Working Through Common Employment Law Issues ( part II ) By Jim Griffis , Attorney
Working Through Common Employment Law Issues ( part II ) By Jim Griffis , Attorney
Fair Labor Standards Act 101 The Fair Labor Standards Act (“ FLSA ”) is a federal law that establishes minimum wage , overtime , record-keeping , and child labor requirements for employees in private business and in federal , state , and local governments . Most people are familiar with the current federal minimum wage of $ 7.25 per hour and the overtime rate of 1.5 times a non-exempt employee ’ s regular rate of pay for each hour worked over 40 in a workweek . However , there is much more to the FLSA than just minimum wage and overtime . Here are some basic FLSA concepts , common mistakes made by employers , and consequences for making a mistake .
Exempt vs . Non-Exempt Employees The FLSA makes a distinction between exempt and non-exempt employees . Non-exempt employees must be paid at least minimum wage for each hour worked , and 1.5 times their regular rate of pay for every hour of compensable time worked over 40 hours per workweek ( unless an overtime exemption applies ).
Exempt workers do not have to be paid overtime , but must generally receive a minimum salary and perform certain duties . Some common exemptions are for executives ( primarily management ), professionals ( attorneys , accountants , engineers , architects , etc .), highly-compensated employees ( office or nonmanual workers who make at least $ 100,000 ), and administrators ( HR , accounting , and public relations ).
Common Mistakes made by Employers under the FLSA 1 . Misclassification of Workers . Employers sometimes misclassify an employee as exempt , rather than as non-exempt . Determining whether an employee meets a certain exemption can be difficult in some situations , and employers can often inadvertently misclassify an employee , resulting in a violation . For example , employers will often label supervisors as exempt , but if the supervisor ’ s actual duties and salary do not qualify for an exemption , then there may be a violation of the FLSA .
2 . Keeping Tipped-Employees ’ Tips . The FLSA permits employers to take what is known as a “ tip credit ” and credit tips received by an employee towards the minimum wage owed . For example , in restaurants , many waiters and waitresses will receive base pay less than minimum wage , and the employer will use tips received by the employee to bridge the gap between the base pay and minimum wage . An employer is not allowed to keep tips received by its employees . For example , if a waiter receives a base wage of $ 2.13 per hour and $ 10.00 in tips per hour , the employer can use $ 5.12 of the tips as a credit towards the minimum waged owed the employee ( e . g ., $ 2.13 + $ 5.12 = $ 7.25 ). The employee also keeps the remaining portion of the tip ( e . g ., $ 4.88 ).
3 . Improper Calculation of Overtime . The general rule is that all compensation an employee receives is included when calculating his or her overtime rate . There are a few exceptions to the rule , and the burden is on the employer to show that the compensation meets one of these exclusions . For example , a non-discretionary bonus received by an employee is included when calculating an employee ’ s overtime rate , but a discretionary bonus is not . It is not always easy to tell the difference between a discretionary and nondiscretionary bonus .
4 . Improper Deductions from Employee ’ s Wages / Salaries . An employer should be careful when making deductions from a nonexempt worker ’ s wages . If the deduction is not a permitted deduction and reduces the employee ’ s wages below minimum wage , then this will be a violation of the FLSA . An employer can obviously make deductions for some items ( such as the employee ’ s share of social security and state unemployment insurances taxes ), but not others ( such as cash register shortages ) if the deduction reduces the employee ’ s wages below minimum wage .
Employers are also not permitted to make certain types of deductions from exempt employee ’ s salaries . For instance , an employer generally cannot make a deduction for damage or loss to company equipment . Also , if an exempt salaried employee is absent from work for less than a full day , an employer cannot make a deduction from his or her salary .
Consequences of Errors The consequences of making a mistake under the FLSA can be costly . An employer can be investigated by the United States Department of Labor and assessed fines and penalties . An aggrieved employee can also bring a private action against an employer and recover back wages for 2 to 3 years , liquidated damages in an amount equal to the back wage award , and reasonable attorney ’ s fees and costs . The employee can also bring a collective action lawsuit in which the employee and all similarly-situated employees pursue their claims together against the employer . In addition , some supervisors and managers can be held personally liable for FLSA violations . Needless to say , it is important for employers to comply with the FLSA .
This article is general in nature . If you need assistance in working your way through employment issues , you should contact an experienced labor and employment attorney . This article is for informational purposes only and not for the purpose of providing legal advice . You should contact an attorney to obtain advice with respect to any particular issue .
Jim Griffis is an attorney with Harris , Finley & Bogle , P . C . He concentrates his 15 year legal practice in labor and employment law . Mr . Griffis represents both employers and employees in various labor and employment matters .
MAY 2018 PARKER COUNTY TODAY
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