The Top 6 Ways to Violate the FLSA
The Top 6 Ways to Violate the FLSA
1. “Exemption status is based on title, right?” Wrong. The position’s duties determine exempt / non-exempt status. For example, an Administrative Assistant position may be exempt if the position has full supervisory responsibility for six Secretaries and conducts specialized financial analyses that require a Bachelor’s Degree in Finance. A Manager of Distribution, on the other hand, would be non-exempt if the position is, in reality, a Courier.
2. “I only have to do what the FLSA says for minimum wage.” Not quite. According to the FLSA, employers must pay their employees at least the higher of the federal minimum wage or the state minimum wage. For employers in New York, for example, the relevant minimum wage on July 1, 2008 is $7.15 an hour. The state minimum wage is higher than the $5.85 federal minimum wage.
3. “Overtime is paid to non-exempt employees after they work 40 hours in a workweek.” Yes and no. State laws sometimes differ from the federal FLSA, so employers must be sure to follow whichever guideline is more beneficial to the employee. For example, employees in California enjoy a one and one-half times overtime rate after working 40 hours in a workweek, eight hours in a day, or the first eight hours worked on the seventh consecutive day of work in a workweek. California employees also receive double time for hours worked over twelve in one day and for all hours worked in excess of eight on the seventh consecutive day of work in a workweek.
4. “Bonuses given to non-exempt employees don’t have FLSA implications.” Not true. If an employer gives a non-discretionary bonus or incentive to a non-exempt employee, and the employee had to achieve certain goals to receive that payout, the bonus monies affect the employee’s regular rate of pay. The employer must calculate all overtime payouts for the affected period of time using this adjusted regular rate of pay. Payouts falling into this non-discretionary category include attendance bonuses, employee referral bonuses, and departmental / organizational bonuses with specific goals to attain. Discretionary bonuses that the employee did not know were coming, such as a holiday bonus, are not included in the regular rate of pay calculation.
5. “We can dock an exempt employee’s pay for partial day absences.” Not if you want to be in compliance with the FLSA. Employers must pay exempt employees on a salary basis. If an exempt employee comes to work late because of transportation difficulties, or leaves work two hours early for a dentist appointment, he or she must still receive a full day’s pay. An employer, however, can make an exempt employee use sick, vacation, or other paid time off to account for that lost time. Employers also can allow an employee to take a full day’s leave without pay, for instance, if he or she has used all accumulated vacation time. In addition, the Family and Medical Leave Act (FMLA) permits partial day docking, in increments as small as two hours.
6. “I don’t have to pay my non-exempt employees overtime. I give them comp time.” Generally, the FLSA does not permit using comp time, or extra time off in lieu of payment for overtime hours worked. Only public sector employers – the government – can provide comp time. Under the FLSA, private sector employers must pay overtime in cash at the rate of time and one-half for each hour worked over 40 in a workweek, even if the employee requests the time off instead.
FLSA compliance requires a constant watchful eye. By comparing these six common pitfalls against your organization’s practices, you take the first step to make sure the Department of Labor has no reason to investigate your workplace.
The Top 6 Ways to Violate the FLSA - To learn more about this author, visit Jennifer Loftus's Website.
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Fair Labor Standards Act (FLSA) compliance can be challenging. Not all of the law’s provisions are cut and dry. With some grey areas in the law, even the most cautious employer may find themselves in a potential non-compliance situation. There tend to be, however, main areas where employers go astray. We’ll explore each of these areas to help you make sure your organization does not run into trouble with the Department of Labor.
1. “Exemption status is based on title, right?” Wrong. The position’s duties determine exempt / non-exempt status. For example, an Administrative Assistant position may be exempt if the position has full supervisory responsibility for six Secretaries and conducts specialized financial analyses that require a Bachelor’s Degree in Finance. A Manager of Distribution, on the other hand, would be non-exempt if the position is, in reality, a Courier.
2. “I only have to do what the FLSA says for minimum wage.” Not quite. According to the FLSA, employers must pay their employees at least the higher of the federal minimum wage or the state minimum wage. For employers in New York, for example, the relevant minimum wage on July 1, 2008 is $7.15 an hour. The state minimum wage is higher than the $5.85 federal minimum wage.
3. “Overtime is paid to non-exempt employees after they work 40 hours in a workweek.” Yes and no. State laws sometimes differ from the federal FLSA, so employers must be sure to follow whichever guideline is more beneficial to the employee. For example, employees in California enjoy a one and one-half times overtime rate after working 40 hours in a workweek, eight hours in a day, or the first eight hours worked on the seventh consecutive day of work in a workweek. California employees also receive double time for hours worked over twelve in one day and for all hours worked in excess of eight on the seventh consecutive day of work in a workweek.
4. “Bonuses given to non-exempt employees don’t have FLSA implications.” Not true. If an employer gives a non-discretionary bonus or incentive to a non-exempt employee, and the employee had to achieve certain goals to receive that payout, the bonus monies affect the employee’s regular rate of pay. The employer must calculate all overtime payouts for the affected period of time using this adjusted regular rate of pay. Payouts falling into this non-discretionary category include attendance bonuses, employee referral bonuses, and departmental / organizational bonuses with specific goals to attain. Discretionary bonuses that the employee did not know were coming, such as a holiday bonus, are not included in the regular rate of pay calculation.
5. “We can dock an exempt employee’s pay for partial day absences.” Not if you want to be in compliance with the FLSA. Employers must pay exempt employees on a salary basis. If an exempt employee comes to work late because of transportation difficulties, or leaves work two hours early for a dentist appointment, he or she must still receive a full day’s pay. An employer, however, can make an exempt employee use sick, vacation, or other paid time off to account for that lost time. Employers also can allow an employee to take a full day’s leave without pay, for instance, if he or she has used all accumulated vacation time. In addition, the Family and Medical Leave Act (FMLA) permits partial day docking, in increments as small as two hours.
6. “I don’t have to pay my non-exempt employees overtime. I give them comp time.” Generally, the FLSA does not permit using comp time, or extra time off in lieu of payment for overtime hours worked. Only public sector employers – the government – can provide comp time. Under the FLSA, private sector employers must pay overtime in cash at the rate of time and one-half for each hour worked over 40 in a workweek, even if the employee requests the time off instead.
FLSA compliance requires a constant watchful eye. By comparing these six common pitfalls against your organization’s practices, you take the first step to make sure the Department of Labor has no reason to investigate your workplace.
The Top 6 Ways to Violate the FLSA - To learn more about this author, visit Jennifer Loftus's Website.
Like this article? Share it with your friends
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Dave KurlanDave Kurlan is the founder and CEO of Objective Management Group, Inc., the industry leader in sales assessments and sales force evaluations, and the CEO of David Kurlan & Associates, Inc., a consulting firm specializing in sales force development. Dave has been a top rated speaker at Inc. Magazine's Conference on Growing the Company, the Sales & Marketing Management Conference and the Gazelles Sales & Marketing Summit. He has been featured on radio and TV, including World Business Review with General Norman Schwarzkopf, in Inc. Magazine, Selling Power Magazine, Sales & Marketing Management Magazine and Incentive Magazine. He is the author of Mindless Selling and Baseline Selling – How to Become a Sales Superstar by Using What You Already Know about the Game of Baseball. He created and wrote STAR, a proprietary recruiting process for hiring great salespeople, and he writes Understanding the Sales Force, a popular business Blog and is a contributing author to The Death of 20th Century Selling and 101 Great Ways to Improve Your Life, Volume 2. - Visit Dave Kurlan's Website |
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