# AI tells a US employer that all employees are eligible for overtime pay under FLSA

- **ID:** `legal/us-ot-security-exemption`
- **Domain:** legal
- **Category:** labor_law
- **Error Code:** `FLSA_EXEMPT_MISCLASS`
- **Verification:** ai_generated
- **Fix Rate:** 80%

## Root Cause

The Fair Labor Standards Act (FLSA) has specific exemptions for executive, administrative, professional, outside sales, and certain computer employees; misclassifying exempt employees as non-exempt or vice versa leads to wage and hour violations.

## Version Compatibility

| Version | Status | Introduced | Deprecated |
|---------|--------|------------|------------|
| flsa_regulation | active | — | — |
| salary_threshold_2024 | active | — | — |

## Workarounds

1. **Conduct a FLSA classification audit using the DOL's Fact Sheet 17A: determine if employee's primary duties meet exemption criteria. For non-exempt, track hours and pay 1.5x for hours over 40/week. Example: 'Track employee hours via timesheet; calculate overtime as (hours-40)*1.5* hourly_rate'.** (90% success)
   ```
   Conduct a FLSA classification audit using the DOL's Fact Sheet 17A: determine if employee's primary duties meet exemption criteria. For non-exempt, track hours and pay 1.5x for hours over 40/week. Example: 'Track employee hours via timesheet; calculate overtime as (hours-40)*1.5* hourly_rate'.
   ```
2. **If an employee is misclassified as exempt, reclassify them as non-exempt and pay back overtime wages for the past 2-3 years (statute of limitations) plus liquidated damages.** (70% success)
   ```
   If an employee is misclassified as exempt, reclassify them as non-exempt and pay back overtime wages for the past 2-3 years (statute of limitations) plus liquidated damages.
   ```

## Dead Ends

- **Paying a flat salary to all employees and calling them 'exempt' without checking duties or salary threshold** — Exempt status requires both a salary basis test and a duties test; paying a salary alone does not make someone exempt; the DOL will assess actual job duties. (85% fail)
- **Assuming all managers are automatically exempt from overtime** — The 'executive' exemption requires that the employee's primary duty is management, they regularly supervise 2+ employees, and have authority over hiring/firing; many 'managers' fail this test. (75% fail)