1. FAIR LABOR STANDARDS ACT TO INCLUDE FAIR PAY The Fair Labor Standards Act (FLSA), enacted in 1938, and amended to include the Fair Pay Act of 2004 is the leading federal law regulating minimum wage and overtime compensation. The act also regulates child labor and equal pay for equal work. FLSA is very broad in its coverage. In general, it encompasses three types of employees: –Employees engaged in interstate commerce, including import and export. –Employees engaged in the production of goods for interstate commerce. –Employees in an enterprise engaged in interstate commerce. Wages paid to employees are largely regulated by federal and state wage laws. These laws typically set minimum wage rates and overtime compensation that must be paid to those employees who fall under their protection.

2. FAIR LABOR STANDARDS ACT TO INCLUDE FAIR PAY Despite the broad categories of employees covered by the FLSA and comparable state laws, certain types of employees are generally exempt from these laws. These exemptions are based on the nature of the work performed. Employees employed in a bona fide executive, administrative, or professional capacity and outside salespersons (and a few other types of employees) are excluded, as well as highly compensated employees, as defined by the Department of Labor) provided they meet certain standards set forth in the implementing regulations.

3. Commission Employees In compliance with 7(i) of the FLSA – exemptions exists for employees in retail sales that meet the following criteria: –More than 50% of their income is derived from commissions. –Their monthly income is greater than minimum wage paid at overtime rate of 1.5 or $7.72 for each hour worked during the month. –They are in a bonafide sales position in which they are selling to the consumer.

4. FAIR LABOR STANDARDS ACT TO INCLUDE FAIR PAY Employment Practices Not Covered By The FLSA Although the FLSA sets minimum wage and overtime pay standards and regulates the employment of minors, it does not regulate a number of employment practices, including: –Vacation, holiday, severance, or sick pay. These are considered fringe benefits and are voluntary on the part of the employer. However, if the employer has a stated policy regarding these benefits, they must adhere to this policy. –Meal or rest periods, holidays off or vacations. –Premium pay for weekend or holiday work. –Pay raises or fringe benefits. Employers are not required to provide cost of living allowances or other pay raises to employees. –Employers are required to pay minimum wage and overtime at a rate of 1.5 times the normal hourly rate for all hours worked in excess of 40 for non-exempt employees. –A discharge notice, reason for discharge, or immediate payment of final wages to terminated employees. This requirement varies from state to state. –Any limit on the number of hours of work for persons 16 years of age or older. Employees under the age of 16 must comply with the requirements of the Child Labor Laws. These matters may be determined by employer policies, employee contracts, collective bargaining agreements, or other federal or state law.

5. FAIR LABOR STANDARDS ACT TO INCLUDE FAIR PAY Minimum Wage Minimum wages are the gross minimum hourly rates employers may pay protected workers, as set by federal wage and hour laws. In 1938, the FLSA was passed and the minimum wage was set at $0.25 per hour. Beginning September 1, 1997, it increased to $5.15 per hour. This year (2007), the Fair Minimum Wage Act, if passed, would raise the federal minimum wage by $2.10 over two years – to $7.25 an hour. Some states may require a higher minimum wage for employees working in that specific state. In this situation, employers must pay the higher minimum wage required by the state.

6. Fair Pay Changes effective August 2004 Employees classified as exempt must make at $455.00 per week in salary. (excluding commission employees exempt under 7(i) of the FLSA. Exempt employees must be paid for time missed (if less than a full week) due to personal illness, injury or jury duty. If employee is eligible for sick pay or personal time off, this benefit may be used to satisfy the paid time for absences due to personal illness, injury or jury duty.

7. FAIR LABOR STANDARDS ACT TO INCLUDE FAIR PAY Exempt Vs. Non-Exempt The Fair Labor Standards Act requires that all jobs be reviewed to determine their exempt/non-exempt status. Managers should review all the positions within the department to ensure that they are classified properly. In the case where there is a position in question, the Supervisor will be requested to contact either human resources or the employee hotline for guidance. Non Exempt All employees in positions that are classified as non-exempt will be required to maintain a time card or record and will be eligible for overtime pay in accordance with the Wage and Hour laws and as outlined in the Fair Labor Standards Act.