Human Resources News & Insights

Debunking common FLSA myths

It’s been said that most firms are violating some form of the Fair Labor Standards Act (FLSA) — most without having any idea.

Look no further than the official statistics. According to the Federal Judicial Center, a record 7,064 FLSA lawsuits were filed in federal court between March 2011 and March 2012.

And employers spent $467 million settling state and federal wage-and-hour lawsuits in 2012.

OT missteps

Some of those mistakes can likely be traced to common myths that employers have about the confusing employment law.

Here are two that regularly trip up firms, courtesy of David Heckett on TLNT:

  1. Do employees receive a salary? Then they’re not eligible for overtime. Many employees and employers get snagged on the misconception that people who are paid a salary are never owed OT. That’s not always the case.
    Heckett says to read the FLSA fine print for who really qualifies as exempt versus non-exempt: “Employees are considered ‘exempt’ from overtime if they are paid a salary of at least $455 per week without deductions for time off and they perform certain duties falling within one of the exemptions as defined by the FLSA.”
  2. You can substitute time off instead of paying overtime. Public sector employees have the option of choosing between receiving overtime time pay or comp pay.
    But for private sector companies, it’s illegal to substitute time off for OT worked.

How to stay safe

So what’s the best way HR can avoid becoming on the receiving end of one of those 7,064 FLSA lawsuits?

Miller Canfield attorney Christopher Trebilcock lays out two critical steps for avoiding wage-and-hour liability:

  1. Set up reasonable complaint procedures. Review your pay policies to ensure that staff can report unpaid time worked and failure to receive the correct compensation. And make staffers sign something acknowledging they’ve been informed of your reporting policies.
  2. Establish policy on investigating oral complaints. Recent Supreme Court rulings have acknowledged that oral complaints are just as legitimate as written ones. Treblicock adds that “employers should establish a procedure for documenting and responding to oral complaints in conjunction with training frontline supervisors in how to distinguish complaints … versus typical employee gripes.”
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