The Fair Labor Standards Act & Your Business - What You Need to Know


1. The Fair Labor Standards Act (“FLSA”) is the federal law which mandates a minimum
wage of $7.25/hour and payment of 1.5 times the regular hourly wage for all hours
worked in excess of 40 in a workweek. The FLSA also imposes recordkeeping
requirements, restrictions on child labor, and requires equal pay for men and
women who perform the same job.

2. The FLSA provides for certain exemptions from the overtime requirement. All of
these exemptions require that the exempt employee perform specific types of
duties set forth in the regulations. Titles are irrelevant if the employee does not
meet the applicable duties test.

3. For most of these exemptions, the employee must also be paid a minimum salary in
addition to meeting the applicable duties test. That minimum weekly salary is about
to become to $913 ($47,476/year) effective December 1, 2016. For the Highly Compensated Employee exemption, the minimum annual compensation increases from $100,000 per year to $134,004.

4. For the first time, up to 10% of this threshold income can come from nondiscretionary bonuses and incentive payments, paid at least quarterly.

5. The main exemptions under the FLSA are:

a. Executive
b. Administrative
c. Professional
d. Computer Employees
e. Outside Sales
f. Highly Compensated Employees
6. The basic duties test for each of these exemptions is set forth on the attached Fact Sheet from the U.S. Department of Labor.

7. The consequences of getting this wrong can be severe:

a. The FLSA provides for recovery of attorney’s fees by a successful plaintiff and
unpaid overtime for up to three years prior to the filing of their lawsuit.
b. Successful claimants also get liquidated damages – i.e. an award that doubles
their actual unpaid overtime.
c. If an employee is clearly mis-classified, your options are few and the sooner
you settle the case, the better.

8. We recommend that you implement job descriptions for each company position to protect your business going forward.

For more facts about the FLSA, click here or contact Trusted Counsel (in counsel with Charlie Hawkins) at