Pay and Payback | Navigating Wage and Hour Compliance

Posted by Karen Choi on Oct 3, 2012 9:01:00 AM

PayandPaybackCompanies navigating federal and state wage-and-hour laws often find themselves on the wrong side of right.

Consider this example: The federal Fair Labor Standards Act (FLSA) requires companies to determine whether a position is exempt or non-exempt from overtime.  Companies make their best effort to properly classify their positions but may not classify them the same way the U.S. Department of Labor (DOL) will. Guess who wins that dispute?

Companies struggling to meet wage-and-hour responsibilities need to understand:

  • the intricacies of how to calculate overtime
  • what to consider “work time”
  • how to handle lunch and rest breaks
  • what can be deducted from a final paycheck
  • how to handle non-exempt remote employees
  • who qualifies as an independent contractor
  • whether the company can use paid or unpaid interns; and
  • hundreds of other wage and hour scenarios

Even the most knowledgeable HR professional can be left scratching her or his head.

To further complicate the picture, Massachusetts implemented the Treble Damages law in July of 2008.  The law mandates treble, or threefold, damages for a wage-and-hour violation, regardless of whether it was the result of a good-faith mistake, difference of opinion or interpretation, or willful or egregious conduct.  Employers found in violation prior to 2008 would be assessed treble damages only when willful or egregious conduct was found. The potential for huge damage awards has brought a host of plaintiff’s attorneys into the field, looking for clients and anxious for a chance to file a non-payment of wages claim.

In 2010, U.S. Wage and Hour Deputy Administrator Nancy Leppink announced the agency would pursue an aggressive auditing and enforcement policy.  Although audits can be focused on any area of wage and hour compliance, two areas specifically mentioned were misclassification of workers as independent contractors and misclassifying non-exempt employees as exempt to avoid the need to pay overtime.

What should a company do? 

AIM provides clear solutions with a new whitepaper entitled Pay and Payback | Navigating the Minefield of Wage and Hour Compliance. The whitepaper poses 10 common questions about wage and hour issues and provides plain-English answers. Read the questions below. Then download the whitepaper for the answers.

If you get one or more questions wrong, or you were unsure of the answer, it may be time to get more information.  Keep in mind, this is just the tip of the iceberg.

1. The Department of Labor estimates what percent of employers are out of compliance with wage and hour laws?
a)  35%
b) 50%
c) 70%
d) 100%

2.  How many collective actions were filed in federal court in 2011 alleging wage and hour violations?  An FLSA Collective Action is a lawsuit (enforcement action) on behalf of a large group of similarly situated non-exempt employees within a company.
a) 4,000
b) 5,000
c) 6,000
d) 7,000

3. The Massachusetts Minimum Wage is currently:
a)  $7.25 per hour
b)  $8.00 per hour
C)  $8.10 per hour
D)  $8.50 per hour

4.  True or False - Employers are free to hire interns as either paid or unpaid interns.
a)  True
b) False

5.  True or False - An employer who has a formal policy requiring employees to get supervisory approval prior to working overtime may refuse to pay the employee for non-authorized overtime work.
a) True
b) False

6. True or False -  If a job requires a college degree, it will meet the criteria to classify the job as exempt under the FLSA regulations.
a) True
b) False
7.  If someone supervises two or more people, would the supervisor be classified as exempt or non-exempt?
a) Exempt
b) Non-exempt

8.  When calculating overtime, what discretionary compensation needs to be factored in when determining the regular rate of pay?
a) Incentive pay
b) Bonus pay
c) Shift differentials
d) Retro pay increases
e) All of the above

9. Many companies have an automatic lunch-period deduction for non-exempt employees consistent with lunch-break policy.  Which one or more of the following presents an issue to the auto lunch period hours reduction?
a)  Technology – the employee has a smart phone or tablet and can review emails during lunch breaks.
b) The employee sits at his/her desk during the lunch period.
c) The employee is asked to take a call, or help a customer for a couple of minutes during lunch, but can finish his/her lunch break after the call.
d) The company has employees attend lunch-and-learn sessions during the lunch break to review company policies or to participate in training.
e) The employee is too busy for lunch, but will leave a half hour early at the end of the day.

10.  The FLSA requires  companies to pay for breaks when the break is equal to or less than:
1) 10 minutes
2) 15 minutes
3) 20 minutes
4) 25 minutes

 Download the Whitepaper

Topics: Compensation, Employment Law, Human Resources

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