The Fair Labor Standards Act (FLSA) is a federal law that imposes minimum wage, overtime, record-keeping, and child labor requirements. Although the U.S. Department of Labor (DOL) enforces the FLSA, employees may file their own lawsuits under the Act. A lawsuit may be an individual action or a collective action, which is similar to a class action. If an employer fails to comply with the FLSA, it may be liable for back pay, liquidated damages, attorneys’ fees, and litigation costs. Thus, it’s important to comply with the law. 
This article doesn’t explain the entire FLSA or address all wage and hour laws. Instead, it addresses five common myths that could lead to liability under the FLSA. Employers should avoid falling into these traps.
Myth #1: Salaried employees aren’t entitled to minimum wage and overtime
Some employers mistakenly believe that simply paying employees a salary relieves them of the obligation to pay overtime compensation. Under the FLSA, employers generally must pay nonexempt employees at least minimum wage for all hours they work plus overtime compensation for all hours they work over 40 per workweek. An employee is nonexempt unless he is exempt. To be exempt, an employee must satisfy all the requirements of at least one exemption.
Common exemptions include the executive exemption, the administrative exemption, and the professional exemption. Each of those exemptions has both a salary-basis requirement and a duties requirement. Simply meeting the salary-basis requirement without satisfying the duties requirement (or merely satisfying the duties requirement without meeting the salary-basis requirement) doesn’t qualify an employee for one of the exemptions.
Myth #2: Commissioned workers aren’t owed minimum wage and overtime
Some employers wrongly believe that simply paying an employee on commission relieves them of the obligation to pay overtime compensation. Again, to be exempt, an employee must meet all the requirements of at least one exemption. The outside sales exemption has two requirements:
- The employee’s primary duty is making sales.
- The employee is customarily and regularly engaged away from the employer’s place or places of business.
Some employers choose to pay salespeople on commission, but the outside sales exemption doesn’t require employees to be paid on commission. Simply paying an employee on commission without meeting both requirements of the outside sales exemption doesn’t qualify the employee for the exemption.
Myth #3: An employee is exempt if his job requires a college degree
Some employers erroneously believe that if a job requires a university degree, the employee is exempt and therefore isn’t entitled to minimum wage and overtime compensation. As mentioned above, to be exempt, an employee must meet all the requirements of at least one exemption. The learned professional exemption has two requirements:
- The employee receives at least $455 per workweek on a salary or fee basis ($913 per workweek under the new regulations, which are currently subject to a nationwide preliminary injunction that has halted their implementation).
- The employee’s primary duty requires advanced knowledge in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction.
A field of science or learning includes law; medicine; theology; accounting; actuarial computation; engineering; architecture; teaching; various types of physical, chemical, and biological sciences; pharmacy; and similar occupations.The learned professional exemption isn’t available for occupations that customarily may be performed with only the general knowledge acquired by an academic degree in any field. Thus, simply occupying a job that requires a university degree without meeting both requirements of the learned professional exemption doesn’t qualify an employee for the exemption.
Myth #4: Short breaks may be unpaid
Some employers allow nonexempt employees to take 15-minute rest breaks but incorrectly require them to clock out and forgo pay during such breaks. The FLSA doesn’t require employers to provide breaks. However, if an employee receives a break, the FLSA regulates whether the break must be paid or may be unpaid.
For nonexempt employees, rest breaks up to 20 minutes long must be paid, so employees shouldn’t clock out for such breaks. Conversely, rest breaks that are at least 21 minutes long may be unpaid, so employees should clock out and back in for such breaks.
Myth #5: Time records need not reflect unpaid breaks
Under the FLSA, a meal break taken by a nonexempt employee may be unpaid if it is duty-free and at least 30 consecutive minutes long. Some employers incorrectly fail to require that nonexempt employees’ time records reflect unpaid breaks.
For example, suppose an employee works from 9:00 a.m. to 5:00 p.m., with a one-hour lunch break from noon to 1:00 p.m. The employee’s time records should reflect that she worked from 9:00 a.m. to 12:00 p.m. and from 1:00 p.m. to 5:00 p.m. rather than simply stating that she worked from 9:00 a.m. to 5:00 p.m. In other words, the employee should clock out and back in for the unpaid meal break.
Under the FLSA, employers must maintain accurate time records. Thus, nonwork time shouldn’t be reflected as work time on time records.
Bottom line
An ounce of prevention is worth a pound of cure. Complying with the FLSA could help you avoid costly lawsuits. Remember that an employee is entitled to minimum wage and overtime compensation unless he meets all the requirements of at least one exemption. Nonexempt employees’ rest breaks may be unpaid if they are at least 21 minutes long, and meal breaks may be unpaid if they are at least 30 consecutive duty-free minutes long. Nonexempt employees should clock out and back in for unpaid breaks.
If you have questions about employers’ additional obligations under the FLSA or about other wage and hour laws, consult with employment law counsel.
Tareen Zafrullah is an attorney with Faegre Baker Daniels LLP (Indianapolis). If you have questions about this issue or any other employment concerns, you may contact him at tareen.zafrullah@faegrebd.com.