As the next deadline for the 2024 FLSA ruling approaches, we want to share our insights from the recent Mayfield v. U.S. Department of Labor decision. This ruling emphasizes the importance of thoroughly reviewing employee classifications under the Fair Labor Standards Act (FLSA) to prevent costly misclassification risks.
Here’s what you need to know.
The 5th U.S. Circuit Court of Appeals’ Mayfield ruling underscores that both salary and duties tests are critical in classifying an employee as exempt. Exemption status cannot be based solely on title or pay; employees must meet the Fair Labor Standards Act (FLSA) requirements for specific duties and salary.
Updated Salary Thresholds
Effective July 1, 2024, the federal salary threshold for exempt employees rose to $844 per week ($43,888 annually) and will increase to $1,128 per week ($58,656 annually) on January 1, 2025. States like California and New York have stricter thresholds, making it vital to comply with both federal and local laws, especially if you have employees or operate in multiple states.
Misclassification Risks
Misclassifying employees carries serious consequences, including:
- Back Pay for Unpaid Overtime: FLSA mandates back pay for up to three years; some states extend this period.
- Double Damages: Both FLSA and certain states impose extra damages equal to unpaid wages.
- Legal Fees and Penalties: Violations can lead to employer liability for employee legal fees and additional state penalties.
The E.X.E.M.P.T. Checklist
To mitigate risks, IDHR recommends using the EXEMPT checklist:
Download a PDF document of the E.X.E.M.P.T. checklist to share.
Proactive Compliance
The Mayfield ruling reinforces the importance of accurately applying the salary and duties tests. By regularly reviewing classifications, staying updated on salary thresholds, and conducting audits, you can minimize compliance risks. If you would like guidance in implementing these steps to safeguard your business contact us at information@idhr.co.
