Wage and hour claims are a common source of legal challenges for employers. With ever- evolving laws and regulations, employers must stay vigilant to ensure compliance with wage and hour laws. Even unintentional violations can lead to costly lawsuits, penalties, reputational damage and employee dissatisfaction.
The following are effective practices that can help employers manage wage and hour issues effectively and reduce potential claims and legal risks:
- Classifying employees correctly: One of the most widespread wage and hour issues stems from incorrect employee classification. Under the Fair Labor Standards Act (FLSA), employers typically encounter two main challenges when classifying employees. First, employers must avoid misclassifying employees as independent contractors. Second, certain employees may be exempt from the FLSA’s wage and hour provisions, including executive, administrative, professional and outside sales employees.
- Paying employees properly: The FLSA requires employers to pay their employees for all hours required or permitted to work. Failing to pay nonexempt employees at least the federal or state-mandated minimum wage, whichever is higher, for all hours worked and overtime pay — at a rate of 1.5 times the employee’s regular rate of pay — for every hour they work over 40 during a workweek is one of the most common sources of wage and hour violations.
- Developing clear and consistent workplace policies: By developing workplace policies that address common wage and hour violations, such as work hours, breaks and overtime, and consistently enforcing them, employers can help mitigate risks and potential violations.
- Conducting regular training: Many wage and hour violations are preventable. Effective training can improve an organization’s compliance efforts by ensuring managers and employees recognize applicable laws and regulations, identify compliance concerns and issues, and report compliance issues properly.
- Ensuring accurate recordkeeping: Proper recordkeeping is a critical component in reducing potential wage and hour claims. Under the FLSA, employers are legally required to maintain certain records for each nonexempt employee.
- Addressing employee complaints promptly: Taking employee wage and hour complaints seriously and resolving issues quickly can prevent internal complaints from becoming formal legal actions.
Kim Figurski, SPHR,
is an HR consultant and trainer at The MBA. Contact her at 814/833-3200, 800/815-2660 or kfigurski@mbausa.org.
