Understanding exemptions under the FLSA

On Behalf of | Jan 21, 2022 | Labor And Employment Law |

The Fair Labor Standards Act (FLSA) is one of the most far-reaching of the laws passed during President Franklin Roosevelt’s New Deal. The statute was intended to ensure that employees received all of the employment benefits offered by federal law. Much of the financial burden of paying for these benefits falls on employers. Some classes of employees are not covered by the FLSA, and employers spend a great amount of time and energy attempting to place their employees into categories that do not qualify for FLSA benefits. Oftentimes, these efforts fail to have the desired effect, and employers can be assessed significant financial penalties for their misguided efforts. Therefore, employer should have a working understanding of the various exemptions provided by the FLSA.

Exempt vs. non-exempt

The basic distinction involves employees who are covered by the FLSA and employees who are not covered. The former group is commonly referred to as “non-exempt employees”. The latter group, comprising employee who are not covered by FLSA benefits, is referred to as “exempt employees.” The basic definition of exempt employees includes all management and administrative personnel. To satisfy this definition, the employer must demonstrate that the employees in this category actually participate in non-manual work concerning the management of the company and are compensated with a salary not less than $684/week. The employee’s primary duty must include the exercise of discretion and independent judgment regarding matters of significance. Non-exempt employees, that is, employees who are covered by FLSA benefits, comprise all other workers at the enterprise. The regulations of the Wage and Hour Division of the United States Department of Labor define other classes of exempt employees, and these regulations should be studied in detail to avoid incurring unnecessary penalties. Highly compensated employees, i.e., employees who are paid an annual compensation of at least $107,432 may also be classified as exempt from the FLSA.

Common benefits

Non-exempt employees are entitled to receive the prevailing minimum federal wage and to receive mandatory overtime at the rate of 1.5 times their ordinary wage for hours worked in excess of 40 in a standard work week. Non-exempt employees are also entitled to benefits under the Family and Medical Leave Act and similar statutes.

Penalties

If an employer improperly classifies employees in an attempt to evade the coverage of the FLSA, the company can be required to pay attorneys’ fees, back pay to the employees who were wrongly denied compensation, and fines; moreover, if the improper classification was determined to be willful, the court may impose jail terms on the individuals responsible for the violations.

Anyone who has questions about the application of the FLSA should contact an attorney who is knowledgeable about the application of the statute.

 

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