Every business must adhere to regulations and laws across a variety of topics. Any violation of these rules and regulations could result in costly and embarrassing fines or even lawsuits.
The Fair Labor Standards Act (FLSA) is one such piece of legislation that requires employers to adhere to strict standards. The FLSA governs overtime rules, exemptions, and many other wage and hour policies. Understanding the nuances and complexities of the FLSA can be a full-time job.
As a small business owner, you have ways to minimize your chances of being fined for an FLSA violation or being sued by an employee.
What is the FLSA?
The FLSA established the 40-hour workweek in the United States. It also established a minimum wage and provides rules on how to calculate and pay employees overtime wages.
Under this piece of legislation, employers must also have standard record-keeping practices. The Department of Labor often audits employers and if your record-keeping is not accurate is non-existent, you could be fined for FLSA violations.
How can you avoid FLSA violations?
Avoiding FLSA violations is important because any violation can quickly result in costly and embarrassing fines. When a company does not pay employees overtime wages, for example, the company may be required to pay back pay and all applicable taxes, in addition to fines.
The FLSA governs exempt and non-exempt employees. Understanding this difference is paramount to ensuring that you are paying your employees correctly.
Many employers mistakenly believe that paying an employee on salary means they are not entitled to overtime. In reality, an employee must make at least $684 per week to be exempt. Any employee not making this minimum amount is non-exempt and entitled to overtime pay.
An employee must also meet minimum job duties standards to qualify as exempt and therefore not subject to overtime pay. These job duties vary based on the type of work done but, generally, require an employee to have managerial duties.
Audit for Compliance
The Department of Labor will audit businesses across the country every year. By conducting a self-audit, you can uncover any areas that might subject your business to fines.
You want to review your policies and procedures to ensure you are paying employees appropriately. They must meet both the salary and job duties tests if you are not paying them overtime.
Educate Managers on Policies
Managers and supervisors have essential responsibilities to ensure your business remains FLSA compliant. Training managers on what to look out for can dramatically reduce the likelihood that your company will face FLSA fines.
Your managers should know how to document any HR complaints or discussions properly. You should also train your managers on proper documentation procedures, including how to properly record hours for both exempt and non-exempt employees. Avoiding costly wage and hour violations starts with your managers.
Develop Complaint Policies and Procedures
Everyone has issues from time to time at work, whether with a manager or a colleague. Understanding how to properly deal with these issues and correctly document them can be beneficial to your organization. Not only does this give employees an outlet to be heard, but it also keeps your company compliant with the FLSA.
Properly documenting employee problems can also help to avoid lawsuits. When you have proper documentation that follows strict procedures, you can be alerted to any issues and work diligently to resolve them before they escalate.
Monitor for New Changes
Labor laws across the country change rapidly. From minimum wage increases at the state and local levels to overtime salary exemptions, it can be difficult to stay on top of the constant changes.
The FLSA is an important piece of legislation that requires employers to adhere to certain regulations. But your state and local governments may impose even stricter regulations on your business. Understanding those nuances and complexities can be extremely difficult, especially considering that you have your core business needs.
Partner with an HR Expert
Understanding the FLSA and its complex rules and regulations can be a full-time job all on its own. You may not have the time, the staff, or the ability to dedicate resources to ensuring your company is FLSA compliant.
Taking proactive steps to ensure your business is compliant with the FLSA can help you avoid costly and embarrassing fines and penalties. It can also help keep your employees engaged. When they know they are receiving the right amount of overtime pay, they have a sense of loyalty to your company.
Understanding the landmines your small business may face under the FLSA can be a daunting task. But if you partner with a trusted HR outsourcing company, you gain access to their HR experts who can help keep your company compliant. That gives you and your team the chance to focus on your core business needs.