In 2021, the U.S. Department of Labor (DOL) collected a whopping $234 million in back wages for nearly 200,000 employees who the DOL determined were not paid in accordance with the Fair Labor Standards Act (FLSA). Experts report that more than 6,000 lawsuits alleging FLSA violations are filed each year in federal courts throughout the country, and that private settlements of FLSA lawsuits cost employers hundreds of millions each year. These figures confirm what every human resources professional already knows: misclassification of employees under the FLSA can be a costly mistake. In this alert, we highlight some of the most common mistakes that employers make when classifying their workers as "exempt" from the FLSA's minimum wage and overtime provisions.
Under the FLSA, all employees must be classified as either "exempt" or "non-exempt" from the FLSA's minimum wage and overtime provisions. Non-exempt employees are entitled to a federal minimum wage (currently $7.25 per hour), as well as overtime pay at a rate of one and one-half times the employee's regular rate of pay for all hours worked beyond 40 hours in a workweek. Employees who are properly classified as exempt are not subject to these requirements. As most employers are acutely aware, satisfying all of the requirements of the applicable "white collar" exemptions presents many challenges and is not always intuitive. In our experience, it is difficult for an employer to properly classify all of its employees and...
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