Several recent cases in which employers were subject to considerable fines for wage law violations are reminders that minimum wage compliance involves more than correctly calculating an employee's rate of pay. Well-intentioned employers may find themselves liable for a number of violations--from misclassifying a non-exempt employee to failing to pay employees for all hours worked. It's worth taking a look at some of these issues and how to avoid costly mistakes.
Misclassifying Non-Exempt Employees as Exempt. Employers must properly classify employees. For an exemption from minimum wage and overtime requirements to apply, the employee must meet the salary test and the duties test for the specific exemption.
Failing to Pay Unapproved Overtime. Many employers prohibit employees from working overtime, unless it has been approved in advance. If employees work unapproved overtime, they don't get paid. This is illegal. Employees must be paid for all hours worked--at least the minimum wage plus overtime, if they work over 40 hours in a workweek. Employers may discipline employees for violating overtime rules, but they cannot refuse to pay them.
Working Off-the-Clock. The FLSA does not require employers to provide employees with meal or rest breaks. However, if such breaks are provided, there are some rules for whether the break should be paid or unpaid.
Breaks of 20 minutes or less should be paid. However, employers are not ordinarily required to pay employees for meal periods of at least 30 minutes if the employees are completely relieved from duty during the break. So, if your assistant eats lunch at his desk so that he will be available to answer the phone, he is “working” and you should be paying him for that time.
Travel Time. While normal commuting time is not considered work time, when an employee travels for the employer's convenience or its business, the employee is likely to be considered working. This seems like a simple distinction, but in fact there are many cloudy areas, only some of which are clarified in wage and hour regulations.
For example, if an employee has a special assignment in another city for a day, she may be entitled to pay for traveling to and from that city. Don't forget, the employee is not just entitled to the minimum wage if this work puts her over 40 hours for the week. In that case, you must pay overtime, as well.
State Laws. Keep in mind that many states have their own minimum wage and hour laws, and employers need to be in compliance with these laws.
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