HR Management & Compliance

The Cost of Compliance? Applying Risk Assessment to FLSA Exemptions

By Holly Jones, JD, Senior Legal Editor

During her recent master class on the upcoming changes to the Fair Labor Standards Act’s (FLSA) white collar exemptions, Kara Shea shared a wealth of advanced, in-depth legal information on wage and hour compliance. She also shared a little of the practical business strategy that comes from her years of experience assisting, counseling, and representing employers of all sizes and industries.

Because the FLSA rules aren’t always intuitive, Shea explained that few organizations are fully compliant with the exemptions—even under the current rules. So, as discussed in a previous article, the upcoming changes provide a great opportunity for employers to conduct an internal audit and review all aspects of their employee classifications. (Yes, even the duties tests, which have not changed).

If conducting a classification audit is on your to-do list, you may appreciate these strategic, data-based tips for managing the otherwise squishy, subjective world of exemptions.

Clean-up, aisle exempt

Shea notes that the questions that arise during a classification audit are usually quite fact specific. Therefore, she recommends first tackling as much of the audit yourself as you can.

“Some of the concepts are apparent and obvious and you can quickly pick out the people who are correctly (or incorrectly) classified. Then you have the grey area—which is usually about 35% of your workforce. Don’t involve legal counsel until you’ve identified these grey area employees. There’s no need to have an attorney review and audit 100% of your workforce.”

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