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This fact sheet contains general information on how the FLSA applies to employees
of hotels and motels.
Characteristics
The primary function of a hotel or motel is to provide lodging facilities to
the general public. In addition, most hotels or motels provide food to guests
and many sell alcoholic beverages. These establishments may also earn revenue
from other activities such as valet services offering cleaning and laundering
of garments for guests, news stands, and renting out rooms for meetings, lectures,
trade exhibits, and weddings.
Coverage
The FLSA includes two methods for applying its provisions to employees of hotels
or motels. The "enterprise" basis of coverage provides that if the employer’s
annual dollar volume of sales or business is $500,000 or more, whether from
only a single establishment or from an enterprise with multiple establishments,
and the employer has at least two employees engaged in commerce or in the production
of goods for commerce or handling such goods, all employees of the enterprise
are covered by the FLSA. The FLSA also provides an "individual employee" basis
of coverage that applies even if the annual volume of sales or business is less
than $500,000. Employees may still be covered if they individually engage in
interstate commerce or produce goods for interstate commerce. Interstate commerce
includes such activities as transacting business across state lines via interstate
telephone calls or the U. S. Mail, ordering or receiving goods from an out-of-state
supplier, or handling the accounting or bookkeeping for such activities. It
would also include handling credit card transactions that involve the interstate
banking and finance systems.
Requirements
Minimum Wage: Covered workers must be paid at least the minimum wage,
currently $5.15 an hour. Wages are due on the regular payday for the pay period
covered. Deductions from wages for items such as required uniforms are illegal
if they reduce the employee's wages below the minimum wage or cut into any overtime
pay. Tips may be included as part of wages for employees who regularly receive
more than $30 a month in tips. However, the employer must pay at least $2.13
an hour in direct wages to tipped employees and make sure that the amount of
tips actually received by tipped employees is enough to meet the remainder of
the minimum wage (or otherwise pay the difference in wages).
Overtime: Overtime must be paid at not less than one and one-half times
the employee's regular rate of pay for each hour worked in excess of 40 a week.
A tipped employee’s regular rate for overtime purposes must include the amount
of tip credit claimed by the employer, plus the reasonable cost or fair value
of any facilities furnished to the employee as allowed by the FLSA (such as
the cost of meals), and the cash wages including any commissions and certain
bonuses paid by the employer.
Tips: Tipped employees are those who customarily and regularly receive
more than $30 a month in tips. If the employer elects to claim a tip credit,
the employer must inform employees in advance, advise them of the amount of
tip credit to be claimed, and pay them at least the applicable minimum wage
when wages and tips are combined. Also, employees must retain all of their tips,
except in the case of valid tip pool arrangements.
Youth Minimum Wage: Employers may pay a youth minimum wage of not less
that $4.25 an hour to employees under 20 years old during the first 90 consecutive
calendar days after initial employment by their employer. The law contains certain
prohibitions against employers displacing any employee in order to hire someone
at the youth minimum wage.
Child Labor: The FLSA Child Labor regulations forbid the employment
of minors under age 14 in non-agricultural jobs, restrict the hours of work
and limit the occupations for 14- and 15-year olds, and forbid the employment
of minors under age 18 in hazardous occupations.
Records: The FLSA requires employers to keep records of wages, hours,
and other items, as specified in the record keeping regulations, 29
CFR Part 516.
Exemptions: Section 13(a)(l) of the FLSA exempts bona fide executive,
administrative, professional, and outside sales employees from the minimum wage
and overtime pay requirements of the FLSA, if they meet certain tests regarding
their job duties and responsibilities and are compensated "on a salary basis"
at not less than stated amounts. Further information concerning these exemptions
can be found in Regulations, 29
CFR Part 541.
Typical Problems Causing Non-Compliance Include:
- Employees placed on salary and classified as exempt without regard to the
duties performed or the percentage of time spent in non-exempt duties.
- Failure to maintain records of, or pay overtime to, non-exempt salaried
employees.
- Failure to record and pay employees for all hours suffered or permitted
to be worked.
- Illegal deductions from pay for items like cash register shortages, uniforms,
errors, bad checks, etc.
- Failure to pay the correct overtime rate to tipped employees, or failure
to pay the correct overtime rate that includes all service charges, commissions,
bonuses and all other remuneration.
- Tips not sufficient to make up the difference between the employer's direct
wage obligation and the minimum wage; employees receiving tips only; and sharing
a portion of tipped employees’ tips with employees who are not eligible because
they do not normally receive tips.
- Paying straight time for hours worked beyond 40 per week instead of required
overtime pay, or averaging the number of hours worked over two or more weeks
to avoid overtime pay.
Where to Obtain Additional Information
This publication is for general information and is not to be considered in
the same light as official statements of position contained in the regulations.
Copies of Wage and Hour publications may be obtained from the nearest office
of the Wage and Hour Division. To locate the nearest office, telephone our toll-free
information and helpline at 1-866-4USWAGE (1-866-487-9243) between 8:00 am and
5:00 pm in your local time zone, or log onto our web site for a nationwide listing
of offices at http://www.dol.gov/esa/contacts/whd/america2.htm
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