The Vital Basics - Wage and Hour Compliance
The phrase wage and hour compliance is one most HR professionals or payroll administrators are very familiar with.
It is probably a regular part of your job, and it is often taken for granted that you are following the law.
And you may very well believe you are doing things right; but what you don't know can cost you big time.
Consider this: When your company is found to be in violation of the Fair Labor Standards Act, you could possibly (or even automatically) be responsible for back wages, liquidated damages, civil money penalties, individual liability, injunctions, criminal penalties and attorney's fees.
Just to put real numbers to these terms, in 2008 Family Dollar was forced to pay $35 million to employees who were misclassified.
They are certainly not the only guilty party around, and won't be the last.
Just make sure you're not the next.
What is the Fair Labor Standards Act? Briefly, it is a federal law first passed in 1938 that established the minimum wage, overtime pay, recordkeeping, and youth employment; the policies are enforced by the Department of Labor.
Furthermore, there has been an effort by the Obama administration to bolster wage and hour enforcement through Secretary of Labor Hilda Solis and some 250 new Wage and Hour division investigators.
A new aggressive campaign from the DOL, part of what it known as 'We Can Help,' is an advocacy group complete with its own website (www.
dol.
gov/wecanhelp) in an attempt to reach out to workers who feel they are victim of wage and hour violations.
Targets include organizations that are new, small, multi-location, have prior violations as well as unsuspecting organizations such as non-profits and charities.
The DOL is also aggressively targeting traditionally low wage industries such as hotels/ motels, restaurants, retail and healthcare.
In addition to the DOL, plaintiff's attorneys are taking a very aggressive position as they know this is a soft-spot for many companies.
Trough advertising in traditional media sources such as billboards, television, radio and phone books or a host of new media platforms online, these attorneys are constantly reaching out to your employees.
Here is what you need to keep an eye on: Minimum Wage.
Current federal minimum wage is set by the Congress and currently stands at $7.
25 (as of July, 2009).
Congress can raise that at anytime.
Furthermore, state's or municipalities can set there own minimum wage if it is higher than the federal amount so you should be familiar with local laws.
Generally, deductions or payments (tools, equipment, uniforms, etc.
) can not place an employee's pay below the minimum wage when averaged out.
Overtime.
Non-exempt employees must be paid an overtime rate of 1.
5 times their regular rate of pay for all time worked over 40 hours.
States, municipalities, or collective bargaining agreements may necessitate overtime pay at certain times such as weekends, nights, or after eight hours in one day, but FLSA does not require it.
Recordkeeping.
Employers are required to keep accurate records of all time worked by a non-exempt employee each workday and each workweek.
Tip- The key work is accurate...
if you simply allow an employee to write down 8 to 5 everyday on their time card and are faced with an audit, this will probably raise some eyebrows as it is not human nature to start working exactly at 8 and finish exactly at 5 everyday.
It is also important for employers to pay attention to potential trouble spots such as meals, breaks, working at home, travel, and more.
Child Labor.
There are very strict child labor limitations that all employers must follow if a worker is under 18.
This includes a limit on occupations, as well as hours worked in a day and week.
It is the employer's responsibility to know the employee's correct age.
Exempt vs.
Non-Exempt.
One of the most common mistakes employers often make is misclassification of workers.
The Family Dollar example mentioned before centered on the fact that store managers were classified as exempt while doing non-exempt work.
While the title (store manager) would imply exempt status, 80 to 90 percent of the work performed in this instance was often manual tasks such as stocking shelves or running the cash register.
Remember, the job title or job descriptions do not necessarily confer exempt status- the actual work performed does.
For a complete list of FLSA exemptions, one website that has complete information is http://www.
flsa.
com/coverage.
html.
To safe guard your company, detailed, accurate and current job information is essential.
Salaried vs.
Hourly.
Common thought is that all exempt workers are salaried and all non-exempt workers are hourly.
That is not the case.
For example, a non-exempt worker may be paid a salary, but you still have to pay attention to minimum wage and overtime.
