Most employees are unaware of the nuanced rules and regulations that inform decisions about how they are paid.
Employers, however, need to fully understand how the federal Fair Labor Standards Act (FLSA) and state laws interact to provide pay protection for employees, or they can find themselves on the wrong side of the law—paying hefty fines to the government and back pay to employees—even if they never intended to disregard the rules.
Since ignorance won’t be a valid defense for improperly paying employees, it pays (or rather saves) for employers to take the time to understand the basic provisions of federal and state labor standards, how they are enforced and what it takes for employers to remain compliant with the law.
What is the FLSA?
The Fair Labor Standards Act (FLSA) is a federal law that establishes basic labor standards in U.S. employment. The FLSA guarantees overtime for eligible workers, establishes the federal minimum wage (states and municipalities may set it higher), sets youth employment standards and determines recordkeeping rules. The law is enforced by the Wage and Hour Division (WHD) of the Department of Labor (DOL).
There are also a number of employment practices the FLSA does not regulate. For example, the FLSA does not require:
a discharge notice, reason for discharge, or immediate payment of final wages to terminated employees
Other state agencies, however, may regulate these employment practices and many of them do. Employers need to be aware of state and local legislation that applies to their business operations.
For example, Wisconsin has regulation requirements for break and meal periods as well as a Wage Payment and Collection Law that dictates when and how employees may be paid. The state also has additional rest and pay requirements for specific industries. The Equal Rights Division of the Department of Workforce Development is responsible for enforcement.
Who needs to comply with labor laws?
With very few exceptions, federal and state labor laws apply to nearly all employers. If a company has an annual growth volume of sales totaling $500,000 or more, it must comply. In addition, employees of hospitals, businesses providing medical or nursing care for residents, public and private schools, and public agencies are covered by the FLSA regardless of business revenue.
Even if an employer isn’t covered, some of the business’ employees may be eligible for FLSA protections if their job is involved in interstate commerce, for example.
How can you make sure you’re in compliance?
Unfortunately, many employers don’t discover they’re in violation of labor laws until an auditor shows up on their doorsteps—and then it’s too late. For years, the WHD has been targeting certain industries for investigation based on discovery of poor recordkeeping practices and employee complaints in similarly situated businesses. If violations are uncovered in your organization, a lawsuit can be filed and could result in significant financial implications, not to mention risk to your reputation.
There are many nuances within the laws and knowing all the ins and outs can be complex. We recommend working with a qualified HR professional to ensure proper compliance with the laws.
McCloneHR- How Outsourcing Can Help
With regular communication about regulatory updates and proactive solutions for employment practices, McCloneHR clients don’t need to worry they will be caught unaware.
If you have questions about how to apply standards to your workforce, our team—including our inhouse compliance attorney—is here with answers and helpful guidance. Please don’t hesitate to reach out for more information.
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