Fair Labor Standards Act (FLSA): Know the Rules and Avoid Litigation

Fair Labor Standards Act (FLSA)

Non-exempt vs. Exempt Employees

2nd in a 4-part series

In Common Mistakes Employers Make, we got a brief introduction to the Fair Labor Standards Act (FLSA), and reviewed mistakes made by employers – mistakes that often lead to costly litigation and even more costly legal penalties and settlements.

So, what’s the first thing you need to know?  Before you can make sure your recordkeeping standards are on par with the FLSA guidelines, you need to understand your employees.  The FLSA has different requirements for non-exempt vs. exempt employees, but if you aren’t sure which of your employees fall into each category, you could get into trouble.

Exempt Employees

Many companies are under the mistaken impression that any salaried employee is “exempt” – but this is simply not the case.  In fact, many salaried employees are non-exempt – a fact that can lead to problems if you don’t know the difference.

According to the FLSA, an “exempt” employee is one that is not required to receive either overtime or minimum wage provisions, or in some cases, both.  Exempt employees are not under the protection of the FLSA, and may include people working in “white collar” industries, farm hands, domestic labourers, some commissioned sales people, seasonal or recreational workers, and employees working in transportation or news media.

Non-exempt Employees

The Fair Labor Standards Act (FLSA) is pretty specific about what constitutes a “non-exempt” employee.  The rules are lengthy and complex, and the job content must undergo a series of validation tests to determine whether the position qualifies.

Non-exempt employees are protected under the FLSA, and are entitled to receive overtime wages for any hours exceeding 40 in a work week.

The FLSA does not require vacation, holiday, severance, or sick leave, nor does it specify any rules for meals or other breaks throughout the work day.  Other than establishing overtime pay, the FLSA does not require any type of extra premium pay for workers who report on weekends or holidays.

The descriptions above should help you started; however, it’s a good idea to follow up with an attorney who can advise you on the finer points.

Come back soon for our next installment, Know Your FLSA: Records and Requirements.

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