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Please join us in welcoming Elizabeth Milito to your Small Business Online Community. Elizabeth is here to guide you through the basics of the Fair Labor Standards Act, the federal wage and hour law. Today, Elizabeth will be using the screen name NFIBLegal.

About Elizabeth

Elizabeth Milito is Senior Executive Counsel for the Small Business Legal Center at the National Federation of Independent Business (NFIB), the leading small business association. A nonprofit, nonpartisan organization founded in 1943, NFIB represents the consensus views of about 350,000 members in Washington D.C., and all 50 state capitals. Milito is a frequent author, speaker and advisor on all aspects of the employment relationship and compliance with employment and labor laws, including wage-hour issues, independent contractor classifications, sufficiency of employee handbooks and proper hiring procedures.

To all Community Members

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FLSA guarantees an employee's right to be paid fairly; defines a 40-hour workweek; establishes federal minimum wage; sets requirements for overtime; restricts child labor; and requires that male and female workers receive equal pay for equal work. As a practical matter, the FLSA covers nearly all employees in the U.S.

Unfortunately, the FLSA has been largely unchanged and was designed to regulate hours of work in an economy where one in five workers was employed on a farm and the factory whistle signaled the end of the workday. The Great Depression workforce bears little resemblance to the workplace we have today. The FLSA's antiquity makes it an attractive weapon for aggrieved workers and plaintiffs' attorneys.

Wage and hour compliance is difficult, but it's worth the effort. Savvy and successful companies practice preventative strategies to avoid wage and hour liability.

Remember - employers must comply with other local, state or federal workplace laws that set higher standards. As many of you know, state laws often afford employees greater protections than provided by the federal FLSA.

Flexible work schedules are certainly a desirable employee benefit. Designing a flexible work schedule for an exempt employee is usually a little easier since overtime pay is not an issue. The most common exemptions include the so-called white collar exemptions. The FLSA contains dozens of exemptions. However, the most well-known are the so-called "white collar" exemptions, which includes:

Executive; Administrative; Professional; Highly Compensated; Outside Sales; and

certain computer employees.

If the requirements of an exemption are met, the employer is not required to pay overtime to the exempt employee under the FLSA.

For nonexempt employees there is no limit to the number of hours that an employee may work in a workweek, so long as the employee is paid for all hours worked. So unless your state has a daily overtime law, you could offer something like 4-10 hour days as a flexible arrangement.

While our workplace has changed dramatically in the last 60 years, the FLSA has not. This means that in the face of modern issues like telecommuting and flexible work arrangements, employers are still responsible for understanding and complying with the same statute that was initially enacted to address a primarily industrial workplace.

Again, under the FLSA an employee can be exempt from minimum wage and overtime requirements if the employee is a bona fide executive, administrative, professional, or outside sales employee. Some computer employees are also exempt. In addition, highly compensated employees performing office or non-manual work and paid total annual compensation of $100,000 or more may also be exempt from the FLSA if they perform at least one of the duties of an exempt executive, administrative or professional employee. While these exemptions were ‘updated' in 2004, there is still dissatisfaction from some industries and workers who feel they are entitled to overtime. The fact that FLSA collective actions outnumber all other federal discrimination class actions combined and that in California, New York and Florida wage and hour class claims are filed daily shows that there is still a lot of dispute over who is or is not exempt from overtime.

There are ways, however, to reward exempt employees for successful projects - for instance it's common to provide exempt employees compensatory time-off and bonuses for completion of projects. Moreover, if an employee raises any question as to their exempt status (i.e., suggests they should be nonexempt), it's always a good idea to perform an audit to ensure the position meets the criteria for exemption.