The Department of Labor has a website called “We Can Help” to educate employees about their rights under Wage and Hour Laws, focusing on overtime pay. This campaign encourages employees to call a toll free number to report any violations of their employer, without fear of retaliation, and promises a free and confidential investigation. What can you do as an employer to protect yourself from penalties or damages? Employers need to be aware of the Fair Labor Standards Act (FLSA) rules and consistently apply them.
State Minimum Wage and Overtime Laws
First, you need to ensure that all of your employees are being paid at least the minimum hourly wage according to your state law or the federal minimum wage rate of $7.25, whichever is higher. Some states also have specific requirements for overtime pay that is more generous than the federal law of over forty hours per workweek. For example, California, Colorado, and Nevada have daily overtime requirements where overtime is paid after a specified number of hours in a day. See the State Map on the DOL website to find your state’s minimum wage and overtime laws.
According to the DOL website, every employer covered by the Fair Labor Standards Act (FLSA) must keep certain records for each covered, nonexempt worker. There is no required form for the records, but the records must include accurate information about the employee and data about the hours worked and the wages earned. Most of this information is normally maintained in your payroll system. The following is a listing of the basic records that an employer must maintain:
- Employee’s full name, as used for social security purposes, and on the same record, the employee’s identifying symbol or number if such is used in place of name on any time, work, or payroll records
- Address, including zip code
- Birth date, if younger than 19
- Sex and occupation
- Time and day of week when employee’s workweek begins. Hours worked each day and total hours worked each workweek
- Basis on which employee’s wages are paid
- Regular hourly pay rate
- Total daily or weekly straight-time earnings
- Total overtime earnings for the workweek
- All additions to or deductions from the employee’s wages
- Total wages paid each pay period
- Date of payment and the pay period covered by the payment.
Exempt vs. Nonexempt
Once you determine your state’s minimum wage and overtime laws, next you need to determine who in your organization is exempt from these FLSA requirements, and who is not. As an employer, you must properly classify every individual in your workforce as either exempt or nonexempt. This isn’t always easy to do, as certain requirements must be met in order to be exempt, regardless of their title. There are exemptions for certain positions such as executive, administrative, professional, computer, outside sales, or FLSA highly compensated employees. The DOL has several fact sheets (all starting with #17) about each of these exemptions, and the various tests that must be met in order to be exempt. If the tests are not met, then the employee is nonexempt, and is subject to the minimum wage, overtime, and recordkeeping rules.
It’s important to audit your internal pay practices to ensure that employees are being paid fairly according to the FLSA rules, and let the DOL “help” someone else!