Enacted in 1938, the Fair Labor Standards Act governs federal minimum wage, overtime, child labor and recordkeeping laws. Failure to follow these laws may come with a price.
The U.S. Department of Labor, which oversees the FLSA, says that it recovered an average of $706,000 in back wages per day in fiscal year 2020. For willful FLSA violations, employers can face steep civil monetary penalties and criminal prosecution.
Here are the FLSA errors that often land employers in trouble:
Incorrect calculation of hours worked
The FLSA says that nonexempt employees must be paid for all hours worked, as defined by the FLSA.
When determining the number of hours an employee has worked, consider not just regular and overtime hours but also more nuanced factors such as:
- Training and meeting time.
- Short breaks that are not for the purpose of a meal.
- Off-the-clock work.
- Travel time during the workday, such as time taken to travel between job sites.
- Waiting time.
- On-call time.
- Sleeping time that has been scheduled during a shift.
Incorrect classification of nonexempt and exempt employees
Under the FLSA, nonexempt employees must receive no less than the federal minimum wage and must receive overtime pay for work hours exceeding 40 in a workweek. Salary exempt employees are not eligible for overtime pay and must receive a minimum salary of $684 per week. To be classified as “exempt,” the employee must meet specific FLSA requirements. If they are not exempt, then they are nonexempt.
Misclassifying nonexempt and exempt employees can cause either group to be paid incorrectly. Further, misclassification can lead to improper recordkeeping, as the FLSA has separate payroll recordkeeping criteria for nonexempt and exempt employees.
Incorrect salary deductions for exempt employees
If salary exempt employees performed any work at all for the week, they must receive their full salaries for that week. You can dock their salaries only if the deduction is legally permissible according to the FLSA.
Be sure to check which deductions are legally permissible before docking an exempt employee’s pay.
Incorrect overtime calculations
The FLSA has strict rules for how overtime must be calculated, including what should be excluded from the “regular rate of pay” calculation.
Additionally, the FLSA has different types of overtime calculations, such as standard overtime, fluctuating overtime and weighted average overtime.
Not considering state and local laws
Many states have minimum wage, overtime, child labor and recordkeeping laws. Some states have wage-and-hour laws that are not covered by the FLSA, such as rest periods, fringe benefits, minimum paydays, final paychecks and reporting time pay. Moreover, some local governments have their own wage-and-hour laws.
When state or local laws conflict with the FLSA, the employer must use the law that favors the employee the most.
Not considering new developments
The DOL periodically releases updates about the FLSA. For example, the agency has provided information on how the FLSA should be applied during the COVID-19 pandemic. Sometimes the DOL publishes “final rules,” clarifying certain aspects of the FLSA. Make sure you’re up to date on these publications.
Copyright 2021
Why Atlantic Payroll Partners
The biggest payroll companies probably won’t have time for your business. It’s that simple, you’ll be a number. At Atlantic Payroll Partners, you’ll be the opposite. We’ll know more than your name; we’ll know the names of your children and their birthday’s as well. We will know you.
We’ve been helping Florida business by managing their payroll and providing workers' compensation quotes for ten years. We help keep payroll cost affordable by provided transparent PEO payroll quotes that allow you to plan your budget accordingly. Like the big payroll companies, you can manage your payroll and payroll timekeeping with us, while reaping the benefits of PEO risk management.
Thinking about payroll outsourcing can be scary. Make sure you know what to expect from payroll outsourcing providers; to make the best decision for your business. In addition to offering payroll, and workers' comp quote we offer: Human Resource consultations, Accounting services, and benefits such as, 401ks and Healthcare plans.
Work from home pay, what should it be?
2020 has been a game changer and chances are you as a business owner have had to make some adjustments. One of the key adjustments that presented during the early stages of the COVID-19 Pandemic, remote work. More specifically, what is work from home pay? What should you be paying your employees? Fun fact, since 2005, remote work has soared 173%, according to 2018 data from American Community Service. Whether you recently adopted this remote work model because of the pandemic or have been utilizing it for years, you should know your wage-and-hour responsibilities.
FLSA Rules for Remote Nonexempt Employees
Nonexempt means the employee is not exempt from overtime pay rules under the FLSA. You must pay remote nonexempt employees, whether hourly or salaried, no less than the federal minimum wage, which is currently $7.25. (Many states impose a higher minimum wage.) These employees must also receive overtime pay at 1.5 times their regular rate of pay for hours worked above 40 in a workweek.
The FLSA does not require you to provide short breaks, but if you choose to give them, the time must be paid. Meal periods are unpaid. The FLSA also mandates that you keep records of wages and hours for each remote nonexempt employee.
Challenges: It can be difficult to track hours and breaks for remote nonexempt employees because they’re working from home or elsewhere off-site. Depending on the type of work the employees do, you might not always know when they’re working. This can result in employees working overtime without your consent.
Solutions: Courts have ruled that remote nonexempt employees are responsible for tracking their own work hours, but their employer must give them the tools needed to track their time. For best results, adopt a timekeeping system, such as an online time clock, that simplifies tracking of remote employees’ work time. Also, develop policies regarding work hours, rest breaks, meals and overtime. Communicate the policies in writing to your remote team. Make sure each employee knows his or her work schedule, your expectations and the consequences of violating the policies.
FLSA Rules for Remote Exempt Employees
Employees who are excluded from the FLSA’s overtime pay provisions are “exempt,” meaning they do not need to be paid overtime for hours worked above 40 in a workweek (or other state-mandated rules). If you have remote exempt employees who are salaried, you must pay them their full salary for any week in which they do any work. Under the FLSA, exempt-salaried employees must receive no less than $684 per week, unless an allowable deduction applies.
You don’t have to track work hours for your exempt-salaried remote team because they’re paid based on a predetermined, fixed amount. But you can require that they work a certain number of hours per week. If you don’t track your remote exempt employees’ work hours, you should at least have some type of system for monitoring their day-to-day performance.
Other FLSA Implications
These include travel and on-call time for telecommuters. In both of these situations, determining how to pay telecommuters can be tricky, good thing Atlantic Payroll Partners can help.
Copyright 2024
Why Atlantic Payroll Partners
The biggest payroll companies probably won’t have time for your business. It’s that simple, you’ll be a number. At Atlantic Payroll Partners, you’ll be the opposite. We’ll know more than your name; we’ll know the names of your children and their birthday’s as well. We will know you.
We’ve been helping Florida business by managing their payroll and providing workers' compensation quotes for ten years. We help keep payroll cost affordable by provided transparent PEO payroll quotes that allow you to plan your budget accordingly. Like the big payroll companies, you can manage your payroll and payroll timekeeping with us, while reaping the benefits of PEO risk management.
Thinking about payroll outsourcing can be scary. Make sure you know what to expect from payroll outsourcing providers; to make the best decision for your business. In addition to offering payroll, and workers' comp quote we offer: Human Resource consultations, Accounting services, and benefits such as, 401ks and Healthcare plans.