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FAIR LABOR STANDARDS AMENDMENTS OF 1989

The Department of Labor administers and enforces the Fair Labor Standards Act (FLSA) through the Wage and Hour Division of the Employment Standards Administration. The FLSA requires that most employees in the United States be paid a minimum hourly wage and overtime premium pay after 40 hours in a work-week. On November 17, 1989, the Fair Labor Standards Amendments of 1989 (Public Law 101- 157) were enacted. These amendments change certain provisions of FSLA with respect to coverage, minimum wage, exemptions, tip credit, and include a new training wage provision. The amendments are summarized below.

Minimum Wage

The statutory minimum wage increased to $3.80 an hour on April 1, 1990, and will increase to $4.25 an hour on April 1, 1991.

Coverage

The minimum wage and overtime pay provisions apply to all employees of certain "enterprises" that are engaged in interstate commerce, produce goods for interstate commerce, or handle, sell or work on goods or materials that have been moved in or produced for interstate commerce. Effective April 1, 1990, the annual dollar volume test for enterprise coverage is raised from $250,000 ($362,500 for retail firms) to $500,000, except for hospitals, institutions primarily engaged in the care of the sick, the aged, the mentally ill or defective who reside on the premises of such institutions, schools for mentally or physically handicapped or gifted children preschools, elementary or secondary schools, institution of higher educa- tion, and public agencies. These latter enterprises are covered under FLSA regardless of their annual dollar volume. Construction and laundry/dry cleaning enterprises, which previously were subject to enterprise coverage irrespective of their annual dollar volume of business, become subject to the $500,000 test.

The minimum wage and overtime pay exemptions for small retail establishments are repealed. Thus, employees of these establishments, as well as laundry/dry cleaning enterprises, construction enterprises, and other non-retail enterprises having annual dollar volumes of less than $500,000 become subject to the provisions of FLSA insofar as they are individually engaged in commerce or the production of goods for commerce or a closely related and directly essential activity in any workweek. Such employees include those who: work in communications or transportation; regularly use the mails, telephones, or telegraph for interstate communication or keep records of interstate transactions; handle, ship, or receive goods moving in interstate commerce; regularly cross state lines in the course of employment; or work for independent employers who contract to do clerical, custodial, maintenance, or other work for firms engaged in interstate commerce or in the production of goods for interstate commerce.

FLSA coverage is extended to employees of the U.S. House of Representatives and the Architect of the Capitol.

Grandfather Clause

Any enterprise that ceases to be covered by virtue of the increase in the enterprise coverage dollar volume test must continue to pay its employees not less than $3.35 an hour, and continues to be subject to the overtime pay and child labor provisions of FLSA.

Tip Credit

Effective April 1, 1990, a $1.71 per hour tip credit may be taken for tipped employees (45% of $3.80) and this increases to $2.13 per hour (50% of $4.25) beginning April 1, 1991.

Training Wage

Under certain conditions, employers may pay a training wage of at least 85% of the minimum wage for up to 90 days to employees under age 20, except for migrant or seasonal agricultural workers and for H-2A nonimmigrant aliens performing agricultural work of a temporary or seasonal nature. An employee who has been paid at the training wage for 90 days can be employed for 90 additional days by a different employers, if that employer provides on-the-job training in accordance with regulations to be issued by the Secretary of Labor. Employers are prohibited from displacing regular employees in order to hire employees eligible for the training wage, and there is a limitation on the proportion of an employer's workforce which may receive the training wage.

The training wage provision expires March 31, 1993.

Remedial Education

Employers may employ employees who lack a high school diploma, or who have not attained the educational level of the 8th grade, for up to 10 hours over 40 in a workweek without paying overtime if the employees are provided with remedial reading or other basic skills during such hours. The training must not be job specific. This provision is effective immediately.

Puerto Rico

Special provisions apply to Puerto Rico. The mainland increases in the minimum wage will be phased in, industry by industry. All industries must reach the mainland minimum wage levels by April 1, 1996.

Civil Money Penalties

The Secretary may assess civil money penalties of up to $1,000 per violation against employers who willfully or repeatedly violate the minimum wage or overtime pay requirements.

For Additional Information

Get in touch with the nearest office of the Wage and Hour Division, listed in most telephone directories under U.S. Government, Department of Labor.

This is one of a series of fact sheets highlighting U.S. Department of Labor Programs. It is intended as a general description only and does not carry the force of legal opinion.

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