The Fair Labor Standards Act (FLSA) governs the way that employees in all industries are treated by employers, with specific regard to wages and hours worked. Violating these laws can result in harsh fines and penalties, which is an especially unfortunate situation if it happens to your business unknowingly.
Understanding these four common FLSA violations and how to avoid them is an excellent step towards making sure that your business is in compliance with all pertinent labor laws that govern your business.
1. Not paying overtime
The FLSA mandates that employees must receive overtime pay if they work more than 40 hours in a week. The overtime rate has to be at least 1.5 times the amount that they get paid regularly. However, companies commonly make mistakes that put them in violation of this law, such as failing to pay for work done off the clock or believing that just because they call an employee salaried it gives them that designation.
The FLSA will also be changing soon. In March of 2014, President Obama signed a bill updating the overtime exemption. Previously, employees making a salary of at least $455 a week were exempt from overtime, but the White House says that this update will help modernize the FLSA. Only 12% of salaried workers today earn a salary under the threshold for overtime exemption.
2. Improperly classifying employees as an independent contractor
Some companies make this mistake when they bring on new hires and give them probationary periods, while others commit this FLSA violation with consultants or freelancers who they end up bringing on full-time. If you have an employee who is working many hours, works in your office, and has their schedule set by a company manager, they are a full-time employee and should be classified as one.
3. Paying below the minimum wage
Every employer should know the minimum hourly wage that they can pay employees, which is $8.75 in New York, $9.15 in Connecticut, and $8.38 in New Jersey. Many employers unknowingly commit FLSA violations regarding the minimum wage. For example, some employers are under the impression that they can hire an outside sales rep and pay them only on commission. However, if the sales rep’s total income does not meet the minimum wage, they are still considered to be making less than the minimum wage, which is against the law.
Make sure that you keep strong records of employee pay so you can ensure everyone is being compensated properly based on minimum wage standards.
4. Equal Pay
Men and women who perform the same job at the same levels of skill, experience and responsibility must be paid the same: this has been the law since the Equal Pay Act was signed in 1963. Unfortunately, there is still work to be done. Some groups of women face particularly difficult equal pay problems: in 2013, for example, Latinas only earned 55 cents for every dollar a white male made.
Be careful: violation of this law also raises a gender discrimination issue under federal and state fair employment laws, so you could be in for double or even triple trouble if you violate this law.
Luckily for today’s employers there is an easy way to remedy this issue. From payroll solutions that help ensure accurate, timely payment to automated time systems that will ensure hours are recorded properly, Paypro can help all sorts of clients looking to stay in compliance with important labor laws. Paypro also offers valuable HR wellness checkups, which take a comprehensive look at your HR policies including handbooks, overtime policies, job descriptions, record keeping systems, and etc. With the right provider of HR solutions you can protect yourself from any potential violations that could cause legal trouble or cost your business money. Contact us to find out more.