The federal Fair Labor Standards Act (FLSA) and many state laws require most staffing firms to pay minimum wages and overtime premium wages. Under pressure to keep costs down, clients often want to avoid paying overtime. Sometimes their efforts — such as encouraging the misclassification of workers or adjusting workers’ reported hours — can lead their staffing firms into legal quicksand.
Classification. Despite the confusing double-negative term, being nonexempt means an employee is entitled to minimum wage and overtime pay. Most eligible employees who work over 40 hours per week are to be paid 150% of their regular wage rate; in California and Washington, some overtime is payable at 200%. Exempt employees are not entitled to overtime pay.
Employees are presumed nonexempt unless the employer can prove that an exemption applies to the employee, the employer or the work. The most common employee exemptions are so-called “white-collar” exemptions: professional, administrative, executive, creative and computer science positions that exceed minimum compensation levels. Unfortunately, the law’s definitions of those qualitative exemptions are much more limited, detailed and misleading than the general meanings of those words.
To be legally classified as exempt and therefore not entitled to overtime pay, employees must satisfy the qualitative, compensation and salary basis tests under federal and state law.
Client pressure. Clients often pressure staffing providers to treat...
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