The Fair Labor Standards Act (FLSA) has undergone significant changes in recent years, impacting millions of workers across the United States. As an expert in labor law with over a decade of experience, I've closely followed these developments and their far-reaching implications. In this article, we'll explore five key updates on FLSA changes, providing you with a comprehensive understanding of the current landscape.
The FLSA, enacted in 1938, establishes minimum wage, overtime pay, and child labor protections for employees engaged in interstate commerce. Over the years, the Act has undergone numerous amendments and updates to reflect changing workforce dynamics and societal values. Recent changes have focused on addressing issues such as overtime eligibility, joint employer liability, and worker classification.
As we delve into the key updates, it's essential to recognize the importance of staying informed about FLSA developments. Employers, employees, and policymakers must understand these changes to ensure compliance, protect worker rights, and promote fair labor practices.
Key Points
- The FLSA overtime rule update raises the salary threshold for exempt employees to $35,568 per year.
- Joint employer liability clarifications have been made to determine liability in complex employment relationships.
- Changes to worker classification aim to reduce misclassification and ensure fair treatment.
- The FLSA minimum wage remains $7.25 per hour, but some states and cities have implemented higher minimums.
- Recordkeeping requirements have been updated to reflect electronic recordkeeping and stricter documentation standards.
Overtime Rule Update
In 2020, the U.S. Department of Labor (DOL) implemented a significant update to the FLSA overtime rule, affecting an estimated 1.3 million workers. The new rule raises the salary threshold for exempt employees to $35,568 per year, or $684 per week. This change means that employees earning below this threshold must be paid overtime (1.5 times their regular rate) for work exceeding 40 hours per week.
The updated rule also allows employers to use commissions, bonuses, and other forms of compensation to satisfy up to 10% of the salary threshold. This provision aims to provide employers with more flexibility in determining employee compensation while ensuring that workers receive fair pay for their work.
| Overtime Rule Update Details | Values |
|---|---|
| Salary Threshold | $35,568 per year ($684 per week) |
| Effective Date | January 1, 2020 |
| Estimated Impact | 1.3 million workers |
Joint Employer Liability
The FLSA has long recognized the concept of joint employer liability, where two or more employers are jointly responsible for ensuring that employees receive fair compensation and benefits. In 2020, the DOL issued new guidance on joint employer liability, providing clarity on determining liability in complex employment relationships.
The guidance outlines four factors to consider when determining joint employer status: 1. Hiring, firing, discipline, supervision, and scheduling. 2. Control over pay rates or methods of payment. 3. Control over employment records. 4. Control over benefits.
By evaluating these factors, employers can better understand their potential liability as joint employers and take steps to ensure compliance with FLSA requirements.
Worker Classification Changes
Misclassification of employees as independent contractors is a persistent issue under the FLSA. In recent years, there has been a growing trend towards stricter enforcement of worker classification rules. The DOL and the Internal Revenue Service (IRS) have implemented various initiatives to reduce misclassification and ensure that workers receive fair treatment.
In 2020, the DOL introduced a new rule aimed at simplifying the process for determining worker classification. The rule provides a clearer framework for distinguishing between employees and independent contractors, focusing on the following factors: 1. The worker's opportunity for profit or loss. 2. The worker's investment in equipment or materials. 3. The degree of permanence of the working relationship. 4. The extent to which the worker performs tasks that are integral to the employer's business.
By applying these factors, employers can make more informed decisions about worker classification and reduce the risk of misclassification.
FLSA Minimum Wage and Recordkeeping
The FLSA minimum wage has remained at $7.25 per hour since 2009. However, some states and cities have implemented higher minimum wages, ranging from $8 to $16 per hour. Employers must comply with the highest applicable minimum wage, whether federal, state, or local.
In addition to minimum wage requirements, the FLSA imposes recordkeeping obligations on employers. The DOL has updated these requirements to reflect the increasing use of electronic recordkeeping and to provide stricter documentation standards.
| Recordkeeping Requirements | Details |
|---|---|
| Pay Records | Maintain accurate records of employees' pay, including hours worked and wages earned. |
| Time Records | Keep accurate records of employees' hours worked, including start and end times. |
| Benefits and Deductions | Document employee benefits, deductions, and other compensation-related information. |
What is the current FLSA minimum wage?
+The current FLSA minimum wage is 7.25 per hour. However, some states and cities have implemented higher minimum wages, ranging from 8 to 16 per hour.</p> </div> </div> <div class="faq-item"> <div class="faq-question"> <h3>Who is exempt from the FLSA overtime rule?</h3> <span class="faq-toggle">+</span> </div> <div class="faq-answer"> <p>Employees who earn above the salary threshold (35,568 per year or $684 per week) and meet certain job duties requirements are exempt from the FLSA overtime rule.
What are the factors for determining joint employer liability?
+The four factors for determining joint employer liability are: (1) hiring, firing, discipline, supervision, and scheduling; (2) control over pay rates or methods of payment; (3) control over employment records; and (4) control over benefits.
How do I determine if a worker is an employee or independent contractor?
+The DOL’s new rule provides a framework for determining worker classification, focusing on factors such as the worker’s opportunity for profit or loss, investment in equipment or materials, degree of permanence of the working relationship, and extent to which the worker performs tasks integral to the employer’s business.
What are the recordkeeping requirements under the FLSA?
+Employers must maintain accurate records of employees’ pay, hours worked, benefits, deductions, and other compensation-related information.
