At the beginning of 2018, the US Department of Labor (DOL) announced an increase in the civil penalties for certain violations of the federal Fair Labor Standards Act (FLSA). In this edition of Astronology®, we will briefly review some of the pitfalls and unintentional errors organizations sometimes find themselves dealing with when attempting to comply with the FLSA.
- Improper classification: Who really falls under the classifications of exempt and non-exempt? Misclassification can easily occur if job positions are not clearly defined. Current and thorough job descriptions are a must for every organization and every position. The following are some key differences between the two classifications:
- Could work in any field
- Could earn any amount per week
- Could be paid a salary or an hourly wage
- Entitled to overtime pay at 1.5 times their regular rate
- Does not fully supervise other employee or use independent judgement or discretion when executing position responsibilities
- Job meets the exemption criteria established by one of the three main categories: Executive, Professional, and Administrative. Other exemptions are available for outside sales roles and computer professionals.
- Must earn a salary wage
- Must earn at least $455 per week
- Is not entitled to overtime pay at 1.5 times their regular rate
- Failure to Pay for all Time Worked: Non-exempt employees must be paid for all hours worked. The challenge for many organizations is identifying what falls under “hours worked.” This can include
- traditional work time (scheduled work),
- short rest breaks (up to 20 minutes) if offered,
- training time,
- “on-call” time, and
- even time spent on travelling on business. Travel time payment requires special consideration. Home to work or travel is not compensable. However, out of town travel is compensable, whether on a daily or overnight basis.
- Failure in Record Keeping: Records relating to non-exempt employees’ hours worked and wages earned for at least three years need to be retained. Information to be recorded includes
- total hours worked each day and each workweek;
- total daily or weekly straight-time earnings;
- total overtime pay for workweek;
- deductions from or additions to wages;
- total wages paid each pay period; and
- the date of payment and pay period covered.
- Failure to Follow State Requirements: Not all states follow the same wage and hour laws that have been set at the federal level. For instance, the state minimum wage rate could be higher than the federal minimum wage law. Exemption tests also may be stricter at the state level than at the federal. As a rule of thumb, the law that is more generous to the employee should be followed.
What other FLSA pitfalls can you name? How does your organization keep up with the requirements of both federal and state FLSA-type regulations? Share your comments below!