Business / Tax

FLSA Reform

Issue
In 1938, the Fair Labor Standards Act (FLSA) was enacted to establish certain workplace standards such as child labor laws, payments for overtime, and minimum wage rules. Over the years, many areas of the Act failed to keep up with the realities of the ever-changing workplace.

Specifically, the so-called “white-collar exemptions,” which exempted any person “employed in a bona fide executive, administrative, or professional capacity” from its minimum wage and maximum hour requirements, caused enormous uncertainty for employers that were trying to comply with the regulations. The regulations left much room for interpretation and resulted in unfair and costly enforcement actions against many engineering firms.

With input from ACEC and other business organizations, the Department of Labor developed new standards for classifying employees as exempt and non-exempt from the Act’s minimum wage and overtime requirements. The rules, which took effect in August of 2004, provide clearer guidance for engineering firms to properly classify their employees, and help to protect businesses from unfair enforcement actions and lawsuits.

Unfortunately, the rules have been attacked in Congress with numerous amendments intended to roll back these long overdue changes. While these amendments have been defeated so far, new challenges may occur in 2009.

ACEC Position
ACEC strongly opposes any legislative attempt to undermine or strike down the Department of Labor’s updated FLSA rules.