How can you avoid common FLSA violations? BACK IN 2016 THE OBAMA OVERTIME RULE WAS PUT ON HOLD AND EVENTUALLY, THROUGH COURT CASE FILINGS WAS INVALIDATED. TODAY, THERE IS A NEW OVERTIME LAW THAT GOES INTO EFFECT ON JANUARY 1, 2020. FOR MORE INFORMATION, CHECK OUT RECENT BLOG POSTS ON THE NEW OVERTIME LAW AND WHAT YOU SHOULD BE DOING TO GET READY.
Editor’s Note: This post was originally published in November 2016 and has been edited to include information about the new overtime rule effective on January 1, 2020, for accuracy and completeness.
Back in 2016, experts predicted a record-breaking year for Fair Labor Standards Act (“FLSA”) lawsuits and FLSA violations. First, thanks to the Department of Labor’s (“DOL”) 2016 Obama overtime rule, around 4.2 million employees would have suddenly qualified for overtime pay as of December 1, 2016. Second, business owners were scrambling to prepare for the salary threshold to increase from $23,660 to $47,467 and then another increase in 3 short years! This 2016 Obama overtime rule significantly increased liability to small business owners with automatic salary threshold increases every 3 years. However, the biggest reason FLSA violations and lawsuits are always on the rise is not due to the 2016 Obama overtime rule or even the new overtime rule of 2020, it is simply because employers continue to violate the FLSA and most often they do it unknowingly. Are you one of those guilty businesses?
Here are the most common FLSA violations:
- DOL vs. STATE OF UTAH REGULATIONS
The State of Utah handles claims for the nonpayment of wages, violation of the Utah Minimum Wage Act, and the employment of minors. All other wage and hour violations are covered by Federal Law and investigated by the DOL. Business owners are required to be aware and up-to-date on both Utah and Federal wage and hour laws. If an employer is found liable for FLSA violations and state of Utah violations, then they can be on the hook for everything from back wages, liquidated damages, fines, attorney fees and in Utah even jail time.
Get in the habit of staying current on Wage and Hour laws
- IMPLEMENT CLEAR OVERTIME POLICIES
Having a rock-solid overtime policy that is enforced is the best protection against FLSA violations. In light of the new 2020 overtime rule, business owners should take this opportunity to review and update their policies, schedule regular check-ins with employees and managers to make sure the policies are being implemented and followed.
Ensure your overtime policies are consistently being followed
- MISCLASSIFYING EMPLOYEES
Over 8.6 million employees are currently misclassified and that number will grow with the new 2020 overtime rule. Classifying employees correctly can be tricky so focus on the specific job duties and not just the job title or job description. To be salaried-exempt, aside from being paid above the new threshold of $35,568, the employee has to be considered an executive, administrative, or some sort of professional duty. Basically, you can’t take a low-level administrative level employee and underpay them, then still claim they are salaried. There’s also the danger of classifying somebody as an independent contractor who really should be an employee. For this, FLSA violation fines can be as much as 100 percent of the employment tax due, income tax not withheld, all Social Security taxes not withheld and unemployment tax insurance of 6.2 percent.
Take assessment of classification status of all workers
- OVERLOOKING OFF-THE-CLOCK-WORK
Employers must pay workers for all work that they knew about or should have known about. Many employers tend to look the other way while employees perform unpaid work voluntarily or under pressure like to help out a co-worker on a project. Most common violations are not paying employees for time setting up a restaurant before a shift, loading or warming up trucks, transferring equipment or preparing a worksite, post-shift clean up, finishing tasks that should have been completed during the shift, or returning to another site to drop off equipment. The solution lies in a strong policy that clearly sets forth when employees are permitted to work off-the-clock and what authorization is required prior to such work to avoid FLSA violations.
Train employees to account for all work time
- FAILING TO PAY UNAUTHORIZED OVERTIME
You still have to pay overtime for all time worked even if the overtime was not allowed. Avoid overtime FLSA violations by implementing safeguards to prevent unnecessary overtime. Employers have the option to discipline employees who fail to follow the overtime policy.
Employees must be paid for all hours worked
- KEEPING SLOPPY RECORDS OR NO RECORDS
If your business gets hit with a FLSA violations lawsuit then your saving grace will be accurate, consistent and complete records. Does your business have a consistent way to track and record hours? That way, when you have to defend your business, you come armed with facts and data rather than subjective information.
Be diligent with your time tracking, train your employees to be diligent with their time tracking
Don’t be one of those small businesses guilty of FLSA violations. Be intentional and protect your business today.
Protect your business and avoid making a mistake with overtime. Get in touch with us for more details. You’ll be surprised how easy it is to work with us!