Because class action status can change a small comp issue into a massive lawsuit—one very attractive to contingency lawyers—Fair Labor Standards Act (FLSA) lapses could be your most dangerous mistakes.
Here are 10 of the most common management moves that create Fair Labor Standards Act (FLSA) disasters. (Pay attention because you don’t want to be the one explaining to the boss how that little problem morphed into a monster!)
1. Misclassification in the gray areas. Classification is always clear at the top of the pay scale — people who manage departments—and at the lower end — people on production lines and in other routine jobs.
But most companies have gray area jobs that sit in the middle. For example, so-called “store managers” who spend most of their time at the register; working supervisors who spend most of their time on the production line; and skilled workers who follow very specific directions. (The authority to make independent judgments on the job is a major element of exempt qualification.)
2. “Suffering” unpaid work. If you allow or “suffer” (the legal term) your employees to work, then you have to pay them. Even if they voluntarily want to work late or through lunch without pay, they must be compensated.
Avoid wage and hour violations with BLR’s easy-to-use FLSA Wage & Hour Self-Audit Guide. Try it for 30 days … on us! Click here
3. Failing to meld state with federal requirements. For example, in California, workers are entitled to overtime after 8 hours in a day and double-time after 12 hours in a day, whereas federal law requires overtime only after 40 hours in a week and does not require double-time under any circumstances.
4. Miscalculating travel time. Travel issues arise because federal law is odd (nonexempts only get paid for travel hours that coincide with their normal work hours) and because state laws may have differing requirements. (For example, in California, you have to pay for all travel hours, whether or not they coincide with normal work hours.)
5. Donning and doffing. Preliminary and “postliminary” tasks (as DOL sometimes refers to them) also cause problems. For example, if workers have to check in and then travel to a worksite, or if they have to don and later doff special safety garb, or elaborate uniforms/costumes, that time may be compensable.
6. Not keeping up with changes. Today’s rapid changes in the way business is conducted mean rapid changes for jobs, too. A typical example would be a job that has been automated. Where the employee used to make decisions about how to manage the task, now the computer does it. The formerly exempt job may now be nonexempt.
All the checklists you need to avoid overtime payment errors. They’re in BLR’s award-winning FLSA Wage & Hour Self-Audit Guide. Try it for 30 days. Click here
7. Failure to count extra compensation for overtime. When calculating overtime rates, employers must include such extra compensation as nondiscretionary bonuses and lodging as part of the weekly total on which overtime is calculated.
8. Making agreements with employees. It’s tempting to make agreements with employees (for example, to set up a compensatory time arrangement). But in the private sector, this is not legal, even if the employee happily agrees or even requests it.
9. Ignoring the woes of your competitors. Prominently publicized FLSA settlements or lawsuits, especially when they relate to your business practices, should raise red flags. Because government inspectors may be targeting guess who next. Time to audit.
10. Docking exempt employees. This tricky topic will have to wait until tomorrow’s issue. We’ll cover it and tell you about an audit program that could save you from expensive lawsuits.