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JoDee Curtis (00:02)
The FLSA is really at the core of how we pay and classify people. It sets federal standards for minimum wage, overtime pay, record keeping, and even child labor laws.

Welcome to The JoyPowered® Workspace Podcast, where we help HR and business leaders embrace joy in the workplace. I’m JoDee Curtis, owner of Purple Ink, an HR consulting and talent development firm, and with me is my dear friend and co-host, Susan White, owner of Susan Tinder White Consulting, an HR consulting practice. Susan is also a senior executive collaborator with Purple Ink.

Our topic today is the Fair Labor Standards Act, and Susan, as I was reviewing our listeners’ suggestions for topic ideas — and as you know, we have a lot of suggested topics. We do try to get to them.

Susan White (01:06)
Yes.

JoDee Curtis (01:11)
But I was surprised at how many we had accumulated on the topic of the Fair Labor Standards Act and also the classification of employees versus independent contractors, which goes along with that, so I thought it was time for us to address this topic and really demystify what we call the FLSA, the Fair Labor Standards Act.

And as a reminder, Susan and I are not attorneys, nor do we want to be. Note that this episode provides information, but not legal advice. You should always check with your own legal counsel for your specific situation.

But the FLSA is really at the core of how we pay and classify people. It sets federal standards for minimum wage, overtime pay, record keeping, and even child labor laws. It applies to most all workers in the U.S. and is enforced by the Department of Labor, specifically the Wage and Hour Division. There are a number of employment practices which the FLSA does not regulate, though, and I thought I would mention those.

They do not require vacation, holiday, severance, or sick pay. They don’t require meal or rest periods or holidays off or vacations. They don’t require premium pay for weekend or holiday work or pay raises or fringe benefits or a discharge notice or a reason for discharge or immediate payment of final wages to terminated employees.

Now note that many of your states or cities might have laws on some of these things. You might have policies in your handbooks, employee manuals on these topics. They’re not covered under the FLSA, which I never thought about that really. Like, what’s not in there that you think might have been covered by this? So.

Susan White (03:26)
Yeah.

JoDee Curtis (03:29)
And I have to admit, I had to look up the federal minimum wage, which is only $7.25 per hour, and that has not changed since July of 2009, which is crazy to me. Now, of course, many, many states and localities set higher rates and workers get the higher rate when the law is different.

Susan White (03:58)
JoDee, when I knew we were gonna be talking about this today, I was just looking at some articles about FLSA. You know, the law was signed into effect in 1938, and at the time, the federal minimum wage was set at 25 cents an hour. Isn’t that crazy? But think about it, 1938 to 2009, when it finally got to $7.25, here we are at this recording, at the end of 2025, it’s still at $7.25.

JoDee Curtis (04:27)
Yeah. That’s crazy.

Susan White (04:28)
I think there’s a need for it to get higher, federally.

JoDee Curtis (04:31)
Yeah.

Well, you know, I think when I first started my first job, and I’ll put “job” in quotes, which was babysitting when I was about 12 years old, I made 25 cents an hour. That, that was — the law was passed in 1938, and that was about 1976. Of course, babysitting wasn’t covered under minimum wage, but…

Susan White (05:00)
Doesn’t it — it blows my mind to think about people would leave their children in our care for 25 cents an hour. Oh my gosh, their lives were in our hands. And we had no cell phones back then, so I mean, like, they trusted — they came back five hours later and hopefully we were all alive, which we were. Yeah, amazing.

Well, let’s get back to FLSA that let’s define exempt versus non-exempt. I think for people new to HR or business leaders who may be listening, it’s like, you get those two confused. What do you mean? Exempt from what? Not exempt from what else? Well, it’s a key distinction with payroll. And exempt employees do not receive overtime. If you want to think about they’re exempt from overtime. To qualify to be exempt or for an exemption, employees generally must meet criteria. And this is what they often talk about, the test, they pass the test.

The three major criteria are number one, they need to be paid on a salary basis, a predetermined fixed amount that is not reduced for the quality or quantity of work. Alright? The second requirement or test if a job is exempt or not, the salary must meet the current minimum set by the Department of Labor. As of December 2025, that minimum, they call it the threshold, is still $684 per week or $35,568 annually.

