Common Pitfalls of the Fair Labor Standards Act

Lisa BoganyWhen employers contact the Employer Services Division for assistance with human resource questions, the subject matter usually involves the Fair Labor Standards Act (FLSA). There seems to be certain areas of wage and hour law that cause more confusion for employers than others. Let’s review some of those pitfalls and some suggestions for avoiding or dealing with them.

Pitfall: “We’re not covered – we’re too small.”

Some employers assume that because their business is small, they are not covered by the FLSA. Unlike most other state and federal employment laws, the FLSA does not depend directly upon the number of employees. The FLSA covers individual employees whose work affects interstate commerce, or it can apply to all employees working for an employer who is covered as an enterprise that is involved in interstate commerce. The vast majority of businesses can save themselves a lot of time and legal expenses by going ahead and assuming that they and all their employees are covered under the FLSA.

Pitfall: “All our managers are exempt – they’re salaried.”

Some employers make the mistake of assuming that simply because an employee is paid a salary, is called “salaried” or “exempt”, or has a high-ranking job title, the employee will be considered exempt from overtime pay. Few things could be further from the truth. Many non-exempt employees are paid a salary, such as secretaries and technicians. In a similar vein, giving an employee a high-sounding job title such as “director of production” or “sales manager” will make no difference, if the employee’s job duties do not satisfy the criteria found in the Department of Labor (DOL) “duties” test for an exemption category. The DOL looks right past what a person is paid or called, and focuses on the nature of the job and how the employee does the job.

Pitfall: “We let our people keep their own time records.”

Some employers fail to strictly follow the FLSA’s recordkeeping requirements, found in Part 516 of DOL’s wage and hour regulations, which require employers to maintain detailed records of hours worked by each non-exempt employee. An employer that allows employees to keep their own time records is only asking for trouble. In one situation, an employee had filed a wage claim for unpaid overtime and the employer (who called us for advice) had no time records to dispute the employee’s own records showing that overtime was worked. The employer was shocked to know that the DOL and the courts would accept the employee’s records as valid under what is known as the “best evidence” rule, unless she could prove that there was good reason to doubt the credibility of those records.

We have covered three pitfalls involving the Fair Labor Standards Act which may benefit in helping to answer some unasked questions. If you still have further questions, the Employers Services Division of Workforce Solutions is here to help you or add your question to your blog response.

Lisa Bogany is a Senior Business Consultant for Workforce Solutions in the Houston metropolitan area. She has over five years of experience in workforce development, primarily working with employers, and over 10 years experience in small business entrepreneurship.



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