Amit K. Misra, Esq., P.C.
The Misra Legal Group
639 Heights Boulevard
Houston, Texas 77007

tel: 832-723-4776
fax: 832-476-9656
amit@misralegal.com

Practice Areas

Wage and Hour Law

Congress enacted the Fair Labor Standards Act (the “FLSA”) nearly 80 years ago. Despite this, continuing changes in the nature of work lead many employers to have compliance problems with provisions of wage and hour law, often inadvertently. Because the FLSA covers all employers, regardless of size, even small businesses need to maintain compliance with their obligations under wage and hour law. Consulting with The Misra Legal Group can help your business avoid liability under the FLSA.

FLSA Preemption and Independent Contractor Status

The FLSA preempts all other laws related to minimum wage and overtime wages. Accordingly, a business and a worker cannot enter into a contract which attempts to create terms and conditions contrary to the FLSA. Even if a business and a worker sign a written contract acknowledging the worker's status as an independent contractor, the Wage and Hour Division of the U.S. Department of Labor or a court may still determine that the FLSA preempts the written contract and deem the worker to be an employee and not an independent contractor.

In making this determination, the agency or the court would conduct an analysis of whether an individual has sufficient economic independence to support independent contractor status based on the following factors:

  • The degree of control exercised by the alleged employer
  • The extent of the relative investments of the worker and the alleged employer
  • The degree to which the worker's opportunity for profit or loss is determined by the alleged employer
  • The skill and initiative required in performing the job
  • The permanency of the relationship

Again, the intent of the parties does not enter into the analysis by the agency or the court. If the business receives the services of the worker (1) without tracking the number of hours worked in a workweek and (2) without compensating the worker at least at the minimum wage and with overtime wages for working more than 40 hours in a workweek, and if the agency or the court determines that the worker has insufficient economic independence to be an independent contractor, the business will fail to comply with the FLSA.

Employees Exempt from the Overtime Wage Requirement

Under the FLSA, even if an employee agrees in writing to receive pay on a salary basis, an employer must pay the employee at an hourly rate and provide overtime wages at 1 ½ times the regular hourly rate for working more than 40 hours in a workweek unless the employee qualifies for an exemption from the overtime wage requirements of the FLSA. The most common exemptions include:

  • Administrative exemption — The employee must have the primary duty of performing office or non-manual work which (1) is directly related to the management or general business operations of the employer or the employer's customers and (2) includes the exercise of discretion and independent judgment with respect to matters of significance.
  • Executive exemption — The employee must have the primary duty of managing the enterprise or a customarily recognized department or subdivision, which includes (1) customarily and regularly directing the work of at least two or more other full-time employees or their equivalent and (2) having the authority to hire or fire other employees or influence over any other change of status of other employees.
  • Professional exemption — The employee must have the primary duty of performing work requiring advanced knowledge, which is (1) predominantly intellectual in character, and requiring the consistent exercise of discretion and judgment; (2) in a field of science or learning; and (3) is customarily acquired by a prolonged course of specialized intellectual instruction.

Importantly, all employees paid on a salary basis under these exemptions must receive a minimum weekly salary of $455.

Depending on the actual duties performed, an employee may qualify for other exemptions under the FLSA which would allow compensation on a salary basis without overtime wages. Again, the intent of the employer and employee does not determine the availability of an exemption. Rather, the employee's actual duties guide this determination.

Notably, consulting with legal counsel may provide an employer with a good faith affirmative defense which may shorten the applicable statute of limitations if an employee files a lawsuit seeking overtime wages. To ensure that your business has considered the FLSA before it sets compensation for its employees, talk to The Misra Legal Group.

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