How to Properly Comply With the Fair Labor Standards Act (FLSA) Before the Department of Labor Visits

Summary

The Fair Labor Standards Act (FLSA) is an important piece of legislation that regulates wages and overtime pay for workers in the United States. It is essential for employers to understand the rules and regulations that govern wages, hours, and overtime pay under the FLSA. Violations of the FLSA can result in serious penalties and fines, so it is important to make sure that you are in compliance with the law.


The FLSA applies to most employers and workers. The FLSA sets the minimum wage, regulates the number of hours that an employee can work without being paid overtime, and sets the rules for overtime pay. It also prohibits certain types of labor practices, like child labor or discrimination in wages.

The Department of Labor (DOL) is the government agency responsible for enforcing the FLSA. They can conduct investigations to determine whether or not employers are in compliance with the law. Violations of the FLSA can result in significant penalties, including back wages, civil monetary penalties, and criminal action.

The DOL has several tools at its disposal to investigate violations of the FLSA. These include audits, wage and hour investigations, and interviews with employees. The DOL also has the power to impose civil monetary penalties and even criminal prosecution.

Employers should make sure that their wage and hour practices are in compliance with the FLSA. Employers should stay up to date on the latest rules and regulations and consult with an experienced employment lawyer before implementing any changes. Additionally, employers should inform their employees of the FLSA and their rights under the law.

The Fair Labor Standards Act is an important federal law that sets forth rules and regulations for employers and employees in regards to wages, hours, and overtime pay. Employers should ensure that their practices are in compliance with the FLSA, or else face significant penalties from the Department of Labor. To ensure compliance, employers should stay up to date on the latest rules and regulations, consult with an experienced employment lawyer, and inform their employees of their rights under the law.
 

FLSA Overview

The Fair Labor Standards Act (FLSA) is a United States federal law that establishes standards for payment of employees. It establishes the national minimum wage, overtime pay eligibility, recordkeeping and youth employment standards. The law was enacted in 1938 as a way to protect workers from unfair and unethical practices. The U.S. Department of Labor (DOL) is responsible for enforcing the FLSA and its regulations.
 

The DOL and FLSA

The DOL is the government's enforcement agency for the FLSA. It investigates complaints and can assess fines and penalties for companies that violate the FLSA. It is important to be aware of the law and understand the regulations so that you can protect your business from potential legal troubles.
 

Compliance

Under the FLSA, employers must comply with the law and regulations to ensure that their employees are compensated properly. They must ensure that employees are paid at least the minimum wage and are paid overtime if they work more than 40 hours a week. Employers must also keep accurate records and be in compliance with child labor provisions. The DOL can assess fines if the employer fails to comply
 

Employee Rights

The FLSA also protects employees from unfair wage practices, such as late wages, unequal pay for equal work, and discrimination based on race, religion, gender, disability, age, and national origin. The DOL will enforce the law if an employee feels that their rights have been violated.
 

Prevention

The best way to avoid a FLSA violation is to understand the law and the regulations. Have policies in place to ensure that employees are paid the minimum wage and overtime when applicable, and keep accurate records. Make sure employees are aware of their rights and responsibilities under the law. If the Department of Labor comes to investigate, you will be prepared.

<<Last fall when the Department of Labor announced changes to the white-collar regulations of the Fair Labor Standards Act (FLSA), there was quite an uproar about whether these alterations would result in thousands of people being classified as exempt who had not been before. But according to John E. Duvall, a partner in the Jacksonville, FL, office of Ford & Harrison LLC, a national labor and employment law firm, there has not been much change "en masse" in terms of how people's pay has been affected one way or the other.

Instead, says Duvall, the recent changes to the white-collar regulations of the FLSA, though important, are "subtle and nuanced modifications." The three main changes are:

• It raised the minimum salary level test, below which all workers are entitled to overtime, from $155/week to $455/week - or $23,660 annually;
• There is a newly created exemption for highly compensated individuals who make more than $100,000 annually; and
• A new safe harbor rule was created to mitigate against deductions from pay.

