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The Federal Labor
Standards Act (FLSA) is a multi-faceted statute that came into existence at the
end of the Great Depression.  That law,
which was dormant for several decades, took on new vigor in the past decade,
becoming more vigorous with the Great Recession.  The goal of the law is laudable:  provide fair working conditions for
employees, and compensate them for the time worked, all within a reasonable
work week.  The law created the concept
of overtime, to pay non-exempt employees overtime for hours worked in excess of
forty hours per week.   However, the FLSA
places the burden on employers to track employee time to determine if overtime
is warranted.  For many small to
mid-sized businesses, especially businesses in the energy and medical services
sector, it is one of the most draconian laws targeted at employers.  Many business owners walk into the cross
hairs of the FLSA because of simple failing: 
inadequate record keeping.
For hourly employees, a
business owner must have procedures in place to generate and maintain
documentation of the number of hours each employee works each day and each work
week (a work week need not be Monday to Friday, but it must encompass a
week).  If an employer does not maintain
employee time sheets and related documentation, an employee may merely allege
the number of hours he or she worked (even the time they spent surfing the
internet) – without providing the business owner the opportunity to argue that
the employee’s estimates are not accurate. 
For a single employee, a business owner’s failure to keep records may
cost the business thousands of dollars, and several thousand more in attorney
fees.  When employees band together in a
class action lawsuit, this can bankrupt an otherwise healthy medium-sized
There are exemptions to
the FLSA, such as basic categories for some employees who conduct sales or who
provide administrative services. 
However, FLSA exemptions have limited parameters, and any business owner
seeking to claim shelter under them must tailor the employee’s role and
responsibilities to the exemption. 
Arguing after suit has been filed about possible exemptions, or
exemptions thought to exist, is an expensive, slow process that has an
excessive and destructive effect on smaller and medium-sized businesses.
To prevent these
consequences, there are a few simple first steps in the direction of safety for
your business.  Maintain accurate
records.  Classify your employees
according to their roles and responsibilities. 
Pay your employees at least the minimum wage and legal overtime
rates.  Make sure that your divisional
managers and administrators maintain reliable and consistent records.
At the Vethan Law firm,
we are a full-service business law firm. 
We work closely with businesses to ensure that their operations match
their needs, as well as their policies and procedures, and that their
operations fall within the bounds of the FLSA and other laws.  We also work with businesses that have been
sued under the FLSA, and counsel companies about available options to defend
these lawsuits.