Employee pay: Keep it legal
As the owner or director of a child-care facility,
you’re required to comply with the federal Fair Labor
Standards Act, or FLSA. Here are some common misperceptions
about paying employees—and the facts that dispute them.
I own a small child care center, so I
don’t have to pay
minimum wages and overtime. Child care programs are subject
to the FLSA, often called the minimum wage and overtime law.
If you have two or more employees, regardless of sales volume,
you must comply with the law.
The FLSA does not apply to nonprofit
child care centers. The law applies to nonprofit as well as for-profit facilities.
Whether a facility is operated by a private employer, church,
hospital, or factory makes no difference.
I pay overtime after 80 hours on the
job each pay period, and that’s OK. Overtime must be figured according to
a fixed seven-day period. Most child care center owners believe
their workers should receive at least the minimum wage, $5.15
an hour, and some form of compensation if they work more than
40 hours a week. Many employers, however, don’t know how
to comply with the law in calculating hours worked and overtime.
According to the U.S. Department of Labor’s Wage and Hour Division, you
must count all hours worked during the “work week” and pay at least
$5.15 for each hour. For all time in excess of 40 hours in that week, you must
pay overtime, calculated at time-and-a-half.
A “work week” is a fixed seven-day period—Monday through
Sunday, or Wednesday through Tuesday, for example. You may decide what the
work week is, but once determined it must remain the same.
You also decide when to pay, whether once a week, every two weeks, or twice
a month. Regardless of the pay period, overtime payments must be based on the
work week. You are not permitted to average hours and pay overtime after 80
hours in a two-week period or 88 hours in a semimonthly (twice monthly) period,
for example. Each work week stands alone.
I pay the tuition expenses for state-mandated
training for all my employees, so I don’t owe them additional money for
their time. The hours an employee spends in state-mandated
training must be counted as work time, even though the employer
pays the cost of training.
Just because the employee attends a workshop away from the center does not
mean that time spent there is not work time. The employee must be paid at least
the minimum wage, and if workshop time results in an excess of 40 hours that
week, the employee must receive overtime as well.
One option to avoid paying overtime is to give the employee time off in the
week of the workshop to make up for the time spent in the workshop. You must
be careful, however, in counting all hours and verifying that the employee
has been paid minimum wage for the week.
Consider this example: Carla, a full-time caregiver who earns $5.50 an hour,
has been told to take off four hours Friday afternoon to attend a four-hour
workshop on Saturday. She is expected to pay the $35 workshop fee out of her
own money. Her paycheck for the week is $220 ($5.50 times 40 hours).
Even though Carla gets time
off, her pay violates the minimum wage provisions of the law. The $35 fee decreases
her wages for that week to $185 ($220 minus $35), which averages out to $4.63
an hour ($185 divided by 40). The employee is due at least an additional 52
cents an hour ($5.15 minus $4.63) to meet minimum wage. In this example, the
employee is due $20.80 (52 cents times 40 hours).
My employees often volunteer their time
for events outside regular business hours, and they often stay
late on their own time when parents are delayed in picking
up their children. I don’t
have to pay them for this extra time. If you allow an
employee to work, you must pay for the time. Employees are working
when they offer to lead field trips, stay late to wait for parents,
care for children during parents’ meetings or “Parents’ Night
Out,” host an open house or holiday party, participate
in a fundraiser, or take home posterboard to make a room decoration.
Employees are working when they watch napping children, even if they are also
eating lunch and talking softly to their coworkers. The time cannot be counted
as a lunch break. Employees are also working when they attend staff meetings.
The hours you do not count are those the employee actually does not work: vacations,
holidays, sick leave, and personal time.
Because my employees are salaried, they
are exempt from overtime regulations. A salary alone exempts no one from overtime
Many caregivers perform their work professionally, and many prepare activities
for language, math, science, art, and other centers. Some caregivers hold college
degrees. More often than not, however, they are not exempt from overtime payment.
There are exceptions. If your director supervises two or more full-time employees
and is totally in charge of the facility, or if you’ve hired a certified
teacher for kindergarten classes, an exemption may apply. Check with the Department
of Labor to be sure.
It’s OK to let my employees accrue compensatory time when
they have to work longer hours. Accruing compensatory
time and averaging hours across the pay period is illegal.
You may protest, “My cousin works for the state, and she accrues comp
time.” Or, “My husband, who manages a large department in his company
works long hours, and all he receives is his salary.” But the law is
firm. Only state and local governments are allowed to bank comp time.
In child care, employees often must fill in for each other when a staff member
calls in sick. Sometimes a caregiver will ask to trade with another employee
to take a personal day. Some plead for longer hours at the straight hourly
rate so they can earn more money. In each case, the employee who works longer
hours is due payment for overtime. The FLSA does not allow employees to waive
their rights to overtime or minimum wage.
What can you do? One option is to rearrange an employee’s work schedule
in the work week. Assume that Bill normally works Monday through Friday from
6 a.m. to 2 p.m. If you want him to attend an eight-hour workshop on Saturday,
for example, you may ask that he leave an hour earlier Monday through Thursday
and take off four hours earlier on Friday.
Another option is to hire a part-time floater. This employee can fill in for
a staff member who calls in sick or needs to go to the dentist, or can stay
late when Johnny’s mother still has not arrived to pick him up at 6 p.m.
I pay employees a lower wage rate for
training hours, and it’s
OK to pay any overtime—whether regular work or training—at
this lower rate. Computing overtime at the lower rate
is not allowed.
