Is your Company in compliance with the Department of Labor’s Fair Labor Standards Act? Don’t assume you are…here is a list of common pitfalls to avoid:
“Our salaried employees are automatically exempt from overtime”
Just because you are paying an employee a salary, no matter how large, does not mean that he or she is exempt from overtime. Each individual employee must qualify for one of the specific exemptions provided by the statute. Other less common exemptions include the executive exemption, administrative exemption, professional exemption, computer-employee exemption and outside sales exemption.
Each exemption has specific tests, and each employee to whom you pay a salary must be evaluated to see whether the exemption applies. Don’t forget that job titles and job descriptions aren’t the determining factor any more than paying a salary is—just because you call someone a manager or an assistant manager and pay them a salary does not mean they qualify for the exemption. The courts and Department of Labor construe all of the exemptions narrowly, and the burden of proof always remains with the employer.
“There’s no overtime around here – our employees just volunteer some extra time”
There is no such thing as “voluntary unpaid overtime” or “donated” time under the FLSA. Any manager who expects or allows his or her staff to put in unrecorded work time, otherwise known as working “off the clock”, is a wage claim or lawsuit waiting to happen. It is simply impossible under the FLSA for an employee to waive the right to receive at least minimum wage and applicable overtime pay for all hours worked. An agreement to the contrary (other than a wage claim settlement supervised and approved by the DOL) is null, void, and completely unenforceable. Employers must ensure that all non-exempt employees properly record all time worked and that they are paid for all such time. If an employer has true volunteers (generally accepted as possible only with governmental entities and non-profit charitable organizations), it should have all such individuals sign a volunteer agreement.
“We don’t have to pay overtime because it was not approved in advance”
Many companies have a policy requiring employees to seek approval in advance before working overtime. The problem arises when an employer refuses to pay an employee for non-approved overtime. The FLSA, unfortunately, does not distinguish between approved and non-approved overtime—if the employee works the overtime, you are required to pay time and one-half the regular rate for that overtime. But the company is not without recourse: An employee who violates a company policy by working non-approved overtime can be disciplined or terminated for that violation of policy.
“We just give them comp time instead of paying overtime”
Employers cannot award comp time instead of OT pay for non-exempt employees. Overtime eligible employees must always be paid one and one-half times their regular hourly wages for all hours worked beyond 40 in a workweek.
Compliance with FLSA is required by all employers. Understanding FLSA, that’s the tricky part! Does your company understand the FLSA exemption tests and know how to apply the FLSA regulations correctly?