Overview: The Fair Labor Standards Act (FLSA) was written in 1938, at a time when manufacturing and agriculture dominated the American economy. The law's structure for classifying employees as exempt or nonexempt from minimum wage and overtime requirements reflects that simpler time. Although it has been updated periodically in the decades since, the FLSA's classification scheme is often difficult to apply to more modern service- and information-related jobs.
One type of employee that has proven especially difficult to fit into the employee classification structure – and has also been the plaintiff in hundreds of lawsuits – is managers. Today's lean, flexible workplace often necessitates that managers pitch in and perform nonexempt work, rather than stand around with a clipboard in hand directing other employees. The more nonexempt work they do, the more likely it is they need to be paid overtime.
Complicating matters is the fact that employees' job duties change frequently. Employers often make the mistake of classifying all employees with a particular job title as exempt. When changes in the workplace necessitate changes in an employee's job duties, that classification can be jeopardized. HR is well-positioned to stay on top of these changes, and must remember that FLSA classification is an ongoing challenge, not a one-time task.
In addition, it's important that employers follow state requirements regarding employee classification.
Trends: FLSA regulations effective December 1, 2016, will raise the minimum salary for most FLSA overtime exemptions from $455 per week to $913 per week. The minimum salary level will be automatically adjusted every three years based on the 40th percentile level of full-time salaried workers in the lowest-wage Census region. In addition, the regulations will allow an employer to satisfy up to 10% of the salary minimum by nondiscretionary bonuses, incentives and commissions that are paid quarterly or more frequently.
Author: Michael Cardman, Legal Editor
The growth of the so-called "gig economy" has brought with it a host of misclassification claims. On this podcast, Cleveland, Ohio employment attorney Todd Lebowitz discusses those issues plus the most common mistake employers are making.
Updated to reflect forthcoming amendments to the workers' compensation law.
Updated to reflect the repeal of the overtime exemption for parking lot and garage attendants under the Wage Theft Prevention Clarification and Overtime Fairness Amendment Act of 2016, effective April 7, 2017.
New York City freelancers may now enforce their rights under a new law, and the City as well as the Freelancers Union have engaged in a communications campaign to ensure gig workers are aware of their legal options.
Updated to reflect independent contractor requirements under the New York City Freelance Isn't Free Act, effective May 15, 2017.
Effective July 1, 2017, drivers for Florida ride-share companies will be considered independent contractors and not employees as long as certain conditions are met.
Updated to reflect forthcoming legislation providing that drivers for ride-sharing companies will be independent contractors and not employees if certain conditions are met.
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.
HR guidance on complying with the FLSA and state employee classification requirements. Support on following rules and regulations regarding this topic.