Fact Sheet #29: Fair Labor Standards Act Amendments of 1996
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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 at least a minimum wage and overtime pay at time and one-half the regular rate of pay after 40 hours in a workweek. In addition, the law includes child labor and recordkeeping provisions. In August 1996, the Fair Labor Standards Act was amended to provide a two-step increase in the minimum wage and a subminimum rate for youth during their first 90 days of employment. The amendments also change certain provisions of the FLSA with respect to the tip credit that can be claimed by employers of "tipped employees"; an exemption for certain computer professionals; and home-to-work travel time in employer-provided vehicles. The amendments are summarized below.

MINIMUM WAGE

The FLSA minimum wage increases to $4.75 an hour on October 1, 1996, and to $5.15 an hour on September 1, 1997.

YOUTH SUBMINIMUM WAGE

A subminimum wage -- $4.25 an hour -- is established for employees under 20 years of age during their first 90 consecutive calendar days of employment with an employer. Employers are prohibited from displacing employees in order to hire youth at the subminimum wage. Also prohibited are partial displacements such as reducing employees' hours, wages, or employment benefits.

TIP CREDIT

An employer may credit a certain amount of the tips received by tipped employees (e.g., waiters and waitresses) against the employer's minimum wage obligation when certain conditions are met. The law now sets the employer's cash wage obligation at not less than $2.13 an hour. This replaces the former provision requiring that tipped employees be paid at least 50 percent of the minimum wage in cash. However, if an employee's tips combined with the employer's cash wage of $2.13 an hour do not equal the minimum hourly wage, the employer must make up the difference.

COMPUTER EXEMPTION

The exemption from overtime pay for certain computer professionals now exempts these workers if they are paid at least $27.63 an hour. This replaces the former requirement that they be paid an hourly rate of at least 6½ times the minimum wage.

TRAVEL TIME IN EMPLOYER VEHICLES

Time spent in home-to-work travel by an employee in an employer-provided vehicle, or in activities performed by an employee which are incidental to the use of the vehicle for commuting, is not "hours worked" and, therefore, does not have to be paid. This provision applies only if the travel is within the normal commuting area for the employer's business and the use of the vehicle is subject to an agreement between the employer and the employee or the employee's representative.

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.

For additional information, visit our Wage-Hour website: http://www.wagehour.dol.gov and/or call our Wage-Hour toll-free information and helpline, available 8am to 5pm in your time zone, 1-866-4USWAGE (1-866-487-9243).