So to clarify, if an employee makes less than that, they’re not allowed to be considered exempt from overtime, regardless of what their role is. They could be managing a division for you, but if they earn less than that $35,568 annually, they cannot be exempt.

And then third test for exemption status is duties test. Primary duties must align with one of the exemption categories. And those categories are executive, administrative, professional, computer, outside sales, or highly compensated employees. Okay, so what’s a highly compensated employee? As of now, employees making at least $107,432 is considered to be highly compensated by the federal government.

JoDee Curtis (07:20)
For non-exempt employees, overtime must be paid at time and a half for hours worked that is over 40 in a work week. And the FLSA defines a work week as a fixed recurring period of 168 hours, which is seven days of 24-hour periods. And it is not permitted to average time across weeks and overtime earned must be paid on the regular payday for that pay period.

Although we previously mentioned exemption categories, note that job titles do not decide the status. It’s the actual work performed does. So to avoid misclassification, we suggest a job analysis, documentation, and job descriptions.

Because of course, you can make their title whatever you want them to be, right? You could say somebody was the vice president of accounting and then be paying them $35,000, right? So that doesn’t make them exempt.

Susan White (08:35)
The Department of Labor has noted that a frequent error is made in calculating overtime. As stated earlier, non-exempt employees must be paid at least time and a half for their regular — at the regular rate of pay for all hours over 40 hours in a work week. The regular rate includes an employee’s hourly rate plus — and here’s the tricky part — plus the value of some other types of compensation, such as bonuses and or shift differentials. It can be further complicated if an employee works two or more different jobs in a single work week.

JoDee Curtis (09:13)
Yeah, so it’s not simple to do. Under FLSA recordkeeping, employers must keep certain payroll related records for three years and basic employment and earnings records for two years. The records do not have to be kept in any particular form and you don’t have to have a time clock to manage it.

With respect to an employee subject to the minimum wage provisions or both the minimum wage and overtime pay provisions, the following records must be kept. Personal information, including their name, home address, occupation, sex, and birth date if under 19 years of age. An hour and day when the work week begins. The total hours worked each workday and each work week. The total daily or weekly straight time earnings, regular hourly pay rate for any week when overtime is earned, total overtime pay, deductions from or additions to wages, total wages paid each pay period, and the date of payment and pay period covered.

Susan White (10:30)
So keep your records, bottom line, right? FLSA protections apply to employees and they do not apply to independent contractors. And I know there’s a lot of noise out there — that’s probably my entire work life, when people were classified as an independent contractor and yet fear was that the employer was treating them like employees, which is a risk you don’t wanna take, right?

So we’ve had a lot of questions about the classification of employees versus independent contractors, so we thought we’d just spend a few minutes on this. Of course, this topic could probably be an entire episode by itself, but here’s just a few, I think, key points. The independent contractor rule addresses six factors that guide the analysis of a worker’s relationship with an employer.

Number one, including any opportunity for profit or loss a worker might have. Number two, the financial stake and nature of any resources a worker has invested in the work. Number three, the degree of permanence of the work relationship. Number four, the degree of control an employer has over the person’s work. Number five, whether the work the person does is essential to the employer’s business. And finally, a factor regarding the worker’s skill and initiative.

Misclassifying workers as an independent contractor when they really, looking at all those factors, they really are acting and you’re treating them like an employee, it could trigger a minimum wage and overtime liabilities plus recordkeeping issues that you could get challenged on. If independent contractors are deemed to have been employees by the government, organizations can be required to pay back wages and taxes and liquidated damages.

JoDee Curtis (12:25)
Yeah, so that can be very expensive process, so I encourage organizations to be really on top of that and look at it. You know, maybe at one point you hired someone as an independent contractor for a particular project or whatever, but now five years later, they’re still there and they’ve done lots of different things. And maybe they still meet all those requirements, but reassess some of those every year really to make sure.

