Overtime Pay and the FLSA: Danger Area for SMBsOvertime Pay and the FLSA: Danger Area for SMBs

More and more small businesses are facing lawsuits from their employees demanding back pay under the overtime rules in the U.S. Fair Labor Standards Act. The 2004 revisions to the Act have sown confusion over who is exempt from overtime pay and under what circumstances.The FLSA, passed in 1938, was originally designed to stimulate employment during the Depression by specifying who could earn overtime. But in today's employment world of flexible work schedules, telecommuting, and remote employees, defining who is an exempt "manager" and who is an "employee" has become ever more difficult. The result is a large group of misclassified workers who are becoming more aware of the money they might be owed. In 2006 the Department of Labor collected $172 million in back wages from employers, 3.6% more than the 2005 number.

Advice for the small business owner on how to stay out of trouble includes is to consult an employment lawyer to make sure you know the status of your workers, and keep detailed time and payroll records for those employees who are eligible for overtime. The Department of Labor provides an online eLaw Advisor that can answer some of your questions about overtime and other FLSA provisions.Fortune Small Business via CNN Money