Legal Compliance

The Fair Labor Standards Act (FLSA) of 1938—also called the Wages and Hours Bill—is a federal law protecting the employee’s right to compensation for work performed. It established the national minimum wage and guaranteed overtime, and prohibited the employment of minors. While organizations are expected to abide by the Fair Labor Standards Act (FLSA) of 1938, in many cases, the definition of what constitutes an exempt versus nonexempt employee is questionable or open to interpretation. This can and does have serious consequences for the employer when employees are found to have been misclassified.

Use the textbook, the online library resources, and the Internet to research the provisions of the Fair Labor Standards Act (FLSA) of 1938 and related cases. Select an example of a company that mislabeled a nonexempt employee as exempt or mislabeled an exempt employee as nonexempt. Write an analysis, including the following:

• Summarize the example you selected, including a description of the issue and an exploration of its cause.
• Explain the implications of mislabeling for both the employee and the organization.
• How could such a situation be avoided in the future?