that they employer otherwise abides by child labor laws. DOL sets limits on the proportion of student hours of employment to total hours of employment of all employees.
  • Students in Vocational Programs. Students who work part-time as part of a school-sponsored vocational or cooperative education program are also eligible for exemption. Such students must be receiving instruction in an accredited school, college, or university and must be employed on a part-time basis, pursuant to a bona fide vocational training program approved by a state board of vocational education or other recognized educational body.  A qualified vocational program would specifically allow for part-time employment training, which may be scheduled for a part of the workday or workweek, for alternating weeks, or for other limited periods during the year, supplemented by and integrated with a definitely organized plan of instruction designed to teach technical knowledge and related industrial information given as a regular part of the student-learner’s academic course.
  • Handicapped Workers. Individuals whose earning capacity is impaired by age or physical or mental deficiency or injury for the work they are to perform may be paid less than minimum wage under the appropriate DOL certificate. Such workers are generally considered to have a diminished level of productivity.  However, employers are required to review their performance levels at least once every six months and make adjustments consistent with wages paid to other disabled employees in the area.
  • Firefighters and Police Personnel. Overtime wages need not be paid to any public agency to employees engaged in fire protection or law enforcement activities who work more than a 40-hour work week. However, fire departments and police agencies must pay overtime wages at some point, subject to the scrutiny and oversight of DOL. They may also be required to pay overtime wages under a collective bargaining agreement notwithstanding a DOL exemption under FLSA.
  • Retail and Service Employees. No employer in a retail or service establishment shall be deemed to have violated the overtime law if (1) the regular rate of pay of the employee is in excess of one and one-half times the minimum hourly rate, and (2) more than half an employee’s compensation for a representative period (not less than one month) represents commissions on goods or services. In determining the proportion of compensation representing commissions, all earnings resulting from the application of a bona fide commission rate shall be deemed commissions on goods or services without regard to whether the computed commissions exceed the draw or guarantee.
  • Hospital and Healthcare Employees. As long as an employer and an employee come to an agreement before the employee’s work commences, a hospital or institutional employer primarily engaged in the care of the sick, the aged, or the mentally ill (who reside on the premises) may withhold overtime pay until the employee has worked at least 14 consecutive days in a given work period.  This exception also requires that, for employment in excess of 8 hours in any workday and in excess of 80 hours in such fourteen-day period, the employee receives compensation at a rate not less than one and one-half times the regular rate at which he or she is employed.
  • Piece-Rate Workers. The overtime law cannot be strictly applied to those workers who are paid on piece rates.  Unlike hourly payroll systems, a piece-rate system is dependent primarily on the number of units produced or processed by a worker during a particular work period.  A piece-rate process creates an incentive system for workers.  To determine how piece-rate workers should be compensated for overtime, FLSA permits two approaches.  In the first approach, total earnings are first calculated.  Then the number is divided by the total number of hours worked to determine the regular rate of pay the piece worker is earning.  For example, a piece worker who is paid $7 for each piece finished, and completes 70 pieces in a week, would have total earnings of $490.  If it took 45 hours to complete this week, the worker effectively earned $10.89 per hour as his or her regular rate.  Under FLSA, the worker would be entitled to an additional half-time increment for the hours worked over 40 hours based on this regular rate – in other words, an additional $5.44 for each of the five hours over 40 hours. In effect, the piece workers FLSA-compliant paycheck for the week would total $517.20

The second approach to paying piece-rate workers permits employers simply to pay “piece-and-a-half” rates for all piece work completed after 40 hours.

  • Tobacco Workers. Those who work in the green leaf and cigar leaf tobacco trades, including all workers involved in stripping, grading, auctioning, selling, buying, handling, stemming, drying, re-drying, packing and storing tobacco, need  not receive overtime pay until they’ve worked more than 10 hours in any work day or 48 hours in any work week.  This practice is permitted for up to 14 work weeks per year.
  • Bus, rail, and trolley drivers. Electric railway operators, street car drivers, and trolley and motorbus drivers need not be paid overtime wages for charter activities, as long as the terms of their charter driving are first agreed upon with their employers and provided that such charter work is not part of the employee’s regular employment.
  • Computer Specialists. Neither the minimum wage nor the overtime provisions of FLSA apply to any employee who is a computer systems analyst, computer programmer, software engineer, or other similarly skilled worker who earns at least $27.63 an hour. To fit the definition of this broadly exempt category, a computer specialist’s primary duty must be the application of systems analysis techniques and procedures, including consulting with users, to determine hardware , software, or system functional specifications; the design, development, documentation, analysis, creation, testing, or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications; the design, documentation, testing, creation, or modification of computer programs related to machine operating systems; or a combination of the duties described above.
  • Outside Sales Representatives. Those who make sales or obtain orders or contracts for services, and for which consideration is being paid by the customer, are also exempt from the minimum wage and overtime law. FLSA describes such “outside salespersons” as workers whose primary selling activity places them “customarily and regularly’ away from the employer’s place of business.  Outside sales does not include sales made by mail, telephone, or the Internet unless such contact is used merely as an adjunct to personal calls.  Thus, any fixed site, whether home or office, used by a salesperson as a headquarters or for telephonic solicitation of sales is considered one of the employer’s places of business, even though the employer is not in any formal sense the owner or tenant of the property.  However, an outside sales employee does not lose the exemption by displaying samples in hotel sample rooms during trips from city to city; these sample rooms should not be considered as the employer’s place of business.  Similarly, an outside sales employee does not lose the exemption by displaying the employer’s products at a trade show.  If selling actually occurs, rather than just sales promotion, trade shows of short duration (e., one or two weeks) should not be considered as the employer’s place of business.  Drivers who deliver products and also sell such products may qualify as exempt outside sales employees only if the employee has a primary duty of making sales.
  • Although they may qualify for a professional exemption under the act, FLSA expressly identifies elementary and secondary school teachers as being exempt from the minimum wage and overtime requirements.  Exempt teachers include, but are not limited to, regular academic teachers; teachers of kindergarten or nursery school pupils; teachers of gifted or disabled children; teachers of skilled and semi-skilled trades and occupations; teachers engaged in automobile driving instruction; aircraft flight instructors; home economics teachers; and vocal or instrumental music instructors.  Those faculty members who are engaged as teachers but also spend a considerable amount of their time in extracurricular activities such as coaching athletic teams or acting as moderators or advisors in such areas as drama, speech, debate, or journalism are engaged in teaching.  Such activities are a recognized part of the schools’ responsibility in contributing to the educational development of the student.

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