The Complete Guide to FLSA Compliance in 2026

What Changed in 2026

The Department of Labor rolled out several key updates to FLSA enforcement in 2026. The overtime salary threshold increased to $43,888 per year, expanding coverage to an estimated 3.6 million additional workers. Employers now face stricter penalties for misclassification, and new digital record-keeping requirements mean paper timesheets are no longer sufficient for audit protection.

These changes are especially impactful for mid-sized businesses with a mix of salaried and hourly workers. If you haven't reviewed your classification status recently, now is the time.

Overtime Rules Explained

Under FLSA, non-exempt employees must receive overtime pay at 1.5x their regular rate for any hours worked beyond 40 in a workweek. The key word is "workweek," which is a fixed, recurring 168-hour period. You cannot average hours across two weeks to avoid overtime.

Common mistakes include failing to count travel time between job sites, not including on-call time when employees are restricted in their movements, and overlooking short break periods (under 20 minutes, which are compensable). A GPS-verified time tracking system eliminates ambiguity by creating a timestamped, location-verified record of every clock-in and clock-out.

Record-Keeping Requirements

FLSA requires employers to maintain accurate records of hours worked, wages paid, and overtime calculations for at least three years. In 2026, the DOL explicitly recognized digital time tracking systems as compliant record-keeping methods, provided they include tamper-evident audit trails.

Timedox automatically generates compliant records with GPS coordinates, device identifiers, and timestamps that satisfy both federal and state-level audit requirements. Every edit to a timesheet is logged with the original entry preserved.

Employee Classification: Exempt vs. Non-Exempt

One of the most common FLSA violations is misclassifying employees as exempt. To qualify for exemption, employees must meet both a salary threshold ($43,888/year in 2026) and a duties test. Simply paying someone a salary does not make them exempt.

The three primary exemption categories are executive, administrative, and professional. Each has specific duties requirements. When in doubt, classify workers as non-exempt and track their hours. The cost of overtime is far less than the penalties for misclassification.

How Timedox Helps You Stay Compliant

Timedox provides a compliance-first approach to time tracking. Automated timesheet generation ensures every hour is captured. GPS verification prevents disputes about when and where work occurred. Overtime alerts notify managers before thresholds are crossed, giving them time to adjust schedules.

The built-in reporting engine generates audit-ready exports that map directly to FLSA requirements, including weekly hour summaries, overtime breakdowns by employee, and classification-aware payroll reports.