Mistakes Were Made: How Small Businesses Commonly Get Into Trouble with the Fair Labor Standards Act

I have represented many small businesses in employment law cases, and I’ve noticed some common mistakes they make that lead to litigation. One mistake is not following federal minimum wage and overtime regulations. Another is misclassifying employees as independent contractors to avoid paying overtime. Finally, small businesses often don’t keep up with changes in employment law. These mistakes can be avoided by understanding and following the rules. The FLSA sets rules for minimum wage and overtime pay. It says employees must be paid at least $7.25 per hour for 40 hours of work each week, but in Florida it’s $8.25. If employees work more than 40 hours, they should be paid one and a half times their regular rate for the extra time. Some employees, like those who work at amusement parks or newspapers with small circulation, are exempt from these rules. Another common exemption is for executive, administrative, or professional employees. Small businesses need to be careful with this exemption, as they may mistakenly think their employees qualify when they do not. It’s important for businesses to know which employees are exempt from these rules to avoid legal trouble. The Code of Federal Regulations is a really helpful resource for small businesses and their lawyers to know about the exemptions in the Fair Labor Standards Act (FLSA). The Department of Labor (DOL) has made rules that explain the FLSA, including who is exempt from its rules. This can help businesses and their lawyers understand which employees are exempt from the FLSA and which aren’t. 1) The executive exemption says that in order to be exempt from overtime pay, an employee must be paid a certain salary, have a main job of managing the company or a department, regularly direct the work of at least two people, and either have the power to hire and fire employees or make recommendations about hiring, firing, or promotions. If an employee doesn’t meet all of these requirements, they are not exempt.

2) The administrative exemption says that in order to be exempt from overtime pay, an employee must be paid a certain salary, do office or non-manual work related to the management of the company or its customers, and make important decisions on their own. If an employee doesn’t meet all of these requirements, they are not exempt. In the Adams v. BSI case, the court decided that an employee met the administrative exemption because her job duties directly related to managing the business operations of the company and its clients. Meanwhile, the professional exemption requires an employee to have advanced knowledge in their field or to be involved in creative work, and if they meet these requirements, they are exempt from certain work regulations. The court in Williams v. Genex Servs. , LLC examined whether an employee’s work required advanced knowledge in a specific field that is usually learned through specialized education. The employee’s job involved assessing injured workers’ medical conditions and treatments, and educating them and insurance adjusters. The court found that the employee’s work required advanced knowledge and that she used her knowledge to advise injured employees. Some employees, such as manual laborers, are not exempt from FLSA rules and are entitled to overtime pay. The FWW method can be used to calculate overtime for employees who are not exempt from FLSA rules. In the Lewis v. Keiser case, the court said employers can use the “fluctuating workweek” method for non-exempt salaried employees. This method allows employees to receive a fixed salary, but also get paid half their hourly wage for every hour worked over 40 in a week. To figure out the hourly wage for a salaried employee, you divide their weekly salary by the number of hours they worked that week. If they worked more than 40 hours, they get paid their regular salary plus half their hourly wage for the extra hours. The reason salaried non-exempt employees are only entitled to half-time instead of time-and-a-half for overtime is because they are already getting paid their regular rate for all the hours they work in a week. Their salary covers the “time” part of the payment, so they only get the additional “half” part for overtime hours. This is based on a court case called Torres v. Bacardi Global Brands Promotions, Inc. The FLSA only protects employees, not independent contractors. Some businesses mistakenly call their employees independent contractors to avoid paying them properly. But just calling someone an independent contractor doesn’t make it true. If a worker is doing the kind of work an employee would normally do, they should be treated as an employee. If a business makes this mistake, they could face big penalties. It’s important for businesses and their lawyers to understand the difference and treat workers fairly. To figure out if someone is an employee or an independent contractor, courts look at a few things. They consider how much control the employer has over the work, if the person doing the work can make a profit or loss, whether the worker has to invest in tools or materials, if the work requires special skills, how long the working relationship lasts, and if the work is a big part of the employer’s business. In Florida, they also look at whether the worker does a different job normally done by the employer, the skill needed for the job, who provides the tools and workspace, how the person is paid, if the work is a regular part of the employer’s business, if the parties think they have a boss-worker relationship, and if the employer is in business. In Florida, the most important factor in deciding if someone is an independent contractor or an employee is how much control the employer has over the person. It doesn’t matter what the employer calls the person. If a small business wants to hire independent contractors, they should have a lawyer make a special agreement for each person, laying out the rules for being an independent contractor. And the employer has to follow those rules. The Obama administration made a new rule to increase the minimum salary required to qualify for the FLSA’s exceptions. But before it could take effect, a group of businesses sued to stop it, and a judge temporarily stopped the new rule. After President Trump took office, his Department of Labor decided not to fight for the new rule, and a judge officially stopped it from happening. The National Labor Relations Board has changed under President Trump, with more Republican members who are more sympathetic to employers than Democrats. This has led to new decisions that make it harder for workers to form unions and bargain collectively. The Department of Labor has also changed its priorities, making it easier for employers to avoid regulations on employee classification. This could affect small businesses and their legal representation, so it’s important to stay informed and avoid legal trouble. The excerpt contains references to different sections of the Fair Labor Standards Act (FLSA) and court cases related to employment law. It also mentions legal citations and exceptions to the FLSA. It discusses overtime rules, exceptions to the law, and court cases related to labor policies.

Source: https://www.floridabar.org/the-florida-bar-journal/mistakes-were-made-how-small-businesses-commonly-get-into-trouble-with-the-fair-labor-standards-act/