DISCLAIMER: This blog post provides a general overview of FLSA classifications. It is not legal advice. If you require information or advice applied to your unique situation, please make an appointment to discuss it with an experienced attorney of your choosing.
Understanding Labor Laws
Labor laws such as the Fair Labor Standards Act (FLSA) exist to protect workers and ensure fair employment practices. The FLSA federally mandates:
- a minimum wage
- maximum hours for a work week
- standards regarding overtime pay, pay equality, record-keeping, and child labor
FLSA History
The Fair Labor Standards Act (FLSA) of 1938 initially set a minimum wage of $0.25 and a maximum 44-hour work week. Over time, amendments and court cases have evolved it. For example, in the Helix Energy Solutions Group, Inc v. Hewitt case, an offshore oil rig worker earning a high daily rate successfully contested his employer’s refusal to pay overtime (OT). The court ruled that his daily-rate pay did not exempt him from OT under FLSA regulations. As a result, he received an estimated OT award of more than $11,000.00 per week for weeks he worked more than 40 hours.
Worker Classifications
As the Helix Energy case demonstrates, a key concern for employers is the proper classification of their workers. The FLSA distinguishes between exempt and non-exempt employees, with different rules and protections for each group. Non-exempt employees are entitled to overtime pay and are protected by the minimum wage laws set forth by the FLSA.
Exempt employees are typically office workers or non-manual field workers whose primary duty is directly related to management policies or general operations. They customarily and regularly exercise discretion and independent judgment and are paid on a salary basis. That salary must be above the below minimums, depending on where the employee works:
- Outside of New York State (NYS) – $844.00 per week ($43,888.00 per year)
- In NYS, but outside NYC – $1,124.20 per week ($58,458.40 per year)
- In New York City – $1,200.00 per week ($62,400.00 per year)
The minimum salary requirements for the OT exemption are increasing again on January 1, 2025:
- Outside of New York State (NYS) – $1,128.00 per week ($58,656.00 per year)
- In NYS, but outside NYC – $1,161.65 per week ($60,405.80 per year)
- In New York City – $1,237.50 per week ($64,350.00 per year)
A full list of minimum salaries and special circumstances under federal law can be found here.
The Cost of Misclassification
Government agencies usually hold employers to higher standards due to their perceived power over employees. Significant financial penalties can result if employers misclassify employees and don’t pay overtime. Relying entirely on your human resources management company won’t necessarily protect you, as they can also make misclassification errors. For example, in 2017, a human resources company had to pay $3.4 million in unpaid overtime to 743 employees.