HR in Out of Home
Article 9 FLSA
by Janea S. McDonald, PhD, PHR, SHRM-CP
janea@edgehrconsulting.com www.edgehrconsulting.com
If you’re reading this, your organization is likely subject to the rules of the Fair Labor Standards Act (FLSA) which was enacted in 1938 to ensure proper working conditions for employees and covers such items as minimum wage, overtime pay, child labor, and employer recordkeeping provisions. The FLSA is undergoing significant changes aimed at addressing modern workforce challenges and ensuring fair labor practices. These amendments reflect the changing nature of work, the increasing prevalence of gig and remote work, and the ongoing need for worker protections. The out of home (OOH) industry, which employs a range of workers from installers to creative designers, will be impacted by these amendments.
Increased Minimum Wage
One of the most impactful changes to the FLSA (“Raise the Wage Act of 2023”) is the increase in the federal minimum wage. The proposed amendment aims to raise the minimum wage to $17 per hour (from the current rate of $7.25 per hour) over five years. This change is designed to improve the living standards of low-wage workers and reduce poverty levels. In the OOH industry, this increase will particularly affect laborers and installation crews, who often work at or near the current minimum wage. Proponents argue that this increase is long overdue, given that the federal minimum wage has not kept pace with inflation, leading to diminished purchasing power for many workers. Critics, however, caution that a significant wage hike could lead to job losses and increased costs for businesses, particularly small enterprises.
Overtime Eligibility Expansion
Another critical amendment involves the expansion of overtime eligibility. The new rules will raise the salary threshold for overtime pay, making more workers eligible. The first change is effective July 1, 2024, followed by a further increase as of January 1, 2025. Currently, employees earning less than $35,568 per year qualify for overtime. The change will increase this threshold to $43,888 on July 1, 2024, significantly broadening the pool of workers eligible for overtime compensation. The threshold will increase to $58,656 per year on January 1, 2025. In the OOH industry, this will impact both office-based employees and field workers who often put in long hours to meet tight deadlines. This adjustment is expected to benefit millions of middle-income workers who often work long hours without additional pay. How could this affect your organization? Employees that are paid on a salary basis that make less than the thresholds will have to be paid hourly – or their salaries will need to be increased to the threshold amounts. (Side note: keep in mind how any changes might impact your internal equity when it comes to compensation.)
Protections for Gig and Freelance Workers
The rise of the gig economy has highlighted gaps in worker protections under the FLSA. The amendments seek to extend certain protections to gig and freelance workers who currently fall outside traditional employment classifications. This includes ensuring that gig workers receive minimum wage and overtime protections. The reclassification aims to provide basic labor rights to a growing segment of the workforce, addressing issues of exploitation and unfair treatment in gig-based jobs. For the OOH industry, which increasingly relies on freelance designers, marketing professionals, and temporary installation crews, these changes could mean re-evaluating how these workers are compensated and classified.
Enhanced Penalties for Violations
To ensure compliance with the new regulations, the amendments propose stiffer penalties for violations of the FLSA. Employers found guilty of wage theft, misclassification of employees, or other infractions will face increased fines and potential criminal charges. This move is intended to deter unlawful practices and encourage employers to adhere strictly to labor laws. The increased penalties will push companies to ensure they are fully compliant with labor laws to avoid costly fines and legal issues.
Improved Record-Keeping Requirements
The amendments will also introduce stricter record-keeping requirements for employers. Businesses will be mandated to maintain detailed records of hours worked, wages paid, and job classifications. This transparency is crucial for the enforcement of labor laws and for resolving disputes over wage and hour claims. Improved record-keeping is expected to enhance accountability and ensure that workers receive their rightful earnings. Meticulous record-keeping will become essential to track the diverse range of workers involved in production, installation, and maintenance.
Support for Working Families
In addition to wage and hour protections, the amendments include provisions to support working families. This involves enhancing parental leave policies, providing more flexibility for working parents, and ensuring equal pay for equal work. These changes aim to create a more balanced work-life dynamic and promote gender equality in the workplace. These provisions will help retain skilled employees by offering better support for their work-life balance needs.
Conclusion
The upcoming changes to the FLSA represent a significant shift towards modernizing labor laws to reflect the realities of today’s workforce. While these amendments promise to enhance worker protections and improve living standards, they also pose challenges for businesses, including those in the OOH industry, adjusting to new regulations. As these changes take effect, continuous dialogue between lawmakers, employers, and workers will be essential to ensure that the goals of the FLSA are met in a fair and sustainable manner. The OOH industry, with its unique workforce composition, must adapt to these changes to continue thriving while ensuring fair treatment and compensation for all its workers.
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Contact Janea at janea@edgehrconsulting.com. Visit www.edgehrconsulting.com
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