Understanding Who is Covered or Not Covered by the Fair Labor Standards Act (FLSA)

Have you ever been stuck with a toxic boss because you didn’t know your rights? Well you’re not the only one. It can to happen anyone, anytime and in any form. For instance, it could be a boss asking for an unfair favor, or asking you to stay past work hours.

Did you know that a new survey from the American Psychological Association revealed that 19% of workers say their workplace is very or somewhat toxic. That’s massive since more people are struggling with their jobs every day.

Fortunately, knowing your rights as an employee and the legal employment conditions can make a massive difference. Let’s look at the details of these laws and the FLSA coverage basics, details, consequences and more.

Who is covered or not covered by FLSA?

The Fair Labor Standards Act (FLSA) is a key piece of federal law designed to protect workers by establishing minimum wage, overtime pay provisions, and other essential labor standards.

However, determining who is covered or not covered by the FLSA can be complex, as coverage depends on specific criteria related to the employer’s business and the employee’s job duties. Understanding these distinctions is crucial for both employers and employees to ensure compliance and fair treatment.

Covered Employees Under the FLSA

The FLSA applies to employees working for businesses, or covered employers, that meet certain thresholds. Generally, the law covers employees of enterprises:

1. With annual gross revenue of $500,000 or more.
2. Engaged in interstate commerce.

Given the broad definition of interstate commerce, many businesses, including small enterprises, may qualify as covered employers under the FLSA. This ensures that a wide range of workers benefit from the law’s protections.

Key Protections for Covered Employees

If you’re a covered employee, the FLSA guarantees:

• Minimum Wage: The law establishes a minimum wage required for most nonexempt employees. As of now, the federal minimum wage is $7.25 per hour, although many states have enacted higher standards.
• Overtime Pay: Covered employees are entitled to overtime pay at one and a half times their regular rate for any hours worked beyond 40 in a workweek.
• Child Labor Protections: The FLSA includes strict rules to protect minors from exploitative labor practices, limiting the types of work they can perform and the hours they can work.

The law doesn’t discriminate based on job titles alone; if your employer is covered and you’re a nonexempt employee, these protections apply to you regardless of your role or industry.

Exempt Employees and Special Exceptions

While the FLSA provides significant protections, not all workers qualify for its overtime provisions. Employees categorized as exempt are not entitled to overtime pay or certain other protections under the Act.

Who Is an Exempt Employee?

To determine if an employee is exempt from the FLSA, the following criteria must be met:

1. Salary Basis:
2. The employee must be paid on a salary or fee basis, earning at least $684 per week.
3. Job Duties:
4. The employee’s duties must fit into one of the defined exemption categories, which include:
5. Executive Exemption:
6. Employees whose primary duty is managing the enterprise or a recognized department, and who regularly supervise two or more full-time employees.
7. Administrative Exemption:
8. Employees performing office or nonmanual work related to general business operations, involving the consistent exercise of independent judgment on significant matters.
9. Professional Exemption:
10. Workers in roles requiring advanced knowledge in a field of science or learning, such as doctors, lawyers, or engineers.
11. Outside Sales Exemption:
12. Employees primarily working outside the employer’s place of business, selling products or obtaining contracts.
13. Highly Compensated Employees:
14. Those earning total annual compensation of $107,432 or more and regularly performing at least one duty of an exempt executive, administrative, or professional employee.
15. Executive Exemption:
16. Employees whose primary duty is managing the enterprise or a recognized department, and who regularly supervise two or more full-time employees.
17. Administrative Exemption:
18. Employees performing office or nonmanual work related to general business operations, involving the consistent exercise of independent judgment on significant matters.
19. Professional Exemption:
20. Workers in roles requiring advanced knowledge in a field of science or learning, such as doctors, lawyers, or engineers.
21. Outside Sales Exemption:
22. Employees primarily working outside the employer’s place of business, selling products or obtaining contracts.
23. Highly Compensated Employees:
24. Those earning total annual compensation of $107,432 or more and regularly performing at least one duty of an exempt executive, administrative, or professional employee.

