Do Your Wage and Hour Practices Need a Spring Cleaning?

This spring, monitoring wage and hour compliance should be on top of every employer’s to-do list. Much like cleaning out your garage or reorganizing your closets, it is not a fun job, but the end result is worth it.

According to the latest statistics from the Administrative Office of the U.S. Courts, lawsuits alleging violations of the Fair Labor Standards Act (FLSA) increased nearly nine percent in FY 2014. Class-action lawsuits involving FLSA are also on the rise. To avoid costly liability, it is important to regularly review your policies and procedures.

As a refresher, the FLSA establishes minimum wage, overtime pay, recordkeeping, and child labor standards for most U.S. employers. Below are some specific issues that can lead to liability for employers:

Independent contractors:

While independent contractors provide a number of advantages to employers, businesses should be mindful that proper classification depends on a number of highly fact-intensive factors, which are increasingly under scrutiny by federal and state regulators. To avoid making a costly mistake, it is imperative to re-verify that any independent contractors on your payroll are not actually employees, keeping in mind that relationships with workers can evolve over time.

Overtime to non-exempt employees:

Under the FLSA, employees who serve in a bona fide executive, administrative, or professional capacity are considered exempt from the statute’s minimum wage and overtime provisions. To qualify for the exemption, employees generally must meet certain tests regarding their job duties and compensation. Since the employee’s written job duties are not determinative, it is important that any audit include a review of the worker’s actual daily activities.

Recordkeeping:

The FLSA requires employers to keep records on wages and hours. With respect to nonexempt workers, it is critical that businesses properly record regular hours and overtime hours, as well as meals/breaks and wage deductions. Having proper payroll procedures in place is essential to ensuring that employees are paid the correct amounts for all hours worked. Proper records are also crucial when defending a FLSA claim.

Nursing mothers:

Amendments to the FLSA can also cause legal headaches. The Affordable Care Act amended the FLSA to require employers to provide both a break time and a place for hourly paid workers to express breast milk at work. Employers are also required to provide a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public. Businesses with less than 50 employees are not subject to the breastfeeding requirements if compliance would impose an undue hardship.

Interns:

As the summer approaches, employers should review their policies regarding unpaid interns. Under the FLSA, internships in the “for-profit” private sector will most often be viewed as employment, unless the Department of Labor’s rigorous six-factor test is satisfied. Accordingly, interns must be paid minimum wage and overtime, even if they also receive an educational benefit.

Retaliation:

The FLSA prohibits employers from retaliating against workers who have filed wage and hour complaints. If adverse action is taken against an employee who asserts their rights under the statute, the employee or EEOC may file a lawsuit seeking job reinstatement, payment of lost wages, and damages. Accordingly, it is important to have procedures in place to promptly and thoroughly investigate FLSA complaints. Manager and supervisors should also receive regular training regarding conduct that is considered unlawful under the statute.