Survey: FLSA Inhibits Workplace Flexibility Policies

Research

The Fair Labor Standards Act’s (FLSA) anomalous and vague requirements are forcing employers to impose precautionary workplace policies that are overly restrictive and out of step with modern work habits, according to a Nov. 3, 2011, report based on a survey conducted by the HR Policy Association.

The survey, to which 155 HR chiefs responded, found that companies implemented a number of restrictions on nonexempt employees because of the law, such as restrictions on:

  • Overtime hours (85.6 percent).
  • The use of personal digital assistants (55.6 percent).
  • Flexible working hours (44.4 percent).
  • Telecommuting (32.2 percent).

Employees have a mixed reaction to reclassifications, according to 50.5 percent of respondents. More employees were not pleased with reclassification (31.9 percent) than were pleased with it (17.6 percent).

Employees often resent being reclassified to nonexempt status because they believe that the reclassification diminishes their status among co-workers (93.7 percent), results in the loss of workplace flexibility (62 percent) and results in restrictions on working beyond normal working hours (51.9 percent).

Almost 25 percent of companies that reclassified employees adjusted their base pay to offset the anticipated overtime premium, and nearly 86 percent placed restrictions on the amount of overtime hours nonexempt employees can work.

FLSA litigation is not limited to the low-paid, low-skilled employees whom the law was intended to protect, the survey found. In cases where the company has settled a wage and hour claim, the typical pay range of the employees involved was $50,001 to $100,000, according to 61.3 percent of the survey respondents; 8.1 percent of the respondents said the average salary was more than $100,000.

Most surveyed employers (55.8 percent) had been sued within the past 10 years for alleged FLSA violations, and 26.6 percent had been sued more than once. In addition, 39 percent of those surveyed had been sued for alleged state wage and hour violations over the past 10 years, most frequently in California.

Most survey respondents who had been sued indicated that they were sued in large and expensive class-action cases, and 37.3 percent of the respondents said those class actions had involved more than 1,000 people.

“The FLSA was enacted for a different century, based on a different model of the U.S. economy, and at a time that predates global competition and nearly all technology we use,” stated Daniel Yager, general counsel and chief policy officer of the HR Policy Association. “These survey results underscore that, for both employers’ and employees’ sake, this 70-year-old law should be modernized, clarified and made relevant for today’s economic realities.”

Allen Smith, J.D., is SHRM’s manager of workplace law content. Click here to read the original article.