The requirement on wages and overtime are often confusing and misunderstood. Does minimum wage apply to commissioned employees? When is overtime due? What information must be proved to employees and what records must be kept? Do you have to pay for the time an employee is being trained or on breaks? Is overtime due if I pay an employee a piece rate or a fixed salary? And what about comp time? Make a mistake on one of these issues, and an employer could be liable for back wages, interest, attorney fees, and penalties. Using a payroll company does not necessarily avoid an employer’s liability.
To help employers better understand the rules, the Department of Labor has developed five videos that provide basic information on the federal law that covers wages and overtime, the Fair Labor Standards Act (FLSA).
The videos are available on DOL’s web page at (https://www.dol.gov/whd/flsa/videos.htm).
The videos provide useful information, but leave many issues unanswered. To illustrate, the videos advise that overtime is due even if an employee is paid a piece rate, but do not advise how to calculate that rate. Similarly, the videos recognize there are employees exempt from the overtime requirement, but fail to provide a full list of exempt employees.
Moreover, the videos correctly note that many states impose stricter requirements, warning the viewer that they still need to check out these local requirements. The videos correctly note that states may have a higher minimum wage than the $7.25 required under federal law, but implies that overtime is due if an employee works over 40 hours a week. It is important to note that some state laws may have different requirements. For example, California requires overtime for every hour an employee works over 8 hours in any given day or if the employee works more than 40 hours in a work week.
Given the potential liability and the various additional state requirements, it is recommended that competent legal counsel be consulted to ensure your company is in compliance with all wage and hour laws.
For a more information on wage and hour issues, please see Piece-Rate Compensation: Get Ready for the Changing Rules, in WFCA’s Premier Flooring Retailer (November/December 2015), which explains how to calculate overtime for piece rate employees, including new California rules; Do You Pay Your Managers Overtime? You May Need to Under New Federal Regulation Premier Flooring Retailer (July/August 2016), which explains the rules on overtime exemption for managers and administrators; Are You Prepared for the Scheduled Increases In Many State Minimum Wage? The Law, The Floor, and You (March 2, 2017) at (https://wfca.org/wfca-blog/are-you-prepared-scheduled-increases-many-sta...) which provides an update on state minimum wages; Remember, Your Managers Must Manage—If Not, They Get Paid Overtime, The Law, The Floor, and You (April 4, 2018) at (https://wfca.org/wfca-blog/remember-your-managers-must-manage—if-not-they-get-paid-overtime); and Have You Updated Your Federal Employee Posters? The Law, The Floor, and You (September 7, 2017) at (https://wfca.org/wfca-blog/have-you-updated-your-federal-employee-posters) for an update on what posters you are required to post.
Notice: The information contained in this article is abridged from legislation, court decisions, and administrative rulings, and should not be construed as legal advice or opinion and is not a substitute for the advice of counsel.
