FLSA Rules and Regulations

Find out how federal labor laws affect your business and how to avoid the pitfalls

New FLSA Rules and Regulations

FLSA regulations are an outline for employee rights in the workplace, enacted in 1938 in the Fair Labor Standards Act (FLSA). In August 2017, a federal judge ruled new FLSA overtime regulations, which would affect 4 million workers, invalid. The Department of Justice launched an appeal, and as of December 2017, new rules have yet to be finalized.

FLSA rules that affect the majority of small businesses include the following:

Minimum wage.

Currently $7.25 per hour.

Overtime.

When nonexempt employees work over 40 hours per week, they are entitled to 1.5 times their hourly rate.

Hours worked.

This refers to the time during which an employee is required to perform their duties.

Record keeping.

Employers are required to display an FLSA poster and keep time and pay records for all employees.

Child labor.

This is intended to ensure young people receive an education and have safe working conditions.

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2018 FLSA Changes

FLSA changes have been on the table since 2016, but the Department of Labor (DOL) has not yet made their final decision on what changes it wants to implement. Here are the most recent FLSA changes and events:

October 2018

The Trump administration formally announces its intention to issue a Notice of Proposed Rulemaking in March 2019, “to determine the appropriate salary level for exemption of executive, administrative, and professional employees.”

April 2018

The Department of Labor announces their intentions to, once again, propose new plans for overtime regulations at the start of 2019. They begin gathering views and ideas from participants through public listening sessions.

October 2017

The Department of Justice challenges Judge Mazzant’s decision, giving another strong indication that the DOL still wants to change the FLSA overtime rule and keep its authority over federal overtime regulations. The current threshold at which a salaried worker will be excluded from overtime remains $23,000.

August 2017

Judge Mazzant officially confirms his previous decision: The new overtime rule is invalid.

July 2017

The Department of Labor indicates that the FLSA overtime rule might still be changed by publishing a new Request for Information (RFI) in the Federal Register. The RFI asks how much salaried employees should earn before they are exempt from overtime.

November 2016

U.S. District Judge Amos Mazzant blocks the new overtime rule at the last minute. Some employers stand by the changes they made to employee salaries, while others decide to roll them back.

September 2016

Texas attorney, General Ken Paxton, backed by 20 states, files a lawsuit challenging the new rule. Paxton’s suit claims the new overtime rule “limits workplace flexibility” and “forces employers to cut their workers’ hours.”

Summer/Fall 2016

Many employers adopt new systems, like employee time tracking, and consult attorneys to help them prepare for the changes. The deadline given for employers to make the changes is December 1, 2016.

May 2016

The Obama administration announces changes that would give salaried employees making $47,476 or less a chance to earn overtime.

FLSA FAQs

The Fair Labor Standards Act (FLSA) is a minimum wage and record-keeping labor law established in 1938. The FLSA outlines employee rights in the workplace.

As of December 2017, new changes to FLSA overtime rules have yet to be finalized. Over the last two years, overtime threshold changes proposed by the Obama administration have been blocked and appealed. The proposed Obama-era changes would have called for updates to the overtime threshold every three years, beginning January 1, 2020.

The FLSA covers full- and part-time employees in both private and government sectors. Though, different rules and regulations apply to exempt and nonexempt employees.

Employees classified as “exempt” under the FLSA do not qualify for and are not entitled to overtime pay. Exempt employees include salaried employees who make more than $23,660 per year. Exempt employees also include farmworkers, loaders, and salespeople who work on commission. The Department of Labor estimates up to 8 million employees are misclassified.
Employees who make more than $23,660 per year are not automatically exempt, as the salary level test is one of three standards that must be met. Other standards include the salary basis test and the duties test.

Read more about exempt employees.

According to the FLSA, overtime must be paid to nonexempt employees (hourly or salaried employees who make less than $23,600 per year) at 1.5 times their normal rate of pay, if they work more than 40 hours in a workweek. Certain states have their own overtime rules.