What’s the correct way to figure overtime payment? Assume that Bertha
earns $5.30 an hour. She works only 32 hours the first week of August but fills
in for an ill employee during week two, thereby working 44 hours that week.
She is due $169.60 ($5.30 times 32) for the first week, and $243.80 ($5.30
times 44, plus $2.65 times four overtime hours) for the second week.
It’s OK to pay a different wage rate for different types of work—$6
an hour for classroom time and $5.15 for training and staff meetings, for example.
In this arrangement, when an employee works longer hours, you may add all the
earnings together and divide them by the total hours worked to find the hourly
rate for that work week. Then you figure the pay as described in the paragraph
Assume that LaKeisha accumulates 44 hours one week, and six of those are spent
in a Saturday workshop. Her hourly rate is $6 when caring for children and
$5.15 for training. First, you multiply the regular rate times the hours in
the classroom ($6 times 38), which is $228. Second, you multiply the lower
rate times the hours in training ($5.15 times six), which is $30.90. Add the
earnings ($228 plus $30.90), and divide by the total hours worked ($258.90
divided by 44), which averages out to $5.88 an hour. Use this hourly rate to
compute pay for the week. Thus, multiply $5.88 times 44 hours, which is $258.72
and add overtime ($2.94 times four), which is $11.76. For the week, LaKeisha
earns a total of $270.48 ($258.72 plus $11.76).
In some cases, a salary may be advantageous to you and the employee. In paying
a salary, you must be willing to guarantee the salary amount when the employee
works less than 40 hours a week because of vacation, sickness, or holidays,
and you must assure that you pay the minimum wage for all hours worked. If
the salaried employee works overtime, you may determine the hourly rate by
dividing the salary by hours worked rather than dividing by 40.
For example, Graciela’s hours vary each week, and you pay her a salary
of $350 a week, regardless if she works less than 40 hours. Under this agreement,
the hourly rate varies by the week. If she works 50 hours, the regular hourly
rate is $7 ($350 divided by 50). She has worked an extra 10 hours and is due
another $3.50 for each extra hour, for a total of $385 for the week ($350 plus
$35). Similarly, if she works 60 hours, the regular hourly rate is $5.80 ($350
divided by 60). She has worked an extra 20 hours and is due another $2.90 for
each extra hour, for a total of $408 ($350 plus $58) for the week.
This method of computing overtime for a salaried employee is called “fixed
salary for fluctuating hours.” The advantage to the employee is that
the same amount is guaranteed, even in short weeks. The advantage to the employer
is that the hourly overtime payment decreases the longer the employee works
in a long week.
I pay my employees a bonus at the end
of the year to compensate them for all mandated training and
volunteer time, which is all right under federal law. Paying a bonus at year’s
end as compensation for training and volunteer time during the
year cannot be done to avoid paying overtime.
Most types of pay must be added to the gross pay before the overtime is figured.
You cannot pay a bonus without including it in the regular hourly rate. Nor
can you prefigure overtime into a salary based on what you think the employee
will normally work.
If you find these overtime formulas confusing, here’s one that won’t
fail you. Add the gross pay for the week, and divide it by the total hours
worked in the work week. The result is the regular hourly rate. Divide this
rate by two to obtain the additional amount to be paid for overtime, and multiply
this figure by the number of overtime hours in the work week. Add this amount
of overtime to the regular pay, which is the regular rate times the total number
of hours worked that week.
Since my employees are salaried, I don’t have to keep
a record of their hours on the job. You do need to keep
records on salaried employees. The FLSA and other laws require
that you keep the following records for each employee:
information: employee’s name, home address,
Social Security number, occupation, sex, and, if younger than
19, birth date;
hour and day when the work week begins;
total hours worked each workday and each work week;
total daily or weekly straight-time earning;
regular hourly pay rate for any week longer than 40 hours;
total overtime pay for the work week;
deductions from or additions to wages;
total wages paid each pay period; and
date of payment and pay period covered.
Keeping and storing records can be time-consuming and bothersome. But when
an employee questions a check, or when a federal investigator asks to examine
your pay registers, it’s a relief to have proof of what you’ve
Last summer I hired a 12-year-old. The parent begged me, and
because the parent gave written authorization, it was OK to hire
No one younger than 14 is allowed to work for you, regardless
of parental permission. Child labor provisions are part of the
FLSA. As long as you keep records of birth dates for all employees
younger than 19 and hire only those 16 and older, you probably
won’t have any problems. You may hire workers as young
as 14 and 15, but special hours and occupation restrictions apply.
Contact the labor department for more information.
You must pay teenage workers just as you pay adult workers. There are no special
pay provisions for minors.
I really don’t have to worry about violating the law. Violations can result in your having to pay back wages,
deal with penalties, and respond to lawsuits filed by employees.
The labor department seeks voluntary compliance from employers. Probably the
worst that can happen is that you will have to pay back wages accumulated over
the past two years. If you have violated child labor provisions, you will be
If you’re investigated a second time and violations are found, you are
subject to penalties for minimum wage, overtime, and child labor violations.
Rarely does an employer continue to violate the law after being penalized.
Should an employer willfully disregard the law, the labor department can seek
a court injunction and sue for back wages, liquidated damages, court costs,
and attorney fees.
Moreover, employees—former or current, individually or as a group—always
have the right to sue an employer for FLSA violations regardless of whether
the labor department determines the employer is in compliance.
Note: This article is reprinted from Summer
1995. It was reviewed by the U.S. Department of Labor.