With the Department of Labor recently publishing a press release on a Bay Area human resources provider to pay $1 million in back wages to employees denied overtime pay, it’s a good time to look at how these violations happen and how they can be prevented.
Employees love the stability a salary gives them. Employers enjoy the benefits as well since they can easily estimate payroll costs with salaried employees. Being classified as a salary non-exempt employee means they are being paid on a salary basis but being non exempt means they are still entitled to benefits, such as minimum wage and overtime. The problem employers’ face is that the FSLA still requires you to track the time of these employees same as you would for your hourly/contract workers. The U.S Dept of Labor legally requires employers to keep accurate records of hours worked, in case a complaint is ever filed. (eg. TriNet Human Resources Corp.)
So how does an employer get in trouble?
They tell their salaried employee not to work over 40 hours. Sounds fine, but all that means is that the employer is assuming they won’t be working past 40 hours and therefore won’t be tracking it.
They require them to do more work out of their usual job…in exchange for an extra afternoon off. The employer is now telling the employee to do extra work and the time for that is exchanged in time off vs extra hours worked (which is ultimately what the employee is doing).
The department lets a few people go and now all of a sudden the employee has extra tasks and aren’t working their standard 9-5…but 8-6. Although the employer tells the employee not to work past 40 hours, it is still their responsibility to track the actual hours the employee is working.
If any of these cases come up, an employee has the right to file a complaint. If the employer is tracking all the actual hours worked – they would have seen that even though they are salaried and only meant to work 40 hours a week, they have in fact been working more and entitled to receive time and a half back pay for all the weeks they worked past 40 hours.
Although it seems easier in the short term to put more employees on salaries because it results in less tracking and paperwork for the employer – that really isn’t the case. The U.S. Dept of Labor also needs you to track and deal with employee absences appropriately. The best way to avoid any issues and adhere to FSLA and FMLA standards is to implement a time tracking system that can alert you before any issues arise – with your salaried and non-salaried employees.