Employer Laws about Hourly Employees
Christine McDade is an experienced human resources manager.
Know the Details of FLSA
Employers are tasked with knowing proper pay requirements that are regulated by law for workers in the United States. The Wage and Hour Division of the Federal Department of Labor oversees the Fair Labor Standards Act, known as the FLSA. Knowing who must be paid for hours worked above forty (40), special rest breaks for the working youth, and proper deductions for disciplinary reasons to an exempt employee are just a few of the many important issues that can be handled incorrectly should an organization not understand the components of the FLSA. While the law has been enacted for several decades and modifications were made as recently as 2011 to the regulations, there are still many organization who do not understand the different components of the law. Nonexempt employees, in particular, are often not paid correctly for work performed.
A law enacted to offer protection for American workers.
FLSA is Enacted
In 1938, the FLSA was passed to protect workers in the American workplace. Child labor and other horrendous working conditions during this Great Depression era brought to the forefront a need to set better standards for American workers. The swift and dramatic changes that were ushered in by an Industrial Age in the 1800's and into the early 1900s demanded change as horrid conditions were broadcast through written media and overwhelming public outcry about poor working conditions. Instead of employers being able to work an employee for excessive numbers of hours at the same low hourly wage, FLSA was designed to set a minimum pay amount and then recognize a threshold for the number of hours a week the employee can work at this wage. This law also essentially banned child labor which had run rampant in many factories and businesses in the United States as there was a demand for cheap labor.Congress passed the FLSA to protect employees from being exploited by employers in how they are compensated for their work. Employees were not expected to work an extreme number of hours without receiving overtime pay.
FLSA is simply a law that regulates employee overtime status, overtime pay, child labor, minimum wage, record keeping, and other administrative matters. Nonexempt employees (more commonly known as hourly employees) must be paid for every hour they work for the employer. Even today, when the Wage and Hour Division of the Department of Labor is notified of a pay concern, an audit and investigation may occur to be sure that there are no violations of FLSA. For this reason, it is still very important to know the laws that govern nonexempt employees in the United States. While the law is somewhat lengthy and complex, it is important to have a grasp of this information or speak to a Human Resources professional who specializes in compensation for assistance. Legal review of the classification of the job descriptions is also advised.
Exempt vs. Nonexempt Employees
In order to be in compliance with the law, employers are obligated to properly classify their employees in a status of exempt or nonexempt. Please note the following:
Exempt Employees are not entitled to overtime pay per the FLSA. These employees are paid a salary that does not fluctuate no matter how many hours they work in a workweek. The main idea behind an exempt employee fitting the exempt classification is that they are paid a higher salary because of the kind of work they do. In this classification, employees are not allowed to have their pay deducted for any time less than a full day of pay for disciplinary actions. To be exempt from the overtime regulations, exempt employees must be exempt under both state and federal laws. Generally, the three requirements for being an exempt employee are:
- must be paid a minimum salary that is designated by FLSA (earning at least $455/week)
- must be paid on a salary basis,
- and must perform exempt duties.
There are different types of exemptions: executive, administrative, learned professional, creative professionals, highly compensated and outside sales (outside sales do not have to qualify with the minimum salary or salary basis per the law). Examples of exempt employees are: lawyers, doctors, engineers, accountants, and teachers. As there are many details concerning the classification of exempt employees, it is recommended that supervisors check out the website, www.dol.gov for more information about these exemptions.
Nonexempt Employees must be paid overtime, one and a half times his or her regular rate of pay for all hours worked that are considered overtime. Please be advised that states may impose additional requirements for an employee to be exempt. In California, for example, overtime is recognized as any time worked over eight (8) hours in a work day or more than forty (40) hours in work week. Again, the workers who are classified as nonexempt must be paid overtime should their actual hours work consist of time beyond the overtime threshold. Generally, overtime is calculated for any time worked over forty (40) hours per work week.
Paying Nonexempt Employees for Hours Worked
The FLSA was enacted into law to ensure the appropriate compensation of employees during the work day. For nonexempt employees, employers must respect the law and be aware of the proper payment of wages to those who work beyond the forty hours. In addition to the components of the federal law, it will be important to know your state laws. It is generally the payment of wages to the nonexempt employees that gets the employer into trouble with the folks from Wage and Hour. Some common examples of problems in the workplace in regards to the working of nonexempt employees are as follows:
- Meal and Rest Breaks: Employees must not work during designated meal or rest breaks. For example, do not allow an employee to eat at his/her desk during their lunch hour. There could be an issue if the employee answers a phone, works on paperwork, assists a customer who walks up to them during this break, etc. Employees might offer to sit at their desk but will be tempted to work on something as they sit there. To avoid any obligation to pay this employee for time worked or misunderstanding about what is acceptable during the lunch hour when they sit at their desk, many employers simply require employees to step away from their desks or office during their designated lunch period.
- Start and End of the Work Day: Employees who come in earlier than their scheduled start day should not be working before their start time. Again, while the employee may say that they are just getting settled in or ready for their shift, it is generally better to just have them start close (less than fifteen minutes) before their start time.
- Working from Home: It is very difficult to properly monitor the hours that a nonexempt employee works while they are not in the office or work site. Unless there is a strict or structured work program and agreement maintained between the employer and the employee, it is generally not recommended to have nonexempt employees work from home. Since employers are tasked with paying the employee for all hours worked, it is difficult to monitor the work the employee does outside of the workplace.
- Vacations: Nonexempt employees who take vacation leave from their job should not be calling into work or taking paperwork with them during their time off from work.
- Take Home Cell Phones and On-Call Status: Employers should be cautious in calling employees during their time off the clock and away from the workplace. Some unionized workplaces have contractual language which refers to on-call status pay that employers should be following.
- Answering Work Emails at Home: Again, time worked on job related tasks at home or away from the office is discouraged because this time could be construed as compensable. Answering emails at home can come under scrutiny because the question comes up as to whether this activity is considered work. While we live in a world where it is tempting to connect with hourly employees through emails that they can check from home, supervisors must be aware that spending such time in this task could be argued as work.
- Child Labor Provisions: The child labor provisions of FLSA restrict the number of hours the child may work and which types of jobs they can perform. As there are many restrictions listed under this law, please check www.dol.gov for the child labor guidelines.
Department of Labor website
Society of Human Resource Management
Some Last Minutes Thoughts about Paying Nonexempt Employees
Nonexempt employees have been classified as such to ensure that their pay is at minimum wage or above and that they are paid properly for ALL time worked during the work day. Employers have had to defend lawsuits from employees who allege that they actually performed work but were not compensated accordingly on their paychecks. When an employee makes such an allegation, the supervisor must investigate the matter, pay the employee for actual time worked that was not paid, and communicate to the employee the expectations of the job regarding their schedule to avoid future violations. It is also recommended to put something in writing to the employee to inform them that they are not authorized to work hours that are not regularly scheduled unless approved by their supervisors. While it is important to compensate the employee to correct the situation, the employee must be put on notice that they are not to work over their scheduled time without proper approval.