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
Updated to reflect the Illinois Service Member Employment and Reemployment Rights Act, effective January 1, 2019.
Updated to reflect the 2019 annual inflation adjustment to the minimum salaries for overtime-exempt executive, administrative and professional employees, effective January 1, 2019.
Updated to reflect adjustments to the minimum salaries for executive employees, administrative employees and professional employees, and to the minimum pay for computer professionals and physicians and surgeons paid an hourly rate, effective January 1, 2019.
Updated to reflect the 2019 increase in the minimum salary for overtime-exempt executive / supervisory employees, effective January 1, 2019.
Updated to reflect the 2019 increase in the minimum salary for overtime-exempt executive, administrative and professional employees, effective January 1, 2019.
Updated to reflect the increase in the minimum salaries for overtime-exempt executive and administrative employees, effective December 31, 2018.
Use this workflow to navigate the process of hiring an independent contractor.
Updated to reflect amendments regarding workers' compensation, effective November 11, 2018.
HR guidance on complying with the FLSA and state employee classification requirements.