Read more about California’s overtime rules.

Yes. Employees who qualify for overtime are entitled to overtime pay, whether or not the overtime was authorized by their manager or employer. Employees working overtime are entitled to 1.5 times their normal rate of pay whenever they work in excess of 40 hours per workweek.

Learn more about workweeks and unauthorized overtime pay.

The FLSA requires employers of a certain size or type to pay overtime of 1.5 times the normal rate to all eligible employees who work more than 40 hours in any workweek.

The Department of Labor carefully defines exemptions. It is the employer’s responsibility to know who is exempt and who is not. Check the regulations before deciding which workers should receive overtime and which should not.

The current salary threshold is $23,660 per year. Salaried employees who make more than the threshold in a year are not entitled to overtime pay. The salary threshold is subject to change.

The FLSA classifies exemptions to employees in administrative, executive, professional, and computer-based roles. The duties associated with each role can be used to determine exemption. FLSA duty tests (or exemption test) can be administered by HR personnel.

See the FLSA duties test.

The salary basis test is one of three standards that must be met for an employee to be considered exempt. The salary basis test says an employee will make a fixed salary that will not be affected by their quality or quantity of work. Other tests include the salary level test and the duties test.

Read more about the salary basis test.

According to the Department of Labor, travel during work normal work hours is compensable. However, home-to-work travel is not considered compensable but subject to an agreement between an employee and an employer.

Read more about compensable travel time.

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Webinar: 3 Things You Can Do to Avoid a Wage and Hour Lawsuit

FLSA lawsuits are on the rise — are your clients prepared?
Watch the webinar to learn how the FLSA has changed and what you can do to prepare your business and your clients.

Related Questions and Resources

Wage and hour lawsuits are on the rise — is your business at risk?

FLSA wage and hour lawsuits have increased a staggering 456 percent since 1995. And that’s just the start of why business owners are concerned. Not only does a successful FLSA prosecution mean you’ll be paying back wages, penalties, and your own legal fees, but you’ll be paying your employee’s legal fees.

Does your industry or state have a target on its back? How much are businesses in your state paying out for wage and hour lawsuits? Use our interactive map to find out.

What if I’m hit with an FLSA lawsuit?

Knowing the laws, creating policies and procedures that safeguard your company and employees, and knowing your options for facing the worst case scenario are crucial to the health and success of your business. Get expert advice on how to handle a wage and hour lawsuit.

The new overtime regulations are still in limbo — what now?

Don’t run into expensive overtime

Not only is overtime expensive, but it’s also one of the most common areas employers struggle with when it comes to FLSA compliance. Understanding overtime laws, which employees qualify for overtime, being aware of potential pitfalls, and adopting technology to aid compliance can make all the difference in avoiding lawsuits.

Final rule on overtime from the US Department of Labor.

FLSA lawsuits are increasing. Learn the 7 deadly FLSA violations you could be committing in your business.

How can I avoid a wage and hour lawsuit?

Knowing the most common pitfalls and the most common mistakes business owners make can help you avoid painful — and costly — consequences. There are seven deadly sins of wage and hour lawsuits. How many do you know?

7 Deadly Sins: FLSA violations you must avoid.

Employee time tracking supports FLSA compliance

Did you know that employers are required to track time for all nonexempt employees — and keep those time tracking records for two years? If the words “organized,” “accurate,” and “easily accessible” don’t apply to your current method of timekeeping, it’s time for a change.

Compliance assistance is available from the US Department of Labor, but cloud-based, mobile time tracking can make all the difference when it comes to complying with the FLSA. Plus, it can help you prepare for changes to overtime regulations, keep overtime in check, and protect your company in the event of a lawsuit.

How does time tracking help me prepare and comply?

Learn how mobile time tracking can make all the difference with complying with the FLSA overtime changes.

Employee time tracking can help businesses with FLSA compliance.

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