The Fair Labor Standards Act (FLSA), commonly known as the Fair Labor Act, was originally enacted in 1938 and revised in 2004 to ensure that American workers receive fair pay for their labor. Understanding FLSA overtime laws is essential for both employers and employees navigating wage and hour compliance.
Understanding Exempt vs. Non-Exempt Employee Classifications
For most workers, the FLSA overtime laws are fairly simple: Employees that meet all of the exemption criteria are paid a salary and are not eligible for overtime pay. These exempt employees usually include administrative, executive, or professional employees who are paid an annual salary in equal payments either by the week, bi-weekly, or monthly. Most hourly workers who do not perform managerial or discretionary duties are subject to the protection of the FLSA and are supposed to receive overtime pay.
The classification depends heavily on job duties, not just job titles. Exempt status is determined by a primary duty test based on a totality-of-circumstances analysis, requiring employees to meet both a salary basis and level test and a duties test. Anyone who does not meet these exemption criteria and works more than 40 hours in a workweek must receive overtime pay at a rate of at least one and one-half times their regular rate of pay under the Fair Labor Act.
How Modern Workplaces Complicate FLSA Classifications
In general, lower wage-earning hourly employees are classified as non-exempt workers who must be paid overtime. The FairPay Overtime Rules address employee classifications and salary thresholds. However, technology has blurred the clear distinctions between manual laborers and white collar workers. Some recent cases have shown that many workers now wearing “white collars” often grind out reports or other similar types of work with little or no discretionary power or managerial duties that were once the hallmark of “white collar” workers.
Common Misclassification Examples
Computer workers of various types have commonly not been paid overtime for the many extra hours they have spent working. Though they are often working with sophisticated equipment and programs, they are not exercising the independent judgment or applying the theoretical and practical knowledge in systems analysis, programming, or software engineering required for exempt status under the FLSA. Similarly in 2005, Starbucks was sued under the Fair Labor Act for unpaid overtime to assistant managers who they misclassified as exempt even though they spent the majority of their time performing barista duties just like the lower ranking baristas who were paid overtime.
Current FLSA Guidelines for Salaried Employees
Under the current Fair Labor Act guidelines, exempt employees usually include administrative, executive, or professional employees who are paid an annual salary in equal payments either by the week, bi-weekly, or monthly. These salaried employees work “off the clock” as defined by the FLSA overtime rules and do not usually receive overtime pay. To qualify for exemption, employees must meet both salary basis and job duty tests established by the Labor Department.
Special Cases: Stockbrokers and Commission-Based Workers
Well-compensated stockbrokers have traditionally been classified as exempt workers not eligible for overtime payment, however most stockbrokers are not salaried, receiving instead only commissions. Under the Fair Labor Act most exempt employees must receive salaries. The result was that many stock brokerages have settled with the plaintiffs even while maintaining their compliance with the law. In November of 2006 The Labor Department issued a non-legally binding opinion letter which stated that brokers are exempt under the FLSA. It remains to be seen how this will work out in the future.
Protecting Your Rights Under the FLSA
The evolution of the American workplace means that many employees that were traditionally not protected under the original FLSA are now receiving deserved compensation for the many overtime hours they put in. If you believe you have been misclassified as exempt or denied overtime pay you earned, experienced overtime lawyers can help evaluate your claim. Please complete our Case Evaluation Form as completely as possible and one of the Lore Firm’s experienced overtime lawyers will consult with you as to the merits of your case.
Michael Lore
Founding Attorney
Michael Lore is the founder of The Lore Law Firm with over 25 years of experience in labor and employment law. He handles cases ranging from unpaid overtime and class actions to executive contracts and personal injury matters in courts nationwide.
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