Government regulation affects pay structure in the areas of equal employment opportunity, minimum wages, and pay for overtime and prevailing wages for federal contractors. Employers may not base differences in pay on an employee's age, sex, race, or other protected status. Any pay differences has to be tied to such business-related considerations as job responsibilities or performance. The goal is for employers to provide equal pay for equal work. Job descriptions, job structures, and pay structures can help organizations demonstrate that they are upholding these laws.
In the United States, employers must pay at least the minimum wage established by law. Minimum wage is the lowest amount that employers may pay under federal or state law, stated as an amount of pay per hour. Fair Labor Standards Act (FLSA) is federal law that establishes a minimum wage and requirements for overtime pay and child labor.
Another requirement of the FLSA is that employers must pay higher wages for overtime, defined as hours worked beyond 40 hours per week.
The overtime rate under the FLSA is one and a half times the employee's usual hourly rate, including any bonuses and piece-rate payments (amounts paid per item produced). The overtime rate applies to the hours worked beyond 40 in one week.
In the early years of the Industrial Revolution, employers could pay low wages by hiring children. The FLSA now sharply restricts the use of child labor, with the aim of protecting children's health, safety, and educational opportunities. Two additional federal laws, the Davis-Bacon Act of 1931 and the Walsh-Healy Public Contracts Act of 1936, govern pay policies of federal contractors. Under these laws, federal contractors must pay their employees at rates at least equal to the prevailing wages in the area. The calculation of prevailing rates must be based on 30%...