1. Know the Rules
Almost every employee in the U.S. is covered by the Fair Labor Standards Act (“FLSA”). If you have at least 1 employee, you are likely subject to the rules.
Covered, non-exempt employees must be paid not less than the federal minimum wage for all hours worked.
Hours worked could include work “suffered” or permitted; waiting time; on-call time; meal and rest periods; training time; travel time and, occasionally, sleep time.
Executives, certain administrative, professional, outside sales and technical employees may be exempt from minimum wage and overtime standards. Three tests exist to determine if an exemption exists.
However, not all “salaried” employees are necessarily exempt.
2. Train your managers
Accurate records of the hours worked each day and total hours worked each week is critical to avoiding compliance problems.
Covered employers must post a notice explaining the FLSA, as prescribed by the U.S. Department of Labor Wage and Hour Division, in a conspicuous place.
Determine whether any formal or informal “comp time” arrangements exist. Typically, most “comp time” arrangements do not comply with the FLSA’s overtime requirements.
Make sure your employees are accurately recording meal and other non-compensable break time and that they are being paid when they do not take that time off.
Systematically check to see whether time records might be inaccurate.
3. Make no exceptions
The FLSA requires that all employers subject to any provision of the Act make, keep and preserve certain records.
Be sure deductions or employee payments, repayments or work related purchases are not cutting the employee’s pay below the required minimum wage.
Be sure that all bonuses, shift differentials and other payments are properly included in computing overtime or may be lawfully excluded from that calculation.
Pay special attention to whether employees are recording things like pre-shift and post-shift work; opening or closing activities; compensable training time; meeting time; compensable time; on-call work time and time spent doing work at home.
Know the limitations on students, interns and children.
4. PERSONALLY check your records
It is important to be completely aware of what is happening with your employees, as the penalties and potential liability can be severe.
A 2-year statute of limitations applies to the recovery of back pay and, in the case of a willful violation, 3-year statute of limitations may apply.
Employers who willfully violate the Act may be prosecuted criminally and fined up to $11,000.00.
The FSLA does not preempt tougher state or local wage-hour provisions like higher minimum wages, daily overtime, and minimum pay for reporting or more rigorous child-labor limitations.
Avoid treating/classifying an employee as an independent contractor when they are not. Although many individuals are called independent contractors, it is extremely difficult for businesses to substantiate the legal basis for that designation.
5. Stay calm – fix it.
Make wage and hour compliance a top priority and business practice.
Don’t try to carry out these initiatives in the middle of a Department of Labor investigation, class action, collective action lawsuit, or even union-organizing attempt.
An effective wage and hour compliance program at your location should include training and retraining, as well as annual compliance audits and spot checks.
The equal pay provisions of the FLSA prohibit sex-based wage differentials between men and women employed in the same establishment who perform jobs that require equal skill, effort, and responsibility and which are performed under similar working conditions.
Implement policies and practices that correct any errors immediately, as well as reduce the chances of future violations and enhance the ability to defend against any claims that may arise.
The Good News
We are available to assist you in evaluating your employment practices, reviewing whether you have properly classified your employees/contractors and/or defending you if and when you have disputes or litigation with current or former employees or the Department of Labor. Contact us today.
About Our Labor & Employment Counseling
Nowell Sparks’ Labor and Employment lawyers are experienced in the significant aspects of labor and employment law, and take pride in helping clients avoid litigation, train employees and investigate alleged wrongdoing. From day-to-day advice and preventative counseling to responding to administrative investigations, we have experience with the myriad of laws governing the workplace, including Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Equal Pay Act, the Age Discrimination in Employment Act, the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Fair Labor Standards Act and many other federal and state laws.