HR Support on FLSA Regulations Compliance

Editor's Note: This old law continues to trouble employers with its complexities and ambiguities.

Michael CardmanOverview: 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:

  • Minimum Wage Laws: All nonexempt employees must be paid a minimum wage; and
  • Overtime Laws: All nonexempt employees must receive one and one-half times their regular rate of overtime pay for hours worked beyond 40 in a workweek.

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:

  • Misclassifying nonexempt employees as exempt;
  • Failing to count all hours worked, including certain break periods, waiting time, on-call time, travel time and activities before and after a shift; and
  • Failing to properly calculate overtime.

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

New and Updated