FLSA COMPLIANCE

FLSA LAW


When asked what FLSA compliance meant, the employee said "huh I don't know". Then I asked if she even knew what FLSA was?


Unfortunately, like most career seekers and employees she had not even heard of the Fair Labor Standards Act (FLSA).


flsacompliance The FLSA sets guidelines for all employers whether public or private concerning minimum wage, overtime pay, record keeping and youth employment. The federal Fair Labor Standards Act also affects Federal, State, and Local government employees.


Our employers have a legal duty to pay "covered" employees that aren't "exempt" the minimum wage and overtime pay equal to time and one half of our regular pay. What does "covered" and "exempt" mean? The term covered involves whether an employee is classified as "exempt" or "nonexempt". If an employee is non-exempt he is protected or "covered" under FLSA. If an employee is "exempt" she is generally not "covered" or protected by FLSA regulations.


Employers typically don't have to pay overtime or minimum wage to "exempt" workers thus they are not "covered" by FLSA guidelines. According to the U.S. (DOL) Department Of Labor, employees of companies that engage in "interstate commerce" are covered under FLSA. For example, employees ordering business supplies or making sales to customers and vendors in another state are conducting "interstate commerce".


Because of this FLSA is different from other employment laws that require an employer to have a certain number of employees to be covered. The Family Medical Leave Act (FMLA) mandates a minimum of 50 employees living within 75 miles of work to be covered. FLSA isn't locked in to a company having a certain number employees. Your could work for a company that has 500 or 5 employees and still be afforded protection under FLSA guidelines.


flsa compliance


Fair Labor Standards Act



Sometimes understanding laws that protect employees can be challenging. However, I have proven by my own employment experiences that any employee or job seeker that takes the time and puts forth the effort can learn basic employee rights. There are certain jobs that are excluded from FLSA rules. There are some jobs that are blocked from any FLSA Act regulations involving overtime pay. A lot of agriculture and movie theater workers are excluded from FLSA overtime pay rules.


Typically, jobs covered by other federal employment laws are excluded from FLSA protection. Many railroad employees who are covered by the Railway Labor Act and truckers are subject to Motor Carriers Act guidelines and not the FLSA. Besides the issue of exclusion, most FLSA "exempt" employees will...


  • make a minimum $23,600 yearly or $455 weekly (salary test)
  • be classified as "salaried" (salary basis test)
  • perform "exempt" job duties (duties test)

As a general rule for FLSA classification employees must meet all "three" tests to be exempt from being paid overtime.

The salary test
If you make less than $455 per week or less than $23,600 per year you are a "non exempt employee". Employee making over $100,000 per year are generally exempt. Computer professionals will be presumed to be non-exempt if earning less than $27.63/hour.

The salary basis test
The salary is preset, is same every pay period for any work performed. The salary is not reduced by the quality or quantity or work. The salary is paid for the whole week when the employee works only part of the week. It doesn't matter if the salary is called "hourly", as long as you are paid a "guaranteed minimum".

The duties test
The exact functions of a job affect whether the job is exempt from FLSA. FLSA compliance exemptions are restricted to employees doing relatively "high-level work". As of this writing there are six categories of exempt duties. They are executive, administrative, learned professional, creative professional, outside sales, and computer professional. For FLSA compliance employers and employees must understand how each of these categories of positions are "exempt".


flsa compliance


DOL FLSA



The Department of Labor On August 23, 2004 updated exemptions for the federal overtime pay laws. This exemption from overtime laws and the minimum wage (doesn't change child labor or equal pay laws) affect the following positions with the requirement for the exemption;
Administrative
Salary:
At least $455 weekly
Duties:
Employee performs office work that's non-manual; is directly related to the operations of the business and its customers; uses independent judgment and discretion involving important business issues.

Executive
Salary:
At least $455 weekly
Duties:
Main function is to supervise a specific department or subdivision of the enterprise; as a rule and routinely manages two or more employees; authority to effect employment status including hiring, terminating, demoting, promoting, reassigning employees; significant influence in making recommendations affecting employees status

Learned Professional
Salary:
At least $455 weekly
Duties:
Job duties involve advanced knowledge, mainly intellectual in nature that requires consistent exercise of judgment and discretion; must be in career fields of learning or science; The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction

Creative Professional
Salary:
At least $455 weekly
Duties:
The employee's work involves imagination, invention, originality or talent in a recoginzed field of creative or artistic endeavor

Computer Professional
Salary:
At least $455 weekly or $27.63 per hour
Duties:
The employee will be titled as a computer systems analyst, programmer, software engineer or other similarly skilled worker with these job functions; systems analysis techniques and procedures, including consulting with users to determine hardware, software, or system functional specifications; design, development, documentation, analysis, creation,

testing, or modification of computer systems or programs including prototypes based on user or system design specifications; design, documentation, testing, creation or modification of computer programs related to machine operating systems; a combination of the duties stated above, which requires the same level of skill; usually requires the expertise and skill to work independently

Outside Sales
Salary:
Does not apply
Duties:
  • The employee’s primary duty must be making sales (as defined in the FLSA), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and

  • The employee must be customarily and regularly engaged away from the employer’s place or places of business


Highly Compensated Employees
Salary:
Total annual compensation of $100,000 or more (which must include at least $455 a week paid on a salary or fee basis)
Duties:
  • Employee performs office or non-manual work

  • Customarily and regularly performs at least one of the duties of an exempt executive, administrative, or professional employee identified in the standard tests for exemption. Total annual compensation does not include credit for board, lodging or other facilities; payments for medical or life insurance; or contributions to retirement plans or fringe benefits.


flsa compliance


FLSA CATEGORY

When the U.S. Department of Labor (DOL) recently changed the Fair Labor Standards Act (FLSA) set of rules involving overtime pay, the importance of job descriptions changed as well. That meant employers could not just rely on what the workers job was "called". Exempt and non-exempt job descriptions were redefined from the perception of "blue collar" or "white collar".


The job title by itself can't determine if the employment status is FLSA exempt. The U.S. Department Of Labor says, “The exempt or nonexempt status of any particular employee must be determined on the basis of whether the employee's salary and duties meet the requirements of the regulations.” No job description is 100% accurate. Manager miscommunication or not informing HR when reclassifying and changing an employee's job title can cause FLSA violations.


FLSA compliance means job descriptions should specifically provide the following info;

  • What does job require or entail
  • Why the employee performs the essential job function
  • What is the education, qualifications or necessary talents and abilities required for the position
  • How are the job duties performed
  • Where are the job duties performed
  • What time and how often are the job duties performed

FLSA compliance provides specific examples of job titles within each exempt category;
Executive
CEO,manager,department director,business operations manager,accounting manager

Administrative
grants specialist,HR generalist,internal auditor

Learned Professional
physicians (M.D.),dentist,chemist,nurse,teacher,lawyer,clinical social worker

Creative Professional
writers,musicians,actors,composers,painters

Computer Porfessional
systems analyst,software engineer

Outside Sales
contract negotiator,salesman

Highly Compensated Employees
same as Executive,Administrative and Professional,paid over $100,000 yearly


flsa compliance


Fair Labor Standards Act Overtime



To understand FLSA compliance job seekers and employees should be aware of what's called FLSA "safe harbor" involving overtime labor law. This DOL policy keeps employers that make inaccurate deductions from FLSA exempt employees salaries from losing the employee's FLSA exempt status. FLSA compliance under "safe harbor" requires your company to correct the error and create a policy prohibiting improper deductions. For FLSA compliance employers must also create ways for employees to address complaints.


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