The Fair Labor Standards Act of 1938 (FLSA) establishes minimum wage and overtime pay requirements for employees. Employees who are covered by the FLSA are entitled to a minimum wage of at least $7.25 per hour. In addition, these employees must be paid overtime pay at a rate of at least one and one-half times their regular rates of pay after 40 hours of work in a workweek.

Employee Misclassification Under the FLSA

Not all employees are covered by the FLSA. This is because the law defines certain employees as “exempt” from the FLSA’s protections, often due to their managerial or professional roles.

Categories of Exempt Employees:

A few of the most common exempt job categories include executive, administrative, professional, and outside sales positions. These positions are further discussed below:

(1)  Executive Exemption

To qualify, an employee must primarily manage the enterprise or a department of the enterprise, supervise at least two full-time employees, and have the authority to hire and fire.

(2)  Administrative Exemption

To qualify, an employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers, and the employee must primarily use his or her own discretion and judgment in work duties.

(3)  Professional Exemption

To qualify under the “learned professional” exemption, an employee’s primary duty must be the performance of work requiring advanced knowledge in a field of science or learning, and the advanced knowledge must be acquired through prolonged education or specialized training. To qualify under the “creative professional” exemption, an employee’s primary duty must be the performance of work requiring invention, imagination, originality, or talent in a recognized creative field.

(4)  Outside Sales Exemption

To qualify, an employee’s primary duty must be making sales or obtaining orders or contracts, and the employee must regularly conduct sales away from the employer’s place of business.

Common FLSA Violations:

Employee misclassification is a nuanced challenge that can manifest in various forms. Recognizing common scenarios where misclassification occurs is essential for employees to ensure that they are being compensated fairly. Several common examples of employee misclassification are set forth below:

(1) Independent Contractors Treated as Employees

Employers might designate workers as independent contractors, providing flexibility and cost savings, but if these individuals are subject to extensive control and direction, they should be classified as employees. For example, a freelance graphic designer who exclusively works for one company, follows set guidelines, and uses company-provided tools may be misclassified as an independent contractor.

(2) Salaried Employees Incorrectly Classified as Exempt

Employers may mistakenly classify salaried employees as exempt from overtime pay without ensuring they meet the specific criteria outlined by the FLSA. For instance, an administrative employee may be misclassified as exempt and paid a salary, when he or she should be eligible for overtime pay, leading to unpaid overtime hours.

(3) Misclassification Due to Lack of Awareness

Employers, especially smaller businesses, may misclassify employees due to a lack of awareness about FLSA regulations and the criteria for employee classification. To illustrate, a startup may hire workers as independent contractors without fully understanding the factors that differentiate employees from independent contractors under the FLSA.

(4) Intentional Misclassification for Cost-Cutting

In an effort to reduce costs, employers may intentionally misclassify employees as independent contractors or exempt, denying them certain benefits and protections. For example, a company may classify hourly workers as salaried exempt employees to avoid paying overtime, resulting in financial gain for the employer and a loss for the misclassified employees.

Understanding Off-the-Clock Violations under the FLSA

What are Off-the-Clock Violations?

In an effort to reduce costs, employers may intentionally misclassify employees as independent contractors or exempt, denying them certain benefits and protections. For example, a company may classify hourly workers as salaried exempt employees to avoid paying overtime, resulting in financial gain for the employer and a loss for the misclassified employees.

Examples of Off-the-Clock Violations:

From the healthcare sector to the service industry, off-the-clock violations can occur at almost any place of employment. Below are a few examples of the diverse situations that may lead to unintentional or deliberate off-the-clock work:

(1) After-Hours Emails

An employee regularly spends an extra hour each evening responding to work emails after officially signing out. If this time is not compensated, it may constitute off-the-clock work.

(2) Preparation Time

In a retail setting, employees are required to set up displays or perform other preparatory tasks before opening hours. If this time is unpaid, it may lead to off-the-clock violations.

(3) Required Training

An employer mandates attendance at training sessions outside regular working hours without providing compensation. This may be considered off the- clock work.

(4) Compulsory Meetings

An employer requires employees to attend meetings before or after their scheduled shifts without compensating for the time spent. If these meetings are unpaid, they may constitute off-the-clock work.

(5) Travel Time

Under certain circumstances, an employee who is required to travel for work-related purposes but is not compensated for the time spent traveling may lead to an off-the-clock violation. This may include commuting to a client’s location, conferences, or off-site assignments.

(6) Donning and Doffing

In industries such as manufacturing or healthcare, if employees are required to put on and/or take off specific uniforms or safety gear before or after their shifts without compensation, it may be considered off-the-clock work.

(7) Unauthorized Overtime

Some employers may discourage or prohibit overtime work, but still expect employees to complete tasks beyond their regular hours. If this extra work is not compensated, it could be a violation.

(8) Checking Work-Related Devices Off-Hours

If employees are required to check work-related devices (phones, emails) during non-working hours without compensation for the time spent responding to work related matters, it may be  considered off-the-clock work.

Consequences for Employers:

who violate FLSA regulations risk legal consequences and financial liabilities, including the following:

(1) Back Pay

Employers found in violation of FLSA regulations may be required to provide back pay for unpaid overtime hours, including any applicable overtime premium.

(2) Liquidated Damages

In certain cases, liquidated damages equal to the amount of back pay may be imposed to further penalize employers for FLSA violations.

(3) Legal Fees

Employers may be responsible for covering the legal fees and costs incurred by employees in pursuing legal action for off-the-clock violations.

(4) Civil Penalties

The Department of Labor may impose civil penalties on employers who repeatedly violate FLSA regulations, serving as a deterrent against non compliance.

How Our Firm Can Help

As seasoned experts in employment law, the attorneys at Mobilio Wood are dedicated to assisting employees who have been misclassified or subjected to other violations of the FLSA. Our legal team is equipped to navigate the complexities of FLSA regulations and provide tailored solutions for your unique situation.