Even though the Fair Labor Standards Act was passed in 1938, many employers still struggle with complying with the regulations.
Below are six common mistakes a number of employers make:
- Allowing “comp time”.
While it may seem that all employers will allow an employee to have an extra vacation day in exchange for working on Saturday, or perhaps leave early on Friday as a reward for staying late Thursday, true comp time in lieu of paying overtime is not allowable in the private sector. In fact only state or local government employers, with the agreement of the employees are allowed to provide nonexempt employees with compensatory time off.
- Automatically paying over time for weekends.
Having an employee work on Saturday or Sunday is not an automatic overtime check. Employers need to establish when their week starts and ends – most weeks run Sunday through Saturday or Monday through Sunday. Overtime is paid for hours worked in excess of 40 in that week.
- Failing to pay overtime without prior authorization.
If an employee works overtime, you’re stuck holding the bill. Punishing the employee by withholding the pay is not the way to go. Instead, establish a policy that discusses how overtime will be approved and inform employees that it needs to be approved prior to working it. Failure to obtain appropriate approvals may result in disciplinary action, but never withholding pay.
- Assuming the job title is what matters.
If I wanted to, I could title myself Queen of all the World, but it doesn’t necessarily make it so. Just because you call an employee a “Manager”, “Director”, or “Supervisor”, doesn’t mean they are performing job functions of such. Determining whether an employee is exempt or non-exempt relies on what the employee is actually doing – not their title.
- Assuming “Salaried” means “Exempt”.
Many employers choose to pay employees a regular salary if, for nothing else, the convenience of it. However, just because you have an employee earning an annual salary does not mean they are performing a job making them exempt from earning over time pay (see above re: job titles). A number of job functions can, and often are, salaried non-exempt roles – receptionist, administrative assistant, and accounting clerks are a few examples.
- Reducing exempt level pay for partial days.
Exempt level employees are expected to get the job done whether they are working 35, 40, 50, or more hours per week. Part of being exempt means they do not earn overtime when they are working more than 40 hours. Part of the danger with reducing pay when they work less than 40 hours is that you, the employer, jeopardize their status as true exempt-level employees.
If you read any of the above and thought “oops!”, it may be time to reevaluate how you are handling your pay, job descriptions and time off. Should you have any additional questions, please contact Bethany Holliday at 314-373-2982 or firstname.lastname@example.org.