Overview: The Fair Labor Standards Act (FLSA) was enacted in 1938, during the depths of the Great Depression. Its goal was to lift the nation back into prosperity by spreading the workload among more workers, thereby alleviating unemployment, and by giving consumers more spending money, thereby spurring the economy.
To accomplish those goals, the law established two main requirements for employers:
Although the Great Depression has passed, the law continues to challenge employers. Few employers set out to deliberately violate FLSA regulations. Rather, most violations are the result of common mistakes, such as:
Employers also often get tripped up by variations between the FLSA regulations and state wage and hour laws. Sometimes the differences can be subtle; other times, they can be significant. But whatever the difference, employers must always comply with whichever law is more favorable to the employee.
Trends: The chances of getting away with noncompliance seem to get increasingly slim with every passing year.
Thousands of lawsuits are filed under the FLSA every year, more than any other federal employment law other than the Employee Retirement Income Security Act (ERISA). At the same time, the U.S. Department of Labor continues to enforce the FLSA regulations aggressively.
The potential liability for noncompliance can be costly, including back wages, attorney fees and civil penalties.
These damages are often multiplied by hundreds or even thousands of employees, since it is relatively easy for large groups of employees to file collective actions under the FLSA. This results in settlements or verdicts that can easily add up to millions of dollars for larger employers.
Author: Michael Cardman, Legal Editor
Updated to reflect significant changes to Seattle minimum wage requirements made under Seattle's Wage Theft Prevention and Harmonization Ordinance, effective January 1, 2016.
An employer's use of third-party management companies, independent contractors, staffing agencies or labor providers could constitute joint employment that makes both parties liable for any minimum wage and overtime violations, the US Department of Labor warns.
On December 17, 2015, Seattle Mayor Edward B. Murray signed the Wage Theft Prevention and Harmonization Ordinance amending the municipality's current labor laws addressing paid sick and safe time, job assistance, wage theft and minimum wage. Several sections of the Employment Law Manual, three Quick Reference charts, and three poster landing pages have been updated. Additionally, two new landing pages and four new Legal Timetable entries have been added.
The US Supreme Court has agreed to hear an appeal of Navarro v. Encino Motorcars, LLC, in which the 9th Circuit Court of Appeals ruled that auto dealership service advisors are not eligible for an Fair Labor Standards Act overtime exemption.
In fiscal year 2015, the US Department of Labor's Wage and Hour Division collected about $74 million in back wages owed to about 102,000 employees in the agriculture, day care, restaurants, garment manufacturing, guard services, health care, hotels and motels, janitorial services and temporary help sectors.
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HR guidance on complying with the Fair Labor Standards Act (FLSA). Support on following all the complex FLSA regulations and standards.