The Fair Labor Standards Act (“FLSA”) – known as the federal wage and hour law - regulates minimum wage, overtime, recordkeeping and child labor at the federal level. Under the FLSA, employees are classified as either exempt or non-exempt from minimum wage and overtime.
An exempt classification means the employer is not obligated to pay overtime when the employee works more than 40 hours in a workweek. Most employees are classified non-exempt, which means they must be paid minimum wage and are eligible for overtime at one and one-half times their regular rate of pay when they work over 40 hours in a workweek.
Mistakes like classifying an employee as an independent contractor or denying overtime to non-exempt employees can be violations of the FLSA (as well as other wage and hour laws) and the penalties can be steep. To help protect your business, take a moment to familiarize yourself with the U.S. Department of Labor’s classification guidelines, and be sure to check your state and local rules as well.