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Businesses Can’t Avoid OT With a Salary

A reminder for employers to properly classify employees’ FLSA Status by 12/15/2021

The Fair Labor Standards Act, or FLSA, is a federal law that sets basic standards for minimum wage and overtime pay. Although the rules might seem straightforward, when employees are tipped (such as in restaurants) or work in retail establishments, complying with the FLSA becomes a little more complex.

Case Study

The operator of a Texas-based restaurant chain is facing over $358,000 in back wages and interest after a Department of Labor investigation determined that restaurant managers received less than the required minimum salary for managers under the Fair Labor Standards Act.

“Employers cannot avoid overtime requirements by simply giving an employee a title and paying them a salary,” said Wage and Hour District Director Cynthia Ramos in San Antonio. “Most employees – even those paid a fixed salary or flat amount per day or shift – are entitled to overtime unless specific FLSA requirements are met.’”

direct quote from the press release

In this case, the division determined the managers were entitled to the minimum wage for every hour of work and overtime when they worked more than 40 in a workweek.

If you need assistance with determining if your employees are properly classified under the Fair Labor Standards Act, please contact the HRinDemand team.

Bailey Cummins, PHR, is a member of the HRinDemand team, a human resources company in Reno, NV, offering expert guidance and easy-to-use tools to help small businesses with employment regulations, compliance, employee relations, and company growth.  

Other Links:

United States Department of Labor. (2019, September). Fact Sheet #17A: Exemption for Executive, Administrative, Professional, Computer & Outside Sales Employees Under the Fair Labor Standards Act (FLSA) [fact sheet].https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/fs17a_overview.pdf


United States Department of Labor. (2021, November 1). US Department of Labor Recovers $358K in Back Wages, Interest for 31 Managers Wrongly Denied Overtime by Dairy Queen Operator [press release].https://www.dol.gov/newsroom/releases/whd/whd20211101-1