Five Ways the Wage & Hour laws can land you in court

by on March 30, 2009 · 0 Comment POSTED IN: HR Info Center

Watch these pitfalls to avoid costly FLSA compliance violations

It hurts to violate Wage and Hour laws: DOL collected $172 million in back overtime in 2006, up 50% from the start of the decade. In fact, employees filed 7,000 claims under FLSA wage and hour laws, more than three times as many as in the year 2000.

What are the biggest FLSA compliance pitfalls? Here are the biggest five wage and hour laws’ violations:

EXEMPT CLASSIFICATION

Employers often misclassify ordinary workers as exempt employees, administrative or managers.

  • An administrative employee must do non-manual management or general business work, and exercise independent judgment on “significant matters.”
  • A manager must manage at least two full-time employees. She must spend the bulk of her time on such tasks as selecting, training, scheduling, evaluating and disciplining employees.

‘SALARY BASIS’ RULE

To be exempt from FLSA wage and hour laws’ overtime provisions, white-collar workers must earn at least $455 a week on a “salary basis.” This means their pay isn’t linked to the amount or quality of their work.

But note: You can subtract certain amounts from salary without turning the employee into a non-exempt worker. These include deductions for personal days off, jury or military duty, suspensions for violating major safety or conduct rules, or FLSA leave time.

Plus, DOL’s new “safe harbor” rule allows you to reduce your exposure for mistakes. To find shelter under this rule, you must tell employees in writing of your salary basis obligations, set up a written complaint procedure and promise not to repeat any errors.

‘REGULAR RATE OF PAY’

Overtime, in wage and hour laws, is calculated as 1.5 times a non-exempt employee’s “regular rate of pay.” That seems simple enough. But calculating “regular rate” can be tricky.

For one thing, that rate has to include most pay premiums, such as:

  • shift premiums,
  • dirty or hazardous work premiums,
  • commissions,
  • non-discretionary bonuses.

When is a bonus “discretionary,” and not subject to overtime? Only when the payment, if any, is set at the end of the period, at the employer’s sole discretion, and isn’t linked to such factors as productivity, attendance or seniority.

‘OFF-CLOCK’ TIME

You can get in major FLSA compliance trouble by failing to pay for time you wrongly consider “off the clock.” This is work during meal breaks or rest periods, activities before and after a shift that are “integral and indispensable” for the employee’s job. Both of these are compensable time under wage and hour laws. “Donning and doffing” issues fall into the latter category. You need not pay employees for time spent putting on ordinary work or safety gear, and taking it off after they’re done. You do have to pay them if the equipment is both specialized and indispensable.

Note: Employees checking e-mails or logging in to office systems at home are on the clock unless the time they spend is very limited – a minute or two.

TRAINING TIME

You know that training time during working hours is compensable. What some employers don’t know is that training outside of normal hours is also compensable, unless:

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