Susan White (12:59)
That degree of permanence I’ve seen be one that really pops up, that people come and they just stay much longer than initially thought they would. You should have — you probably need to convert them to employees.

JoDee Curtis (13:12)
Right, right.

Child labor rules are also part of FLSA. Generally, employees must be at least 16 for non-hazardous work and 18 for hazardous work. Younger teens may work under specific conditions and agricultural rules different. Once again, if state rules are stricter, the more protective rule applies. I have to tell you, Susan, this takes me back. I started working, maybe I shouldn’t even say where or who, but I worked for a fast food restaurant in a very small town in Indiana starting at the age of 14, which is allowed. It says up there, we just read younger teens may work under specific conditions.

Susan White (14:06)
I really, they had really, back when I was doing it at 15, we had to, I think, work till seven at night or whatever it was. It was very restrained amount of hours we could work and how late we could do and how early we could start. Yeah.

JoDee Curtis (14:16)
Yeah. Yes, and I’ll just say now it’s – what, 45 years later, but I worked until 11 o’clock on school nights.

Susan White (14:30)
Oh my gosh, I have to think there was a law against that. I don’t know.

JoDee Curtis (14:36)
Yeah, I’m not going to go back and look to see if any of the parameters have changed. Although I will tell you, in general, not a whole lot has changed since 1938, right? I mean, minimum wages have changed over the years, but I’m not sure I was in compliance.

Susan White (14:57)
I don’t think I could have stayed awake the next morning in math class. I would have been a mess. Well —

JoDee Curtis (15:01)
I even think back to that now that, like, I can’t believe my parents let me work until eleven o’clock on a school night.

Susan White (15:07)
Let you do it. What were they thinking? Yeah, that’s funny. Well, when I was reading this morning about the FLSA, another interesting component really relates to the child labor laws, because prior to 1938, there were no regulations. They were five-year-olds working in factories. In fact, they showed some pictures. Children were — of course, you think about the Depression that they were working through and trying to get food on the table, but their children were not protected. The 1938 Fair Labor Standards Act certainly was, I think, a movement in the right direction.

JoDee Curtis (15:44)
Right, right, right. Actually, that reminds me too, a friend of mine’s daughter graduated from college a couple years ago and started her first full-time job, and after her first week of work, she was exhausted and she told her mom, my friend, she said, “Who came up with this 40 hours a week thing?” Like, she said, this, you know, it’s too much to work 40 hours in a week.

Susan White (16:13)
That cracks me up.

JoDee Curtis (16:14)
Her mom and I were laughing and I was like, well, it was the Fair Labor Standards Act because it used to be, you know, there were no limits on it.

Susan White (16:22)
Right. And actually in 1938, it was 44 hours a week. It was two years later, 1940, that they reduced it to 40 hours a week. So briefly, 44 hours is what we all would have been expected to work. But that cracks me up. Yeah.

JoDee Curtis (16:37)
Right. I know. So funny. Well, the Wage and Hour Division continues to actively enforce these rules. In 2024, the Wage and Hour Division recovered nearly $150 million in back wages tied to FLSA violations, and that affected over 125,000 workers. This is a strong reminder that understanding this act is critical. Civil penalties for willful or repeated violations also increased in 2025. So based on this, we have a few suggestions of things to consider.

Number one is to perform a self-audit, maybe a couple of times a year, to just — maybe someone independent of payroll, even, to go in and relook at classifications. Who’s considered exempt and non-exempt, and are those still accurate? Maybe initially they were set up correctly, but has the rule changed over time? Are the rates appropriate? Are the overtime calculations being done properly, especially with that regular rate calculation you mentioned earlier and just overall job classifications, as well, too.

Susan White (18:10)
Second thought: train or provide information, maybe frequently asked questions to managers on overtime, timekeeping, and classification.

I will tell you, in my experience of working with a lot of managers, there’s times where they come to you and they want to reward someone and they say, you know what, I want to make them exempt so they can stop filling out a timecard. And I always say, let’s stop for a moment. That may not really be a reward for that individual. Let’s take a look at what they do, the number of hours they work. You might be taking overtime away from them. Is this really a gift you’re giving them, or is it a gift the company’s gonna get because they’re gonna work more hours for a set rate?

