The Fair Labor Standards Act or the FLSA is a United States Federal Law governing overtime, minimum wage and other wage and hour issues. It is applicable to almost every employer and the Department of Labor (DOL) and other government agencies are increasingly focusing on FLSA enforcement.
The FLSA provisions are complex. Given the amount of requirements under the Act, we have found out some common FLSA mistakes employers make and what they do to avoid them.
1. The Employee is misclassified as an Independent contractor
There are certain requirements that ought to be met for a person to be classified as an autonomous contractor. One test that could be made use of to determine this is the Internal Revenue Service's common law test. This test verifies the behavioral control over the amount of work done, the type of relationship between the employer and the individual and financial control.
2. Improper Application of an Exemption
The FLSA allows exemptions from its overtime and minimum wage requirements. These exemptions apply only to a few executive, administrative and professional employees, outside sales personnel, and workers in occupations involving computers. These employees should meet definite requirements; the job title alone is not sufficient to determine an exception. Rather, the employee’s real work profile as well as salary must be considered.
3. Misclassification of persons as unpaid interns
The FLSA admits that not everyone who works for an employer are considered as "employees" and thus allowed compensation. Graduate assistants, Interns and apprentices could be exempt from wage and hour laws so long as they meet defined criteria and can be treated as trainees and not employees. Here are the 6-factors that must be met: (A) the internship must be similar to the training given in an educational environment; (B) the intern must not displace regular workers, but must work under the close supervision of existing staff;(C) the internship must be for the benefit of the Intern;(D) the intern is not necessarily at liberty to a job at the conclusion of the internship; (E) the employer obtains no advantage from the intern’s activities and (F) the intern and the employer must understand that the intern is not eligible to wages for the internship time.
4. Failure to pay for all the hours worked
Nonexempt employees must be paid for all hours worked. Hours worked includes the general work time, short rest breaks and in certain cases the time spent travelling on business.
5. Failure to stick to state requirements
A lot of states do have their own wage and hour laws thatdiffer from the FLSA. Usually, when the State and the Federal law conflict, the law that benefits the employees more generouslyneeds to be followed. Always check your state law before proceeding to classify the employees as exempt, determining the number of hours worked, calculating overtime of job hours and so on.