3 Wage & Hour Actions to Avoid
2025 was one of the most successful years for the United States Department of Labor (USDOL) in collecting settlements for Fair Labor Standards Act (FLSA) violations. According to the USDOL, $259 million was collected in back wages for nearly 177,000 employees during fiscal year 2025, which was reported as the largest amount recovered since 2019.
What are three actions you should be cautious about as an employer?
Unpaid Overtime or pay errors. For non-exempt employees, all hours worked past 40 hours must be paid at time and one-half. Be careful to review your payroll to ensure that employees are being properly paid and there are no overtime mistakes. Encourage employees to report any pay errors as soon as possible so that they can be rectified.
Misclassifying employees. Remember, you are classifying an employee as either overtime eligible (non-exempt) or overtime exempt based on the duties performed, not the title or the person performing the work. There are three overtime exemptions under the FLSA, and you should carefully review and conduct a thoughtful analysis to make sure you are classifying an employee properly. Also, be cognizant of properly classifying an individual as an employee versus contractor - know the difference.
Off the clock time not being paid. If an overtime eligible employee performs any kind of work after hours (i.e., responding to an email, answering calls, etc.) or works during their lunch period, they should be compensated, regardless of the amount of time spent. Tis also encompasses on-call time as well as call-out time.
During 2026, the USDOL has issued 10 Opinion Letters covering topics such as the Portal-to-Portal Act, payment for pre-shift activities, meal breaks, bonus payments, commission employees pay, travel to/from medical appointments and the application to FMLA, and FMLA for teachers during calamity days. It is a good practice to review these Opinion Letters as it allows you to see the direction and philosophy of the USDOL and will aid you in being on the right side of compliance.
Clarity Concepts is here to assist you if you have any questions or concerns regarding FLSA compliance.
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