The Fair Labor Standards Act (“FLSA”) requires employers to pay “non-exempt” employees time and one half of their “regular rate” when they work in excess of forty hours in a week. The United States Department of Labor, the agency tasked with enforcing FLSA, has shown a willingness to aggressively initiate enforcement actions against employers suspected of violating FLSA’s standards. Here are a few tips on how to avoid problems that breach FLSA:
Diligent Record Keeping
You should utilize various record keeping tools to track your employees’ time. Electronic payroll systems should be used in conjunction with some type of device like a time clock to track hours worked. We recommend that you retain these kinds of records for at least three years.
Employee vs. Independent Contractor
It may be tempting to classify an employee as an independent contractor in order to avoid FLSA and other laws. Remember that the Department of Labor has specific standards it uses to determine whether a worker is an employee or independent contractor. These standards center on who controls the individuals’ work. The more control you exert over a party, the more likely the Department of Labor would classify the individual as an employee.
Exempt vs. Nonexempt
Determining whether an employee is exempt from FLSA is usually a fact-driven analysis. Compare your employee’s role to see if he or she may be exempt under the “salaried basis,” “professional,” “executive,” or “administrative” categories.
Compensable vs. Non-compensable Time
The widespread use of mobile communication devices such as smartphones, tablets and laptop computers has blurred the line between what employees do while on or off the clock. If your internet sales manager responds to emails from home, is this time compensable under FLSA? This is an emerging area of FLSA enforcement and one that dealers should take very seriously. To avoid disputes over compensable time, develop clear processes governing the use of company inventory outside of the office.
To make sure that your policies and procedures are compliant with the Fair Labor Standards Act, please call us at 631-224-7000.