Employers are often finding themselves exploring whether they have properly classified someone as an independent contractor under the Fair Labor Standards Act (FLSA) and are losing sight of the importance of properly classifying employees as exempt or nonexempt. This lack of focus is not only resulting in more lawsuits, it is resulting in potential mergers and acquisitions getting held up at the last minute when the purchasing entity realizes they are about to take on a massive liability due to the improper classifications of employees. The importance of properly classifying employees as exempt or non-exempt must be stressed to avoid these potential issues. Employment attorneys assisting employers with this process play an important role.
The FLSA requires employers to pay employees at least the federal minimum wage and, if the employee is not exempt, the FLSA requires employers to pay employees, but not independent contractors, overtime pay for any hours worked over 40 hours per week. For nonexempt employees, the FLSA requires that they be paid an overtime pay of at least one and one-half their regular rate of pay for all hours worked over 40 in a given workweek. The FLSA does not, however, require employers to pay any overtime to employees that are properly classified as exempt from the FLSA.