Wage and Hour Laws - Are You in Compliance?

Compliance may not be the most interesting word for managers. We are stretched with so many responsibilities, yet compliance is something that never goes away. We have to comply with many state and national statutes. Many of those statutes are difficult to understand.

Having said all of this, there are some laws that we allocate more attention to over others. One such law is the Fair Labor Standards Act (“FLSA”).

FLSA: An Overview

If you haven’t heard of the FLSA, the U.S. Department of Labor provides a basic definition. The FLSA is a federal law that “establishes minimum wage, overtime pay, recordkeeping, and youth unemployment standards affecting employees in the private sector and in Federal, State, and local governments.”

The most prominent portions of the FLSA concern compensation of your employees. Under the law, covered, nonexempt workers must be paid at least $7.25 per hour. After 40 hours in one workweek, employees must also be paid overtime pay of at least one-and-a-half times the employees’ regular rate of pay.

While the FLSA imposes a floor on the amount of pay for your employees, there are some employment practices that the FLSA does not regulate. Those areas include vacation or sick pay, meal or rest periods, premium pay for weekend or holiday work, pay raises or fringe benefits, or a discharge notice or immediate payment of final wages to terminated employees. Along with this, some classes of employees are excluded from the FLSA’s overtime provisions and/or the minimum wage provisions. Such employees include outside sales employees, employees of certain seasonal amusement or recreational establishments, certain farmworkers, or casual babysitters or people employed as companions to the elderly or infirm. For a complete list, you can view the Department of Labor’s guidance here.  

The FLSA goes beyond minimum wage and overtime pay regulations. While not an exclusive list, the law includes recordkeeping and notice provisions. The recordkeeping provision requires employers to keep tabs on wages, hours, and other items as specified in the Department of Labor’s recordkeeping regulations. As for notice, employers must advise employees of their rights under the FLSA, including the display of a poster that contains summaries of all applicable provisions of the law.

Penalties and Compliance

Failing to comply with the FLSA can be costly. The Department of Labor, for instance, may file suit on behalf of employees for back wages or seek an injunction to restrain certain violations of law (like unlawful withholding of minimum wage and overtime pay). Employers may also be subject to criminal liability for FLSA violations, which may ultimately result in hefty fines or even imprisonment.

Managers will most likely defer to legal counsel to determine whether they are in compliance with the FLSA. However, it’s important to think about some key questions of FLSA compliance—most notably, whether your employees are covered under the FLSA. You can find further information here, but in all likelihood, you will need to pay your employees overtime pay. If you are aware of an eligible employee not being paid minimum or overtime pay under the FLSA, you will have to escalate the fact within your company.

Beyond that, you can help ensure your organization’s compliance with the FLSA by confirming that your office prominently displays a poster containing employees’ rights under the FLSA. If your office doesn’t contain the poster, you must act quickly. Thankfully, the Department of Labor provides workplace posters on its website, which you can find here.

Finally, it’s critical to ensure that your organization is complying with the recordkeeping provisions of the FLSA. Wage and Hour auditors within the Department of Labor are particularly searching for complete and accurate pay records of each and every employee from the prior three years. The pay rate and hours worked are critical components, so ensure that you are collecting timesheets with this information.

Don’t Ignore It

While compliance may not be the most exciting part of your job, you must ensure that you and your organization are complying with the FLSA. Understanding what the law is and how it applies to your organization is a great start to ensure compliance. Beyond that, however, report any potential violations to your in-house attorney. Doing so may save your organization from a hefty fine or even a potential prison sentence.

TrainingABC's video-based training course - Wage and Hour Compliance Made Simple will take your managers through the nuts and bolts of the law and help keep your organization in compliance.