The Fair Labor Standards Act (FLSA) was enacted in 1938 to provide for the establishment of fair labor standards in employment in and affecting interstate commerce. Important things to know about the FLSA is that it generally requires employees be paid a minimum wage of $7.25/hour, and overtime at the rate of 1 1/2 times the hourly pay rate for all hours exceeding 40 hours a week.
There are 5 major exemptions for “white collar” workers. The FLSA exempts bona fide executive, administrative, professional, outside sales, certain computer employees and highly compensated employees (over $100,000) from its minimum wage, overtime and timekeeping requirements. The burden is on the employer, not the employee, to prove the applicability of exemptions. The exemptions generally focus on the primary duties of the exempt employees.
While the FLSA was enacted to protect “blue collar” workers from being taken advantage of by their employers, FLSA investigations, audits and litigation can become a literal “house of horrors” for employers and industries found to be in non-compliance. It is essential to maintain proper records, and to properly classify the workers of an employer. The failure to do so can be an expensive or business closing event for noncompliant employers. The best practice is to have an experienced attorney in this field review employer records to insure proper compliance and documentation is kept.