There are many federal and state laws that regulate business. Many of them depend on the number of employees a company has as to whether or not the law applies to that company. I will be posting a series of blog posts on federal and state laws that apply to many of the small businesses here in Tennessee.
The first one is the Fair Labor Standards Act (FLSA). I chose this law first because it applies to almost every business. In order for a company to be covered by the FLSA, there only has to be one (1) employee of that company. The FLSA addresses both minimum wage and overtime pay, as well as child labor.
The biggest issue that companies I work with run into with the FLSA is overtime pay, specifically whether or not a company has to pay it to certain employees. There are two main classifications of employees: exempt and non-exempt. Exempt employees do not have to be paid overtime, while non-exempt employees must be paid at least 1.5 times their regular wage for any hour worked over 40 hours in a 7 day span.
In order to be an exempt employee, that employee must fall into a certain classification, and this is where most employers encounter the most problems. The following is a list of some of the exempt positions:
- Executive, administrative, and professional employees (including teachers and academic administrative personnel in elementary and secondary schools), outside sales employees, and certain skilled computer professionals (as defined in the Department of Labor’s regulations) 1
- Employees of certain seasonal amusement or recreational establishments
- Employees of certain small newspapers and switchboard operators of small telephone companies
- Seamen employed on foreign vessels
- Employees engaged in fishing operations
- Employees engaged in newspaper delivery
- Farm workers employed on small farms (i.e., those that used less than 500 “man‑days” of farm labor in any calendar quarter of the preceding calendar year)
- Casual babysitters and persons employed as companions to the elderly or infirm
- Certain commissioned employees of retail or service establishments
- Auto, truck, trailer, farm implement, boat, or aircraft salespersons employed by non‑manufacturing establishments primarily engaged in selling these items to ultimate purchasers
- Auto, truck, or farm implement parts‑clerks and mechanics employed by non-manufacturing establishments primarily engaged in selling these items to ultimate purchasers
- Railroad and air carrier employees, taxi drivers, certain employees of motor carriers, seamen on American vessels, and local delivery employees paid on approved trip rate plans
- Announcers, news editors, and chief engineers of certain non‑metropolitan broadcasting stations
- Domestic service workers who reside in their employers’ residences
- Employees of motion picture theaters
The most common exemption companies try to fit employees in is the Executive, Administrative, and Professional Exemption. Even once classified correctly, there are many rules and regulations about deductions from salary, calculation of pay, and other matters that need to be addressed. The Department of Labor has many good resources for more information on the website (http://www.dol.gov/compliance/laws/comp-flsa.htm).
I would recommend as a business owner or Human Resource Manager to review the FLSA in detail to make sure you are compliant with the current law.
One of the services I offer to new business clients is the Bottorff Business Review. One piece of the review is to look into your classification of employees as exempt v. non-exempt and review other aspects of the FLSA. Contact me at 615.829.8250 x3 or [email protected] for more information.
Luke D. Bottorff
Nashville Business Attorney
McNulty & Associates, PLLC
211 Printers Alley, Suite 400
Nashville, TN 37201