The Fair Labor Standards Act (FLSA) establishes requirements
for minimum wage, equal pay, overtime pay, child labor and
recordkeeping standards for employers. Most employers know
that nonexempt employees get paid overtime and exempt employees do
not, however, there is more to the FLSA than that, as illustrated
in the following errors employers frequently make.
- Misclassifying exempt and nonexempt jobs. Typically,
almost anyone paid on an hourly basis and having to record time in,
time out, and meal breaks, is nonexempt. "Executive,"
"administrative," and "professional" employees, typically paid a
set amount regardless of amount of time worked, are
exempt. You can't arbitrarily assign jobs to exempt and
nonexempt categories without comparing your job descriptions to the
FLSA definitions, which are based on compensation level and job
duties
- Not paying minimum wage. Deductions, fines or other
penalties deducted from an employee's paycheck cannot reduce the
amount paid to less than the minimum wage of $5.15 per hour.
- Failure to calculate and pay overtime correctly. Overtime
must be paid at the rate of 1.5 times the employee's regular rate
of pay for all hours worked over 40 in a single workweek.
Hours worked cannot be averaged over two workweeks.
Bonuses may affect the rate of pay at which you calculate
overtime.
- Granting "comp time" instead of paying overtime. With
some exceptions in the public sector, even if nonexempts prefer
comp time to overtime, the FLSA has no provision for employees to
waive their overtime rights. However, it's up to you whether
or not to give comp time to exempts who work long hours.
- Failing to pay nonexempt employees for meetings held outside of
regular work hours such as coursework and seminars, travel time and
prep time. Work-related meetings held before or after regular
work hours are considered hours worked. Travel time to the
primary place of work is not necessarily part of hours worked, but
travel from the primary place of work to other work sites may be.
Time required to change from street clothes to work clothes
or to set up for work is considered time worked. Coursework
or seminars that you require a nonexempt employee to attend as part
of the job may be compensable as time worked.
- Incorrectly tracking breaks and meal periods. Nonexempt
employees do not have to clock out for "rest periods" or breaks of
no longer than 20 minutes. They should clock out for "meal
breaks" of 30 to 60 minutes or be paid for the time. If
nonexempts eat at their work places, they are "on the clock" for
purposes of calculating hours worked.
- Allowing or requiring employees to work "off the clock.”
Nonexempt employees cannot "volunteer.” If you require
or allow nonexempts to perform job duties, the time worked is
compensable.
- Requiring exempt employees to keep track of hours worked and
docking their paychecks for time away from work. There is no
FLSA expectation that employers track the time worked by exempt
employees, and, under most circumstances, they cannot dock their
paychecks in less than one-day increments.
Some exceptions apply to specific occupations and certain
industries. To be sure you are in compliance, get a copy of
the FLSA and compare job descriptions (not job titles, but the
entire job description) and your payroll practices with the
provisions of the law. U.S. Department of Labor (U.S.DOL)
investigators don't need a complaint from an employee to come in
and inspect your records. They can target employers or
certain industries suspected of or known for wage and hour
abuses.
FLSA information is available from a number of sources,
including:
