The Basics Of The Fair Labor Standards Act
The Fair Labor Standards Act or FLSA is a federal law that applies to all covered
workers engaged in interstate commerce or those employed by companies engaged in commerce or in the production of goods and services.
Under FLSA, the federal government:
Established a minimum wage (if the state has a its own minimum wage, then employers should follow the higher rate)
Prohibited oppressive child labor practices
Guaranteed time and a half for overtime of non-exempt employees
An employee can be classified as non-exempt if he works on production majority or more than 50 percent of his time.
To be exempt, an employee must fall in any of the following categories to be considered:
Executive exemption This refers to employees who spend majority of their time running the business or managing a department.
Administrative exemption This refers to employees whose role in the workplace is to assist executives, the proprietor or other exempt individuals in running the business.
Professional exemption This refers to employees who need specific licenses to be able to practice their profession. This includes doctors, lawyers, engineers, dentists, etc. This exemption also includes employees who work in a learned or artistic profession such as singers, dancers and actors.
Computer software professional This refers to employees who work in the development of computer software and is earning more than $41 an hour.
Outside sales person exemption this applies to employees who spend majority of their time outside the office to generate sales for the company.
The FLSA covers all employers who have at least $500,000 in gross sales annually. If that is the case, then the employees have the full protection under the FLSA, unless they are considered exempt.
However, the Fair Labor Standards Act only covers employees and not independent contractors.
Under the law, independent contractors, though hired by an employer for certain services, are not employees.
Technically, an independent contractor is considered as a separate entity or even a separate company.
The employer has no real authority over the methods of how they perform the job, but strictly on the results.
Since independent contractors are not employees, they are not given the protection given to employees such as overtime pay.
However, employers are not allowed to simply label their employees as independent contractors to escape their duties under the FLSA.
The courts will find out if the worker was indeed misclassified as independent contractor or not.
If there is misclassification, the employer may be:
Fined penalties by the IRS
Asked to pay remised taxes due to misclassification
Pay unpaid wages and overtime to employee.
To know more about the law, consult an employment law attorney for more details about your rights.
by: Mark Dacanay
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