How to Comply with FLSA Overtime Regulations
As an employer, you’ve certainly heard of the Fair Labor Standards Act (FLSA). This regulation sets working standards that affect eligible employees, including:
- Minimum wage
- Child labor
- Nursing mothers
It’s vital to understand FLSA overtime regulations and other requirements and whether you are compliant. Let’s explore some of the top FLSA regulations every employer should know.
As of January 1, 2020, the FLSA overtime regulation threshold for salaried employees under the so-called “white collar exemptions” was raised from $455 per week ($23,600 a year) to $684 per week ($35,568 a year). This means that an employee who didn’t qualify for overtime pay last year could this year.
Paying employees who qualify for overtime is important (and the law). But there are different categories of exempt employees to be aware of to avoid misclassification.
This exemption applies to employees who work directly with general business operations of a company, including human resources, marketing, purchasing, accounting, budgeting, and legal compliance.
Employees working in professions that require an advanced degree likely fall under this exemption. Examples include lawyers, dentists, professors, and engineers.
Reserved for high-level managerial employees, the executive exemption applies to employees who interview, hire, and train employees. They might also control the budget or mandate employee processes.
Outside sales exemption
If your business has outside sales members that regularly work remote and sell goods, insurance, stocks, bonds, or secure contracts for your business’ services or facilities, they may fall into this exemption.
Understanding different categories of exempt employees is important when following FLSA overtime regulations. Here’s an example:
Let’s say you own a medical supply factory and the following employees work for you. First, there is John who manages the floor. Consequently, he hires employees and establishes safety protocols and makes $75,000 a year. Therefore, John falls under the executive exemption.
Next, Matt is an engineer in the same department and makes $65,000 per year. Accordingly, Matt falls under the professional exemption.
Then we have Mary, a purchasing manager who maintains vendor relationships and makes purchasing decisions for the factory. She earns $50,000 a year and falls under the administrative exemption.
Mary has an assistant named Sarah. As part of her duties, Sarah often comes in on the weekends to catch up on paperwork. She makes $30,000 a year and did not qualify for overtime before the new 2020 threshold. But with the changes, she does qualify for overtime pay on those long weekends.
Lastly, we have Gary who travels the country discussing your medical products with healthcare professionals in the hopes of getting them to sign a contract. He would fall into the outside sales exemption and be paid for fulfilling his duties rather than the hours he works.
Since July 24, 2009, the nationwide minimum wage has stayed put at $7.25 an hour. However, most states and even several cities require employers to pay a higher minimum wage. Therefore, it’s best to check with local resources to determine local pay requirements for your business. You can check your state here.
There are a few exceptions to the federal minimum wage law. For example, employees who receive gratuities, like bartenders or servers, are still entitled to a minimum wage of at least $7.25 but as a combined total between hourly wage and tips. Apprentices and full-time students also fall under different minimum wage requirements.
Employers are often surprised to learn the FLSA does not provide guidelines on rest breaks or meal breaks for employees. Instead, this is determined at the state level. Moreover, some states even leave the choice to provide breaks entirely up to employers. Consequently, you should look for special regulations for younger workers when researching your state’s unique guidelines for paid and unpaid breaks. This includes both those under 18 and those under 15.
The FLSA requires employers to keep certain records for non-exempt workers. The following list is not exhaustive but can point you in the right direction for your own recordkeeping:
- Employee’s full name
- Social security number
- Birthdate (if younger than 19)
- Hours worked each day and total hours worked each workweek
- Total wages paid each pay period
- Total overtime (if any)
Also included in this regulation is a requirement that employers provide their employed nursing mothers reasonable break time to express milk for her nursing child. Also, the area provided must be shielded from view and free from intrusion from the public and other employees. Therefore, a bathroom does not meet these requirements. Additionally, nursing breaks must be provided for the first year after a nursing child’s birth.
Compliancy and FLSA Overtime Regulations
You should also know that FLSA requirements aren’t optional. Consequently, employers who willfully or repeatedly fail to remain compliant with FLSA overtime regulations and other requirements can be fined up to $1,000 per violation.
Therefore, it’s important to be sure of your requirements as an employer. In other words, don’t assume you’re compliant. Reach out for confirmation before you find yourself in legal hot water.
If you do not have an HR PARTNER, Tandem HR is happy to help.
Give us a call today at (630) 928-0510.