How an employee is paid does not have anything to do with how they are classified.
It is probably a regular part of your job, and it is often taken for granted that you are following the law.
And you may very well believe you are doing things right; but what you don't know can cost you big time.
Consider this: When your company is found to be in violation of the Fair Labor Standards Act, you could possibly (or even automatically) be responsible for back wages, liquidated damages, civil money penalties, individual liability, injunctions, criminal penalties and attorney's fees.
Just to put real numbers to these terms, in 2008 Family Dollar was forced to pay $35 million to employees who were misclassified.
They are certainly not the only guilty party around, and won't be the last.
Just make sure you're not the next.
What is the Fair Labor Standards Act? Briefly, it is a federal law first passed in 1938 that established the minimum wage, overtime pay, recordkeeping, and youth employment; the policies are enforced by the Department of Labor.
Furthermore, there has been an effort by the Obama administration to bolster wage and hour enforcement through Secretary of Labor Hilda Solis and some 250 new Wage and Hour division investigators.
A new aggressive campaign from the DOL, part of what it known as 'We Can Help,' is an advocacy group complete with its own website (www.
dol.
gov/wecanhelp) in an attempt to reach out to workers who feel they are victim of wage and hour violations.
Targets include organizations that are new, small, multi-location, have prior violations as well as unsuspecting organizations such as non-profits and charities.
The DOL is also aggressively targeting traditionally low wage industries such as hotels/ motels, restaurants, retail and healthcare.
In addition to the DOL, plaintiff's attorneys are taking a very aggressive position as they know this is a soft-spot for many companies.
Trough advertising in traditional media sources such as billboards, television, radio and phone books or a host of new media platforms online, these attorneys are constantly reaching out to your employees.
Here is what you need to keep an eye on: Minimum Wage.
Current federal minimum wage is set by the Congress and currently stands at $7.
25 (as of July, 2009).
Congress can raise that at anytime.
Furthermore, state's or municipalities can set there own minimum wage if it is higher than the federal amount so you should be familiar with local laws.
Generally, deductions or payments (tools, equipment, uniforms, etc.
) can not place an employee's pay below the minimum wage when averaged out.
Overtime.
Non-exempt employees must be paid an overtime rate of 1.
5 times their regular rate of pay for all time worked over 40 hours.
States, municipalities, or collective bargaining agreements may necessitate overtime pay at certain times such as weekends, nights, or after eight hours in one day, but FLSA does not require it.
Recordkeeping.
Employers are required to keep accurate records of all time worked by a non-exempt employee each workday and each workweek.
Tip- The key work is accurate...
if you simply allow an employee to write down 8 to 5 everyday on their time card and are faced with an audit, this will probably raise some eyebrows as it is not human nature to start working exactly at 8 and finish exactly at 5 everyday.
It is also important for employers to pay attention to potential trouble spots such as meals, breaks, working at home, travel, and more.
Child Labor.
There are very strict child labor limitations that all employers must follow if a worker is under 18.
This includes a limit on occupations, as well as hours worked in a day and week.
It is the employer's responsibility to know the employee's correct age.
Exempt vs.
Non-Exempt.
One of the most common mistakes employers often make is misclassification of workers.
The Family Dollar example mentioned before centered on the fact that store managers were classified as exempt while doing non-exempt work.
While the title (store manager) would imply exempt status, 80 to 90 percent of the work performed in this instance was often manual tasks such as stocking shelves or running the cash register.
Remember, the job title or job descriptions do not necessarily confer exempt status- the actual work performed does.
For a complete list of FLSA exemptions, one website that has complete information is http://www.
flsa.
com/coverage.
html.
To safe guard your company, detailed, accurate and current job information is essential.
Salaried vs.
Hourly.
Common thought is that all exempt workers are salaried and all non-exempt workers are hourly.
That is not the case.
For example, a non-exempt worker may be paid a salary, but you still have to pay attention to minimum wage and overtime.
How an employee is paid does not have anything to do with how they are classified.