And then I guess the second thing I hear from managers a lot is I want — my employee feels like it’s beneath them to fill out timecards. They moved from a company where they didn’t have to fill out timecards for a very similar role, and now I’m asking them to track their time, they feel like that’s demeaning.

I’m like, you’ve got to understand that we take a look at the job. That other company was — probably had misclassified, if that was, if the role is similar to ours, they’ve misclassified it. We got — compliance is important, and we’re going to need to help our new hire understand that, yes, we need to track your time because we want to pay you for every hour that you work here. So train, spend the time educating your leaders, help them understand the why behind our making sure that we’re compliant with FLSA.

JoDee Curtis (19:31)
Yeah, and Susan, that’s such a good reminder to me when I — even though, you know, I just said there haven’t really been all that many changes to FLSA since 1938, recently, though, there has been a lot of discussion around it at the federal level. I think even going back, maybe – it was pre-COVID — maybe 2018 or 2019, they talked about changing those, increasing those…

Susan White (20:05)
You’re right.

JoDee Curtis (20:06)
…salary rates so that — to really protect the employee and to ensure that people were getting paid overtime when they were working it.

But it — and so we were working with a lot of companies during that time to help them assess their classifications. Of course, it didn’t go into effect, but it was still a good exercise to go through. But anyway, I was surprised at some of the pushback we got. As you called it, some companies thought they were giving their employees a gift by not having them fill out timecards or timesheets or whatever, but what they could be missing out on is overtime payments.

But it really was a psychological thing for some people that they felt like they — that I think some people think of exempt versus nonexempt as almost like professional and nonprofessional.

Susan White (21:07)
I’ve heard that, yes.

JoDee Curtis (21:08)
And that really is not the truth.

The large part of the population that was going to be impacted by that were assistant managers in the hospitality space. So you think about assistant managers at restaurants or retail stores or hotels that were maybe making $39,000 a year, but might have been working 50 plus hours a week due to the nature of their roles. They were thought of as more professional because they were an assistant manager, but they still should have been paid extra overtime hours.

Anyway, there’s multiple things to think about and I was surprised at the psychological one. But number three is double check salary level compliance. Check for new updates from the Department of Labor, confirm raises or changes in compensation that might impact compliance.

Susan White (22:17)
JoDee, what’s one thing about wage and hour practices that might take the joy out of work?

JoDee Curtis (22:23)
Yeah, so I think it’s confusion, really. And I just mentioned about the psychological impacts of thinking, am I professional or not professional, which is not the distinction really, but we may be thinking about it. So people might be confused about their classification.

And when they, employees don’t understand their status, they don’t understand why they are or not getting overtime or how their overtime is calculated, trust drops, right? They may not trust the system if they’re confused by it. So we highly encourage you to have transparent policies and that manager training that we mentioned earlier.

Be sure you understand and follow the federal guidelines as well as any state laws in which you have employees. And just be transparent about the whys and hows and what the law is around it so people know that you know how they should be paid.

Susan White (23:39)
Excellent points. JoDee, it’s time for the listener question. The following question came from a listener of one of our monthly podcasts. As you know, listeners, we welcome questions anytime. Here it is, JoDee.

“Which is a better bereavement policy: X days, depending on who died, like the parents, cousins, etc., or an open policy depending on manager’s discretion and the situation with the employee?”

JoDee Curtis (24:08)
Yeah, so this is a really tough question and I’m not sure there’s – you, you’re asking which is the better policy. There’s no set rule around this. Companies can create their own bereavement policies. So I’m not going to tell you an answer, right, that’s validated by some — by anyone, but I will give you some things to think about.

I personally, and you’ve heard me say before that I’m a fan of very flexible PTO, right? So our bereavement policy in essence falls under our paid time off plan, along with holidays and religious days and vacation and sick time and all of that, which I think gives people the most flexibility of all to use their time. I think it becomes — I mean, I remember the days as an HR leader where I had policies that said, you, you get five days for the loss of a child and two days for the loss of a parent. I mean, none of those make sense, right? It’s difficult.

