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Fair Labor Standards Act: Overview

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in Employment Law,Human Resources

The Fair Labor Standards Act (FLSA) covers the federal minimum wage, rules on overtime pay and child labor regulations.

You must comply with the FLSA’s provisions if your organization is engaged in commerce, has annual gross income of $500,000, is a public agency or operates a hospital, health care facility or school. 

Even employers that don’t meet the above criteria may find that an employee during some workweeks engages in interstate commerce: i.e., takes or makes calls to another state or sends or receives e-mails interstate. Also, be aware that the child labor and minimum-wage provisions apply to virtually every employer.

The FLSA covers domestic service workers (such as day workers, housekeepers, chauffeurs, cooks and full-time baby sitters) if they receive at least $1,700 in cash wages from their employer in a calendar year or work more than eight hours a week for one or more employers. (Starting in 2015, home health aides will also be covered.)

Many executive, professional, administrative and outside sales personnel may be exempt from some provisions of the FLSA provided they meet certain standards in the DOL's overtime regulations, which it revised in 2004. Those employers that aren’t in compliance with the revised rules may face lawsuits from workers entitled to overtime, as well as penalties. Caution: Since 2010, the DOL has increased its investigative force by 33%, meaning employers can expect more scrutiny.

Classifying workers

Every employer should regularly review job descriptions to ensure all workers are classified properly. You could do this annually in conjunction with performance appraisals for current employees. Compare their job descriptions to the exemptions allowed by the Labor Department. Then specify in every job description whether the position is exempt from overtime or is hourly, nonexempt.

When you create a new position, consider the implications of the classifications. If you can design the job to fit an exemption, do so. That may mean raising the minimum salary to meet the test or adding a minimum education requirement that qualifies the position for the administrative or professional exemption.

Also, make sure that supervisors are well versed in the FLSA and overtime rules. The Labor Department recently created a task force to ensure that workers who are owed overtime receive every penny they’re entitled to. Don’t make yourself a needless target of a Labor audit or investigation.

Also, some states have more generous overtime rules than the federal ones. So be sure to check with your state labor department before making any changes to employee overtime classifications.

Caution: The FLSA forbids employers from retaliating against workers because they’ve “filed any complaint” about their pay, perks or working conditions. In 2011, the U.S. Supreme Court ruled that such complaints don’t need to be in writing to be considered “protected activity.” (Kasten v. Saint-Gobain Performance Plastics, No. 09-834) Some lower courts had earlier ruled that the FLSA’s anti-retaliation provision doesn’t cover oral complaints.

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