Tag: overtime

FLSA Take-Away

“We will not rest until the (FLSA) is followed by every employer, and each worker is treated and compensated fairly.”

– U.S. Labor Secretary Hilda Solis announcing a 33% staffing increase in investigators.

A BusinessWeek report says Fair Labor Standards Act (FLSA) lawsuits have “exploded nationwide,” and that “because wage-and-hour laws have been so widely violated, undetonated land mines remain buried in countless companies.”

Don’t make these pay-related mistakes!

  1. Wrongly classifying employees as exempt versus overtime,
  2. Paying hourly employees incorrectly for their travel time,
  3. Failing to retain payroll records for the right amount of time,
  4. Improperly paying staff when you closed the office during that last snow storm, or
  5. Violating the “rounding law”.

All it takes is one employee filing one complaint.


The HR Experts for Small Business

Salary = Exempt From Overtime?

Many employers and business owners believe that because they pay someone on a salary basis they are exempt from receiving overtime.  This is not always the case.

A good example is someone working as a receptionist.  According to the Fair Labor Standards Act (FLSA), for a full time administrative employee to be exempt from receiving overtime, they must make more than $455 per week (or $11.37 per hour) and their primary duty includes exercising of discretion and independent judgment with respect to matters of significance.  A receptionist making $440 per week ($11 per hour) would not be exempt from receiving overtime on two accounts:

  1. Their salary is below the $455 per week threshold, and,
  2. Their main duty is to answer the telephone and not using judgment with respect to matters of significance.

In this instance the receptionist should be paid overtime for all hours physically worked over 40 hours in a week (i.e. vacation, holiday, and personal time do not apply as being physically worked).

Refer to the FLSA on the Department of Labor’s website for specific details as they relate to each employee classification.  OR, for any small business HR issues contact www.hrinsights.com.

The Small Business HR Resource

Avoidable FLSA Mistakes

The Fair Labor Standards Act (FLSA) is the federal law that oversees wage and hour issues like overtime and minimum wage requirements.  When many companies or small business owners see “FLSA”, they start shaking in their boots.  There are so many different complex provisions of the FLSA that make it quite a difficult act to manage.  So, let’s take a step back and look at some common mistakes and how you may be able to prevent these mistakes from happening in your organization.

-Since many state laws conflict with federal laws, it is sometimes difficult to determine which laws needs to be adhered do.  The advice of many HR professionals here would be to follow the law that is more generous to the employee.  Do some research and look at your state’s law before doing anything pay-related.

-One of the most important things your organization can do is keep diligent records.  This applies to HR basics in general and not just the FLSA.  For the FLSA, however, you must keep records pertaining to hours worked and wages earned for nonexempt employees for 3 years.  This is entails everything that you would think; from total overtime pay for the workweek/pay period to total hours for the day/week/pay period and everything in between.

-This one is easy: DO NOT PERMIT “OFF THE CLOCK” WORK.  Even if an employee works unauthorized overtime hours, they must be paid.  To discourage this, you can create a policy where overtime work is prohibited unless previously approved by a manager.

-Though it seems easy, exemptions need to be applied properly.  Definitions are acutely defined in the FLSA.  Executive, administrative and professional, outside sales personnel, and certain IT positions are exempt not because of their job titles, but because of their job duties and their day-to-day responsibilities.

-Another classification mistake is one where an individual is determined to be an independent contractor before examining the employment relationship first.  There are very specific requirements that must be met in order for an individual to be classified as an independent contractor. The IRS’s ‘Common Law Test’ examines who has control over how work is done, whether the individual has unreimbursed expenses or  realizes a profit or loss from the working relationship, and whether there are written contracts or employee-type benefits involved.  You can submit a Form SS-8 for determination of worker status.

These are all common mistakes and there are plenty more.  The key to staying within the boundaries of FLSA is to keep on top of your state and federal laws as well as having a diligent system implemented to keep track of hours worked and wages earned.

Netflix Nixes its Vacay Policy: Read Between the Lines…

Earlier this week, I read a truly fascinating article about the corporate culture over at Netflix, specifically their unconventional vacation policy.  Being a hyper-successful company easily outstripping it’s competition, I was intrigued by the details.  Netflix has completely eliminated their vacation policy:

Salaried employees can take as much time off as they’d like, whenever they want to take it. Nobody – not employees themselves, not managers – tracks vacation days.

My first skim of the article had me disbelieving that any such policy (or lack thereof) could result in anything less than chaos and a routinely empty office – especially on the days surrounding every minor holiday and 4-day weekend.  My second, more thorough, read had me officially convinced of their reasoning.

Bringing Work to the BeachBased on my own professional experiences, I think the vacation policy Netflix follows, while exceptionally bold, is also relatively  sensible considering how individuals work in a modern world.  Managers at any and all levels should be most interested in work being accomplished efficiently, creatively and on-deadline and less interested in where specifically that work gets done.  As I sit here on my couch at 10:53 pm, I am acutely aware of working outside the confines of the office.  The freedom to work whenever and wherever gives an employee a higher level of responsibility and more opportunity to prove his or her dedication to and passion for the company.  Contrary to popular belief, it actually sets a higher standard for employee performance.  Working only nine-to-five is a practice that is becoming more obsolete and can (sometimes) indicate a disengaged employee.  Without overtime pay for salaried employees and with the advent of telecommuting, employers can proactively seek out individuals who can be held accountable for deliverables, regardless of time and place.

One of the primary principles I learned in college is that communication technology, from the telegraph to the iPhone, reconstructs time and space for society.  People easily connect across continents and the final barrier to communication really exists only in time zones (and this may be deconstructed as time travel becomes possible).  It’s imperative that employers adjust workplace norms to reflect this high-degree of flexibility.  As Netflix aptly points out,

We should focus on what people get done, not how many hours or days worked. Just as we don’t have a nine to five day policy, we don’t need a vacation policy.

I encourage you to re-evaluate your own policies to determine if they match with where your employees fit along the spectrum.  Not every company can adopt such a liberal policy, nor should they.  Each company and employee is unique for a reason.  But maybe it’s time to address your employees needs and provide them with the freedom to choose their own responsibility.  At the end of the day, you may find more engaged and productive employees, leading to more innovation and more growth within your organization.