PEO Industry Leader SourceOne Partners Responds to Increase in Wage and Hour Lawsuits with Advice for Following New FLSA Rules

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Misclassifying employees to avoid paying overtime has lead to an increase in cases filed under the Fair Labor Standards Act (FLSA). SourceOne Partners advises companies to avoid penalties and lawsuits by complying with Labor Department rule changes for classifying exempt versus nonexempt employees.

PEO & Payroll Experts
Mistakenly assuming that any salaried employee is exempt from overtime under the FLSA can be very expensive if the employee brings the issue to the attention of the Labor Department.

Employees who are mistakenly classified as being exempt from overtime regulations can report employers to the Department of Labor, and receive back overtime pay if the employer is found to be in violation of the Fair Labor Standards Act (FLSA). The Federal Judicial Center says that 8,126 cases have been filed under the FLSA this year, an increase of nearly 5% over 2013. Cases can also be brought under state laws, and consequences may include civil settlements, back wages, and penalties levied by the Labor Department.

Employers must make sure they understand the differences between exempt and nonexempt employees to comply with the FLSA. Some employees are exempt from the overtime provisions of the FLSA because they meet both a duties test and a salary basis test. Under the duties test, employees must meet FLSA criteria for executive, administrative, professional, or computer duties (or some combination of exempt duties). Employees may be considered exempt even if they occasionally perform non-exempt duties, as long as the employee's primary duties qualify as exempt. Non-exempt employees must be paid overtime for all hours in excess of 40 in one workweek.

Jeff Hecht, President of SourceOne Partners, a company offering customized solutions in the Professional Employer Organization (PEO) industry, says, "Simply because an employee is salaried does not mean he or she is exempt from overtime. Exempt employees must be salaried, and they must meet the duties criteria under the FLSA. Mistakenly assuming that any salaried employee is exempt from overtime under the FLSA can be very expensive if the employee brings the issue to the attention of the Labor Department."

Earlier this year, President Obama ordered the Labor Department to rewrite rules that enable businesses to avoid paying overtime to managers in the fast food and retail sectors. "The pay threshold for exemptions is currently $455 per week, and the new executive order is expected to increase that threshold, making more employees eligible for time-and-a-half overtime pay," said Hecht. Other rule changes would reduce avoidance of paying overtime by employers classifying fast food and retail managers as "executives" even though they spend most of their workdays performing non-executive functions like manning cash registers.

"The bottom line is, under proposed Labor Department rule changes, millions more American workers will become eligible for overtime pay,” explained Hecht. “Employers must make sure they are classifying all employees correctly as exempt or nonexempt, or they could face lawsuits and penalties. Companies that work with Professional Employer Organizations - PEOs - should be vigilant in ensuring their PEO understands the latest Labor Department classification rules for exempt and nonexempt employees."

SourceOne Partners offers customized PEO solutions for each client's specific needs, including payroll outsourcing and workers' compensation insurance. SourceOne Partners shops both the PEO and traditional market and provides cost-benefit analyses to assist clients in making informed decisions about payroll outsourcing, workers’ compensation, and other employee benefit administration services.

About SourceOne Partners

SourceOne Partners is a leading provider of PEO and payroll services in South Florida, New Jersey, New York, and Pennsylvania. The services SourceOne Partners provides help companies reduce HR costs, minimize employer risk and liability, and relieve the administrative burdens of HR and payroll. Visit or call 561-674-0748 for a free payroll or PEO analysis for your business.

SourceOne Partners Locations:

South Florida
2255 Glades Road
Suite 324
Boca Raton, FL 33431

New Jersey
990 Cedarbridge Ave #7
Brick, NJ 08723‎

T: 561.674.0748

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Jamie Maloney
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Sourceone Partners
since: 09/2013
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