The loss of a child, even, I… you could give people a year off and it might not be enough for them, right? So there’s no period of grief. I also think too, sometimes people need time off later, right? Maybe immediately they need a few days for the funeral, but they may need more time off later to rethink childcare or when all the help and support from people around us kind of goes away, right? So just think about that.

I also, we’ve had Liesel Mertes on the podcast before, and I always remember that she suggested in bereavement times that you not say take all the time you need, right? I know it’s… You may want to say those words and truly believe that you want the person to take all the time they need, but how much time might someone need, right? It could be a year or years.

So I do recommend having a very clear policy. And maybe you can combine that with some unpaid time off so that they are allowed additional time, but that you don’t sort of get yourself trapped in an arrangement where someone says, well, they told me to take all the time I need and I’m still getting paid, so I think I need more time.

So whatever your policy might be, if it’s included in your paid time off, if it’s five days or three days or whatever it is, I encourage you to be as flexible as possible, but not with setting up policies with, you know, unlimited time off that are — really can be difficult for both parties. The employee might not know what’s reasonable either. So any thoughts you have on that, Susan?

Susan White (27:34)
Yeah, my heart just aches when I think about this because, you know, we all go through grief and depending on what the relationship was with your parent or with your sibling or with your mother-in-law, you know, everyone’s gonna react differently. And so whenever we put a certain, dictate the amount of time based on the relationship, we’re probably gonna get it wrong. It’s just, we’re probably gonna do that.

But I loved your point about PTO where you have built in time, more than likely should — you know, for all the different types of reasons people could leave, some leave — need to be off. It could be that some people are really lucky and have a year where they didn’t have to use any of their paid time off for grief. But there’s gonna be years where they might need to use it multiple times. So be as generous as your business can allow on PTO time.

But I loved when you said maybe there’s unpaid time that you have available for discretionary leaves, where the manager can, based on situation, say, you need more time. I know you’ve used up your time. We can give you a discretionary leave. It’s unpaid. Would that be helpful? Or give you four days from that or whatever. So wherever we can show our empathy and our humanity and help people, I’m all for it. I recognize we have to run businesses and we have to make a profit so that we can keep everyone employed. So trying to find that balance is not easy and I love that the question came in.

JoDee Curtis (28:50)
Right. Yeah, me too. Now it’s time for in the news. The Academy to Innovate HR recently released a report on the 11 HR trends for 2026. We have a link to the article in the show notes. And not surprisingly, AI is an important part of many of them. But here are some of the trends.

Number one, AI leadership coalition emerges with HR at the table. Number two, human centered governance guides AI deployment, right? We have to have humans making decisions about AI. Number three, businesses invest in AI centers of excellence. Number four, another AI. AI capacity gains fuel collective growth.

Number five, here’s a — here’s a new word for you, Susan: technostress. I haven’t heard of that one before, but it’s stress around technology. And FOBO, the fear of being obsolete. So both technostress and FOBO enter the HR agenda. Number six, cross-functional structures replace HR silos. I thought that one was particularly interesting. Number seven, HR’s AI spending is accelerating. No surprise there. Number eight, AI fluency becomes a baseline HR competency. Not surprised about that one either.

Number nine, human strengths will define HR’s future. Human resources will not be replaced by AI. Maybe some roles or some activities and tasks, and I think those will be some of the ones we need to be replaced by AI. Number 10, workforce planning expands beyond jobs and roles. And number 11, leadership expands as management shrinks.

So my advice to all of our listeners in general is to start learning AI. Start practicing, start, you know, doing personal things, right? Get out there, get active. The more you use it, the better at it you become. And again, some of those trends were a bit generic, but I encourage you to follow the link in the show notes and read more about it. It’s a great article.

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Again, that’s getjoypowered.com slash shrm to get the code and it will expire on January 26, 2027. Thank you for listening and thank you for your dedication to the HR profession. Please tune in next time and make it a JoyPowered® day.

Susan White (32:42)
Thank you.