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: The US Department of Labor (DOL) is expected to issue new employee classification regulations that will raise the minimum salary for most exemptions.
Author: Michael Cardman, Legal Editor
H.R. 3441, known as the "Save Local Business Act," would amend the National Labor Relations Act (NLRA) and the Fair Labor Standards Act (FLSA) to narrow the circumstances under which an employer will be considered a joint employer.
Updated to reflect the repeal of the minimum wage and overtime exemption for certain switchboard operators, effective September 13, 2017.
Updated to include proposed rules under the forthcoming New York City Fair Work Practices ordinances.
The US Department of Labor is appealing the permanent injunction blocking the Obama administration's 2016 overtime rule not to uphold the $47,476 salary threshold but rather to preserve its authority to set a lower salary threshold.
Enhanced to improve the comprehensiveness, organization and scope of coverage.
The Illinois Department of Labor will create an online employee misclassification referral system for employees who claim they were misclassified as independent contractors will be able to file a complaint to multiple agencies at once.
The US District Court for the Eastern District of Texas ruled that the US Department of Labor (DOL) exceeded its authority when it raised the minimum salary for most overtime-exempt employees to $47,476 last year.
Updated to reflect information on a 7th Circuit ruling regarding the US Department of Labor's six-factor test to determine whether an intern or trainee qualifies as an employee.
HR guidance on complying with the FLSA and state employee classification requirements.