Top 10 FLSA Mistakes made by Employers Part Two

This is part two of the top 10 mistakes FLSA violations that employers make.

Every year, employers pay millions of dollars in fines and restitution to the Department of Labor for employment law compliance violations.

To read part one, click here.

Mis-classifying Employees as Exempt

The DOL has specific guidelines for classifying employees as exempt. Employees must be administrative, executive or professional. 

The DOL has clarified that executive employees must manage at least 2 other employees and have their primary job duties be managerial.

Further, they must have as their job duties, decision making abilities over other people’s jobs. This clarification over the executive level means that many shift managers at retail and fast food establishments are incorrectly classified as exempt under the executive function.

Another common misclassification is under the administrative job duties. The DOL defines administrative job duties as higher-level operational persons in their areas of responsibilities.

Specifically, administrative employees are not secretarial, clerks, data entry and bookkeepers. They must have non manual work directly related to the management or general business operations of the business. They must be able to exercise independent judgement of significant importance in matters relating to the business.

Areas of administrative duties include tax, public relations, purchasing, quality control, human resources, safety, computer networking, legal and regulatory compliance, budgeting, and internet and database administration. There are other areas not listed above.

Just as when evaluating executive employees, the duties performed, not the job description are the best guide for administrative employees.

Tasks should not be repetitive, mechanical, and routine, but should include decision making, analysis, and establishing.

Not Tracking Actual Hours Worked and Not Keeping records

One mistake that even large employers like Gerber and Disney have been busted for is not paying employees for time changing uniforms while on site.

In multiple rulings, the courts have interpreted FLSA law to include time spent donning and doffing uniforms. This can be a costly mistake.

Having time cards that always show 9-5 is one example of incorrect timekeeping. Employees never show up and leave at the exact time they are scheduled.

Non-exempt employees must be paid for all time worked and that includes staying late 5 minutes after a shift was scheduled to end.

Another area is failing to keep time cards and other payroll records long enough.

Time cards must be kept for 3 years minimum. Additional records that must be kept include total hours worked each day and each workweek, total daily or straight time earnings, total overtime, deductions or additions to wages, total wages paid each pay period, date of payment and period covered.  

Failing to Also Follow State Requirements

Many businesses focus only on the FLSA requirements and fail to realize their state’s own requirements. This cost one Oregon business thousands in fines.

When a state law is more strict than the federal law, employers must make sure to follow the law that most benefits the employee. Some state laws require paid sick leave, daily overtime,

Shameless Plus for SwipeClock: Are You Overpaying Employees?

While not technically a violation of FLSA, overpaying employee wages can also be costly to employers.

Often employees who enter their time manually will enter a rounded start and end time. This could mean that an employee that arrived at 9:05 and left at 4:55 actually enter a 9-5 work shift. Their employer pays wages of an extra 10 minutes for the day.

Multiply that across many employees throughout the year, the cost to employers in wages can add up drastically.

In addition, employers may be paying additional wages from “buddy punching” a practice where one employee clocks in another employee.

Employees report stealing an average of 4.5 hours a week, according to the American Payroll Association. This accounts to approximately 2.2% of a company’s payroll.

These and many other “over payment” of employee wages are more easily solved through SwipeClock’s timekeeping software and solutions. SwipeClock partners report that HR & payroll departments using SwipeClock technology save much money than the cost of the technology.

Let SwipeClock Help

Employers across the United States pay millions in FLSA violations and millions more in state and local employment violations.

These employers must manage labor laws from a variety of government authorities which include the Family Medical Leave Act and any other national or local laws that are enacted.

SwipeClock provides a comprehensive array of workforce management and time tracking tools that can help businesses to more easily stay in compliance with local and national laws.

Records are effortlessly kept for years and accrual is automatically tracked and reported to employees according to the state and city laws. Additionally, with geo-timekeeping clocks, businesses can effortlessly track time worked in specific cities to ensure compliance.

Resources

https://www.dol.gov/whd/regs/compliance/whdfs23.pdf

https://www.dol.gov/whd/overtime_pay.htm

https://www.dol.gov/whd/data/index.htm

Written by Annemaria Duran. Last updated on October 10, 2017