Hardly anyone can be certain about complying with all the provisions of the Fair Labor Standards Act relating to overtime and white-collar exemptions. But you can adopt good policies that protect your company from penalties if someone does make a compliance blunder.
The federal government calls them “safe harbor” policies, meaning there’s a good chance auditors will let you off the hook with just a warning if you’ve followed the policies but have misclassified a worker or made improper deductions from the worker’s pay. If you don’t have such policies, you could be subject to fines, damage payments and reclassification of workers, making them eligible for OT pay.
Generally, the FLSA states that you can escape penalties if you:
- Have a “clearly communicated” policy prohibiting improper deductions and a system under which employees can file in-house complaints about improper deductions
- Reimburse employees for improper deductions, and
- Make a good-faith effort to comply after discovering mistakes.
- adopt the two
- use them as guides for customizing or formulating policies,
- or compare them with existing policies to make sure you’ve covered all the bases.