Time and pay requirements under the Fair Labor Standards Act (FLSA) are complex and often confusing for small business owners. Case in point, the Department of Labor (DOL) overtime rule — scheduled to go into effect December 1 — is now on hold due to a last-minute move by a federal district court.
Keeping track of the latest overtime law changes and requirements is enough to make your head spin. Still, small business owners must stay on top of overtime rules to avoid FLSA violations and situations that seem legit, but are ultimately illegal.
Overtime Is Overtime, No Matter How You Spin It
A common misconception: if employers and employees agree on an action, then everything is fine. However, it’s not fine if the arrangement is illegal. Here are a few common scenarios of overtime-management miscues you should avoid:
Waiving rights to overtime
A business owner expressed to his staff he could not afford to pay overtime despite business picking up. To unify employees around the cause, he shared that he may have to hire an additional employee to meet demand, but also may need to reduce the existing staff’s future hours from time to time. Understanding the bind the owner was in, and their potential loss of hours, employees agreed to sign documents to waive their rights to overtime. Even though everyone was in agreement, this is illegal. Employees must be paid for all of the hours they work, and overtime pay at time and a half is required above 40 hours — even if everyone in the company is in agreement to waive it.
Borrowing from Peter to pay Paul
The concept might work when it comes to managing your personal finances, but not for employee hours. For example, a local restaurant owner gets extremely busy during the holidays. She knows that the first week of January is relatively slow, so she asks employees to borrow hours from the slow week so they can work extra hours during the holidays. Employees agree because they assume it’s legal, but it’s not. Regardless of time worked the week before or the week after, employees must be compensated for all of the hours worked in the specified week. If the hours are above 40 for the given week, the employee is entitled to time and a half.
Taking the work home.
An employer asked some of its non-exempt employees to take work home in the evenings to help meet a project deadline. In return, the employees were promised future time off as a reward. The law is clear: if an employee works a specific number of hours — whether it’s in the office or at home — the employer must compensate the employee accordingly.
Meeting outside of scheduled work hours.
A small business, in an effort to keep production on schedule during normal work hours, requires press workers to attend a weekly Monday meeting, one hour before the shift begins. By law, each worker is entitled to overtime pay in the event the meeting puts them at 40+ hours for the week.
Make Sure You’re in Compliance
If any of these examples sound familiar to you, it’s important that you research your individual situation to ensure you’re in compliance with the law. A good resource to start with is the Department of Labor’s webpage on Overtime Pay. It’s also useful to learn about the most common violations found during a DOL investigation to learn how to protect yourself from fines.
In addition to government resources, TrackSmart’s suite of services can help you better manage employee hours to ensure your business complies with overtime regulations. In addition to capturing employee hours submitted online or via the mobile app, TrackSmart Attendance provides a quick-reference time sheet summary report that lists regular, paid time off and overtime hours for each employee. At a glance, you can review employee hours to ensure overtime is managed accurately.