Overview: Determining if an employee should be classified as an independent contractor or an employee under the FLSA and IRS is a perennial issue that continues to confound many workplaces; misclassification is surprisingly common and results in costly litigation.
To further complicate matters, properly classifying an employee regarding their exempt or non-exempt status befuddles many HR professionals; employee misclassification similarly results in a long list of costly litigation, many resulting in companies owing years of back pay for overtime due to having improperly classified employees as exempt when the proper employee classification should have been non-exempt (and thereby eligible for overtime).
Other FLSA regulations and state compliance challenges pertaining to employee compensation laws include deciding whether employees must be paid for certain activities, such as meal and rest breaks or training. minimum wage laws, overtime laws, child labor, and recordkeeping are additional aspects of FLSA compliance, most of which have variations by state.
Trends: Of concern to employers, not only are employees continuing to file FLSA lawsuits at a rapid pace but also the U.S. Department of Labor has stepped up its enforcement of employee compensation laws. So it's more important than ever to ensure compliance with this law.
Author: Michael Cardman, Legal Editor
Updated to reflect information on a court ruling that the tip credit does not apply to restaurant delivery drivers.
Updated to reflect information on a court ruling rejecting daily overtime on top of weekly overtime for certain employees.
Paying an employee a lot of money does not necessarily guarantee that he will be exempt from overtime requirements, as the 11th Circuit Court of Appeals' ruling in Freixa v. Prestige Cruise Servs. illustrates.
For the time being, employers will no longer need to comply with the US Department of Labor's overtime rule, which had been scheduled to take effect December 1, 2016. However, there remains a possibility the rule could be resurrected.
Updated to reflect a new law clarifying the compensability of preliminary and postliminary activities, effective April 5, 2017.
Many states have passed laws that prohibit local governments from adopting, enforcing or administering an ordinance or local resolution on certain issues, such as minimum wage or employee leaves.
HR and legal considerations for employers regarding employee compensation laws. Support on following rules and regulations regarding this topic.