Enterprise or Recognized Subdivision

What does Enterprise or Recognized Subdivision mean?

Under the Fair Labor and Standards Act, the term enterprise or recognized subdivision is defined as a collection of workers who are recognized as a department or group with a specific function and permanent status.

The enterprise and recognized subdivision is in contrast to other groups of employees who may be grouped together periodically to complete a specific job or task. The law does not require that the department or subdivision be located within the physical building of the employer’s establishment. It can move from location to location without invalidating the exempt employee’s status.

For example, the employee’s exempt status can remain valid if the unit retains a continuing function. Commonly recognized departments or subdivisions could include an employer's human resources department which is divided into separate smaller entities such as the personnel management group, the labor relations group, the pensions group, and the equal employment opportunity group.

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