A closer look at the first two
The minimum salary level is pretty self-explanatory. Anyone who makes less than $455 a week ($23,660 annually), regardless of job duties, is not exempt from overtime. Even if the worker is in a managerial position and may qualify for exemption because of such job duties, he or she cannot be classified as exempt.

Also pretty easy to understand is the new exemption for highly compensated individuals who make more than $100,000 a year. The caveat is that this person must regularly perform at least one type of job duty that is expected of someone who is an exempt executive, administrator, or professional. Companies do have the discretion to decide the conditions of the year: calendar, anniversary, or fiscal year. For those who are not employed for the entire year, employers can prorate the employee's basic compensation.

Safe Harbor
The safe harbor regulations were a welcomed relief for employers who needed clarification about whether they can deduct partial-day absences from exempt employees' paychecks if they call in sick or leave work early to go home to take care of personal business. One of the fundamental requirements of the white-collar exemptions is that the employee has to be paid on a salary basis, which means they receive a fixed amount of compensation that is not subject to fluctuation for absences from work, explains Duvall. The converse to that is if an employee can perform the job in less than the standard increment of time that is traditionally associated with work (40 hours), then he or she is not required to punch a clock or stay at work the requisite time. So can an employer deduct partial-day absences from an exempt employee's paycheck?

"What the new regulations have made clear," says Duvall, "is that the answer is 'no.' Employers may not deduct for absences for less than a full day. If a salaried employee decides to take the afternoon off, he or she cannot suffer any adverse consequences of compensation as a result of that absence."

What the safe harbor does allow employers, however, is a window of correction to right any inadvertent deductions that were made. "Before the safe harbor regulations," Duvall explains, "if an employer made an improper and inadvertent deduction from an exempt employee's wages, the employer would lose the exemption for that employee for the life of the employment. The safe harbor allows for the correction of that inadvertent deduction within a reasonable period of time, without losing the exemption."

The theory behind this new regulation is that employers cannot correct a problem unless they are made aware of it. So, if an exempt employee receives a paycheck with a deduction for being absent for half a day, it is up to the employee to call that deduction to the employer's attention. Then employer can correct it. Of course, the deduction has to be inadvertent and isolated. It cannot be the result of an unlawful pay practice that imposes automatic deductions of absences of less than a day for all exempt employees.

There are three exceptions to the full-day rule: the Family Medical Leave Act (FMLA), first and last weeks of employment, and penalties for safety infractions in the workplace, the latter of which is brand new with the August changes.

Recent paralegal opinion
Another Wage and Hour administrative decision that law firms should pay attention to has to do with paralegals. About 10-15 years ago, many law firms decided to classify all their legal secretaries as paralegals, so they could consider them exempt from overtime requirements of the law; but that was not appropriate under the learned professional regulations. Back then, says Duvall, paralegals were often considered exempt. In January, the Wage and Hour division of the DOL issued an opinion paper that basically says paralegals may not be classified as exempt employees. In the opinion, the DOL administrator took the position that paralegals are only exempt if they possess advanced, specialized degrees in another professional field and apply advanced knowledge in that field in the performance of their paralegal duties, says Duvall. The example given by the Wage and Hour administration is of an engineer who is hired as a paraprofessional to provide advice on product liability cases or patent matters. In that case, because the paralegal would be using an advanced engineering degree to perform the work, that person would be exempt. For all paralegals, Duvall notes, the focus is still going to be on what they do on a day-to-day basis, not on the education they received before becoming paralegals.

Final thoughts
Duvall offers two more pieces of advice for employers: First, do not get hung up on job titles. The title means nothing in terms of whether the employee is exempt or not. What matters are the day-to-day duties. Second, he suggests, keep track of the changes in an employee's job duties, salary, and wage reductions. Just because someone's job is exempt today does not mean that it will be tomorrow. Simply remember the mantra of all employment lawyers to employers: Keep records.

For a handy guide to the FLSA, visit the DOL website at http://www.dol.gov/esa/regs/compliance/whd/hrg.htm

Readers wishing to contact Mr. Duvall with questions may email him at jduvall@fordharrison.com.