The Fair Labor Standards Act was enacted in 1938 and establishes minimum wage, overtime pay, record-keeping and youth employment standards. Nearly 80 years later, employers continue to struggle with compliance and mistakes prove costly. In fiscal year 2014, the federal Wage and Hour Division of the Department of Labor collected approximately $240 million in back wages for workers. This is approximately a 30 percent increase over fiscal year 2010.
The increase is, in part, a result of a strategic effort by the agency to target investigations where violations are most common. Two of the most common violations for employers are (1) misclassifying employees as exempt rather than nonexempt; and (2) misclassifying workers as independent contractors rather than employees. Both of these mistakes expose employers to significant liability.
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