If you were to review your employee personnel files today, would you possess all necessary employment records documenting employee names, dates of employment, and hours worked to comply with a Fair Labor Standards Act audit? If the answer to question is now you could be in violation of the Fair Labor Standards Act, which could end in with your business being written up on an official citation.
Misinterpreting the policies of the Fair Labor Standards Act (FLSA) can open you up to an investigation into possible violations, lawsuits, and hefty fines.
Review these Top Ten FAQ about FLSA to ensure your stay compliant.
Quick Review of FLSA
The Fair Labor Standards Act sets federal minimum wage, overtime pay, recordkeeping, and child labor standards. There are several different categories for exemptions to some of these provisions. An employee could be exempt from minimum wage, overtime pay, and recordkeeping, while another employee could be exempt from overtime pay only. Exempt does not mean they are exempt from all provisions.
Employees need to be reviewed to determine whether they meet the FLSA qualifications exemptions.
First things first: review your employees to determine whether they meet the FLSA record-keeping requirements.
Simply put, classify your employees by:
- Exempt – Individual performing executive work. They are usually not eligible for overtime pay, minimum hourly wage, or tracking hours.
- Non-exempt – Individual performing as a cashier. They are normally eligible for overtime pay, the minimum hourly wage, and time-tracking.
- Overtime laws will vary from state to state, but under federal regulations, your standard is based on a 40-hour work week.
According to the U.S. Department of Labor (DOL), non-exempt employees must receive overtime pay “at a rate not less than time and one-half their regular rates of pay.” Regular rate means after 40 hours of work are completed in a workweek.
These same employees must be paid a minimum hourly wage of “not less than $7.25” according to the DOL as of July 24, 2009. Many states have laws that raise the minimum wage above the federal standard for employees in those states.
Who Qualifies as an Employee Under FLSA?
All non-exempt employees earn an hourly wage.
Determining whether your employee is covered by the FLSA can be confusing. Many employers think that salaried employees do not qualify for monitoring under the FLSA.
That’s false!
Some employees working on a salary earn that rate for a predetermined number of hours. Once those hours are exceeded, overtime is accrued at 1.5 times the regular hourly rate.
To be exempt from minimum wage and recordkeeping requirements under FLSA, an employee must:
- Earn a salary of at least $684 per week (or $35,568 per year)
- Paid on a salary basis- your paycheck amount does not change.
- The amount of work you perform. Whether an exempt employee works 1 hour or 100 hours in a week, they will still earn the same salary.
- Work in a role that is considered executive, administrative, or professional.
If the position is required.
FSLA Employment Rules Violations
The key to not violating FSLA employment rules is to follow these suggestions:
- Tell your employees they can’t access their work email remotely. If you permit employees to access their work email from home, make sure you pay them for the time they spend reading and responding to emails.
- Tell your managers they shouldn’t text message or email non-exempt employees when those employees are “off the clock.”
- Confirm with non-exempt employees that they are not receiving text messages or emails from you when they are off the clock.
- Don’t let your employees take their lunches at their work stations. If an employee feels they have to be at their desk, ready to answer the phone/email, during their lunch break (even if they don’t actually do anything), they are entitled to be paid for that lunchtime. Just because employees show up early every day does not mean you have to pay them for that time. However, if they come in early and spend time on setup/prep, that time is likely compensable.
- Allow your employees to clock in after their scheduled start time if they need to finish up a project. The employee must be on “the clock” for that time.
If a supervisor knows that an employee is working overtime to complete a project, that time is considered compensable, even if the supervisor did not specifically authorize the overtime. - Manage your managers. If they know an employee is working, that time must be compensated.
- Post a policy prohibiting unauthorized work and unauthorized overtime. While this probably won’t protect you if an employee claims they worked unauthorized hours, you should still post a policy.
Employers who violate the FLSA expose themselves to double damages and attorneys’ fees. An employee can recover twice their unpaid wages, PLUS an award of attorney fees. In a lawsuit, attorney fees can far exceed the amount of unpaid wages. For example, if an employee files a lawsuit for your failure to pay $1,000 in wages, this can turn into a lawsuit for hundreds of thousands of dollars. Contact us to review your current practices and policies. We can identify potential FLSA violations and work with you to prevent them. We work with employers to prevent and comply with the FLSA and other statutes.
