FLSA: Fair Labor Standards Act
Attendance Enterprise Eases Compliance
In organizations across America, compliance with the Fair Labor Standards Act (FLSA), especially as it relates to overtime pay, is increasingly crucial. The burden of proof is 100% on the employer to comply with FLSA regulations.
Federal lawsuits alleging violations of FLSA have more than doubled nationwide in recent years. An increased emphasis on overtime- along with nonpayment for the work- is alleged to be a big part of the problem.
What Is the Fair Labor Standards Act?
The Fair Labor Standards Act advocates for workers by establishing minimum wage, overtime, and child labor standards in the United States. These standards usually apply only to hourly employees, but some salaried employees also are covered under FLSA.
Wages & Hours
The Fair Labor Standards Act (FLSA) prescribes standards for wages and overtime pay, which affect most private and public employment. The act is administered by the Wage and Hour Division of the Employment Standards Administration (ESA). It requires employers to pay covered employees who are not otherwise exempt at least the federal minimum wage and overtime pay of one-and-one-half-times the regular rate of pay.
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What Does the FLSA Say About Overtime?
According to the U.S. Fair Labor Standards Act, overtime must be paid at 1.5 times the employee’s average pay rate after the employee has worked 40 hours.
Where an employee in a single workweek works at two or more different types of work for which different straight-time rates have been established, the regular rate for that week is the weighted average of such rates. That is, the earnings from all such rates are added together and this total is then divided by the total number of hours worked at all jobs.
US Dept of Labor
How Do Fair Labor Standards Act Regulations Affect My Organization?
According to information recently released by the Administrative Office of the U.S. Courts, the number of federal lawsuits alleging violations of the Fair Labor Standards Act has recently doubled.
A large portion of the increase in cases is being widely attributed to low-paid workers in a variety of industries, including landscaping, shop clerks, restaurant workers, warehouse laborers and construction contractors.
This recent litigation is fueled by several factors:
- Nonexempt employees often work more than one job.
- Employees “volunteer” for regular work activities.
- Employee gap time is not always considered.
- Payroll and human resources staff are inadequately staffed or trained.
First on the list is that employees can often have multiple jobs. For example, in a hospital setting the same person can work 25 hours a week as a maintenance worker, and 20 hours a week as a cafeteria server. Although it is easy to consider this worker as having two separate jobs, for the purposes of FLSA this worker has one job, works over 40 hours a week, and is entitled to overtime pay at 1.5 times the average pay of those two activities.
A second consideration is nonexempt employees volunteering for work that is similar to the work for which they are paid. Furthermore, if an employee does a task on a regular basis, even if it is considered volunteering, the employee must be paid—and that pay goes towards the calculation of overtime hours.
Gap time can also lead to underpayment of nonexempt employees. For example, in a healthcare setting, if a Nurses Aide is paid a salary to work 37.5 hours a week and works 42 hours, that employee is due 2 hours of overtime and 2.5 hours of gap pay.
Accurate Tracking Methods
Another consideration for organizations is the accurate recording of employee time. If your business keeps paper time sheets that record the employee’s schedule (not the hours the employee actually works), these records are considered inaccurate and do not comprise an accurate legal record of employee attendance.
The last factor that can expose your organization to problems with FLSA is the sheer lack of personnel dedicated to recordkeeping.
Knowing how to quickly correct the process of overtime payment, and retroactively paying employees for overtime can, while financially draining, save the business from dire consequences.
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How Can My Business Counter Lawsuits Due To Incorrect Overtime Calculation?
- Classify employees correctly under FLSA regulations.
- Obtain a legal audit to retroactively pay employees back overtime pay.
- Keep accurate time and attendance records.
- Simplify the calculation of overtime pay using Attendance Enterprise blended rates.
As noted above, the first step in avoiding the recent trend of lawsuits against employers is to correctly classify employees under FLSA regulations.
Obtaining a legal audit to retroactively pay employees for unpaid overtime is a smart decision. One option is obtaining a Department of Labor audit. However, the employer is then obligated to pay any overtime costs that are due.
Improved Timekeeping
An important step to quickly becoming compliant with FLSA regulations is to adopt timekeeping practices that accurately record employees’ time and overtime. Employees’ actual time must be recorded.
Timekeeping can be dramatically improved with the use of time recorders and time and attendance software that keep a precise record of the exact minute employees begin and end work.
Attendance Enterprise is powerful software that can be customized to reflect your time and attendance policies, as well as FLSA regulations for nonexempt employees.
The blended rates feature in Attendance Enterprise makes it easy to manage employee overtime pay.
For example, if an employee makes $6.50 an hour for 23 hours in a job for the first half of the week and $5.75 an hour for 17 hours for the second half of the week (both nonexempt positions), then works 6 extra hours in the cafeteria, that employee will earn $9.27 for each hour of overtime pay.
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Conclusion
The recent surge of legal actions taken against employers for incorrect payment of overtime can strain the limits of an organization. Businesses are 100% responsible for FLSA compliance.
Industry-leading tools like Attendance Enterprise will greatly simplify FLSA compliant overtime calculation, as well as maintain accurate employee attendance records, for better protection against this type of litigation. Attendance Enterprise records become invaluable legal records of employee attendance and pay.