Nearly all employers operating in the United States or U. S. Territories have obligations under this statute.
The basic provisions seem simple enough; minimum wage, overtime compensation, required records, and child labor. However, this is an extremely complex law, and its regulations cause employers great consternation.
Many employers encounter difficulties with DOL because of failure to understand and properly apply key concepts, such as employment relationship, hours worked, and regular rate principles. Additionally, the application of exemptions is a major problem area for employers.
Back wages that are owed are collectible by DOL through several types of administrative enforcement, and DOL pursues litigation alternatives when the agency deems such action to be appropriate. If employees are not paid back wages under DOL supervision, or an offer of payment is declined, they may file suit.
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Exemptions
There are many FLSA exemptions. In fact, approximately thirty-nine sections of this law deal with exemptions from the overtime standards. Several of these exemption sections affect a large number of varied occupations; for example, the familiar "white collar" exemptions emanate from just two FLSA sections. Conversely, some of the exemption sections are so precisely worded that they apply to few employees.
Virtually all employers and their advisors are aware of the "white collar" exemptions. These exemptions have widespread application, but misclassifications are common (resulting in back wage liabilities). On the other hand, many employers may be able to claim exemption (for certain employees) under one of the more obscure sections of FLSA, but employers are rarely aware of those possibilities.
If an exemption is to be applied, it is important to make sure that it is valid under the employment scenario. Some of the exemptions have no tolerance (i.e., any nonexempt work during a workweek "defeats" the exemption and overtime pay is owed for that workweek). Other exemptions are much more forgiving of nonexempt activity. An employer's circumstances should be carefully evaluated as to exemption potential. Assumptions can lead to great difficulty and costs.
Courier and delivery services, as well as many other types of employment involving transportation of property or persons, have traditionally applied the "motor carrier" exemption to safety-affecting employees. That FLSA provision has undergone changes in recent years, causing loss of exemption in numerous cases. The most recent development is an interpretation by DOL of a related 2008 statute. Every employer who is claiming the Section 13(b)(1) exemption should become very familiar with the current rules. It is no longer adequate to rely on the 1971 regulations and other "guidance" from DOL that is at variance with the most recent motor carrier exemption fact sheet and Administrator's Field Assistance Bulletin.
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FLSA Overtime Compensation Provisions
Failure to understand and properly apply the FLSA overtime compensation rules (including regular rate concepts) when overtime pay is calculated will result in back wage liabilities. In fact, it is not unusual for an employer to face a "double whammy" (believing that overtime wages have been paid, only to find that - because of failure to precisely apply correct methodology - the overtime premium pay remains owed to employees).
In other instances, the deficiency merely results in additional overtime pay that is owed. This is a less costly type of infraction, as the employer receives credit for overtime paid; but the additional overtime compensation owed is nevertheless an unexpected expense.
"Comp time" is often applied by employers to nonexempt employees. When this results in the averaging of overtime hours among two or more workweeks (i.e., failure to pay overtime based on each workweek separately), it is not a permitted method of dealing with overtime obligations. Each workweek "stands alone" for overtime calculation purposes, unless an applicable exemption allows an alternative method. However, rescheduling of hours to be worked by employees is an employer prerogative and is not equivalent to "comp time."
FLSA authorizes public agencies to utilize a compensatory time pay plan. There are restrictions, however.
Certain pay plans lend themselves to inadvertent errors. The arrangement may appear to be beneficial to employees, yet overtime compensation is not being calculated as required by the overtime regulation. An experienced FLSA consultant will know how to spot deficiencies and explain to you how to correct them.
The overtime compensation provisions are quite convoluted and most employers will save time and money by conferring with an advisor who fully comprehends the regulatory concepts and principles that must be applied to actual pay plans. Seeking appropriate assistance enables you or your client to avoid hassles and expenses.
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