Special Case: Computer Employees

While machine operating systems are often considered accurate, the total annual compensation of employees may change for them depending on several factors. The employer’s customers may not always impact it, but certain roles in the computer field are also exempt if they involve:

• Systems analysis techniques.
• Designing or developing computer systems.
• Programming or modifying computer programs.

These employees must meet the salary basis requirement or be paid at least $27.63 per hour if compensated on a fee basis.

Employees Not Covered by the FLSA

Not all workers fall under the FLSA’s protections. Some are excluded based on the type of work they perform or the nature of their employment relationship.

Who Is Not Covered?

Here are examples of workers not covered by the FLSA:

1. Small Farm Workers:
2. Employees working on small farms that don’t employ a sufficient number of workers to meet FLSA thresholds.
3. Seasonal Amusement or Recreational Employees:
4. Workers employed by establishments open for less than seven months per year, such as summer camps or ski resorts.
5. Casual Babysitters and Domestic Workers:
6. Those who work on an irregular basis or provide services within a household that don’t meet FLSA coverage.
7. Independent Contractors:
8. Individuals who operate their own businesses and are not classified as employees under federal law. Since they’re self-employed, FLSA wage and overtime provisions don’t apply.
9. Federal Employees:
10. While most federal employees are covered by the FLSA, certain classifications have different rules regarding overtime pay.

Compliance and Employer Responsibilities Under Such Situations

For businesses, compliance with FLSA standards isn’t just a legal requirement—it’s a matter of fairness and maintaining employee well-being. The covered employer still needs to understand their obligations and ensure they’re adhering to federal labor standards.

Responsibilities of Covered Employers

Covered employers are required to:

1. Pay the Minimum Wage: Ensuring all eligible employees receive at least the federal minimum wage or the higher state-mandated wage, whichever applies.
2. Provide Overtime Pay: Employers must calculate and pay overtime correctly for nonexempt employees who work over 40 hours in a week.
3. Keep Accurate Records: Detailed records of hours worked, wages paid, and other employment conditions must be maintained.

Failure to comply with these requirements can lead to serious consequences, including back pay, liquidated damages, and civil penalties.

Penalties for Non-Compliance

Employers found in violation of the FLSA may face investigations by the Department of Labor (DOL), lawsuits from employees, and significant financial penalties. Noncompliance can also harm a company’s reputation and employee morale, further emphasizing the need for strict adherence to labor laws.

Simplifying FLSA Exemptions

Misclassification of employees is one of the most common pitfalls for employers. Labeling a worker as exempt without meeting the proper criteria can lead to legal challenges. To avoid this, employers must thoroughly evaluate whether a role meets the exemption standards outlined in the FLSA.

Key Factors in Determining Exempt Status

When determining exempt status, employers should consider:

• Job Duties: The actual work performed must align with the duties required for the specific exemption category.
• Compensation: The employee must meet the salary or fee basis threshold.
• Independent Judgment and Discretion: Certain exemptions, like the administrative exemption, require employees to regularly perform tasks involving significant decision-making.

Employers should consult legal or HR professionals to ensure roles are classified correctly and to stay updated on any changes to FLSA regulations.

Understanding who is covered or not covered by the FLSA is essential for fostering a fair and compliant workplace. Whether you’re an employer striving to meet federal standards or an employee seeking clarity about your rights, knowing the distinctions between covered employees, nonexempt workers, and exempt employees can help prevent misunderstandings and legal disputes.

The FLSA’s protections, from ensuring a minimum wage and overtime pay to safeguarding against child labor violations, serve as a foundation for equitable labor practices.

If you have questions about your rights under the FLSA or need guidance on compliance, the Bourassa Law Group is here to help. Contact our experienced employment law attorneys today for personalized legal advice and support.

Start seeking assistance today!

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