Although a stated goal of the Department of Labor’s recent revision of the Fair Labor Standards Act was to clear up confusion regarding overtime pay, experts on both sides of the issue contend it has had just the opposite effect. The number of FLSA lawsuits doubled last year, and they now outnumber federal employment discrimination suits.

The best protection against becoming a target of such a lawsuit—or of the stiff penalties DOL levies for noncompliance—is to make sure employees are properly classified in terms of eligibility for overtime and that all managers and supervisors are familiar with the new rules.

A common misconception held by employers subject to FLSA is that salaried “managerial” employees are automatically exempt, thus not entitled to overtime pay. In reality, so-called “white collar exemptions,” which apply to executive, administrative and professional positions, must meet certain tests related to the employee’s actual job responsibilities and duties. The nature of the employer’s business and the employee’s job title have little or no bearing on the classification.

FLSA delineates three tests to determine whether an employee falls into the exempt category:

• Salary basis—The employee receives a predetermined amount of compensation that cannot be reduced because of variations in the quality or quantity of work performed.
• Salary level—The employee receives a minimum of $455 per week or the equivalent, regardless of full-time or part-time status.
• Job duties—The employee’s “primary duties” match the guidelines provided by FLSA.

Some of the terms used to describe the duties of exempt positions can be vague and ambiguous, such as involvement in “general operations” and exercise of “discretion” or “independent judgment” in the regular performance of duties. Employers are advised to review all existing job descriptions, assess current compliance and take corrective action where warranted.