The Liable Nightmare, Wage & Hour

The following article was written by Ann Fisher is President and founder of HR Alternative Consulting, Inc.  Learn more about Ann Fisher and the HR services provided at www.hralternativeconsulting.com or (317) 852-3590. 

The rising number of overtime lawsuits is causing companies to examine potential problems they could face, due to the wage and hour laws.  As the increasing amount of back wages, wages the employee should have received for working overtime, are among one of the highest workplace class-action lawsuits employers face.  In 2006, wage and hour complaints filed by employees received over $160 Million in back wages. The Fair Labor Standards Act’s (FLSA) goal, effective in August 2004 was to clarify the white-collar exempt status for executives, administrative and professional employees.

 Exempt (Salary) vs. Non-Exempt (Hourly) 

The Fair Labor Standards Act is a Federal law that requires that non-exempt employees be paid at least minimum wage and overtime pay for hours worked over 40 hours a week.  There are two Employee Classifications:

1.      Exempt Employee (Salary) - An employee that is exempt from the overtime provision is based on the FLSA.  The hours worked by salaried employees are often irregular and begin and end beyond the normal workday.

2.      Non-Exempt Employee (Hourly) - An employee that is non-exempt from the overtime provision is expected to work the normal workday and workweek unless overtime is authorized.  Overtime is paid for time worked in excess of forty (40) hours in a work week.

 What is the Employer’s Pain? 

To qualify for exemption, employees generally must meet certain criteria regarding job duties and be paid on a salary basis.  Job titles do not determine the exempt status.  For the exemption to apply, the employee’s specific job duties and salary must meet all of the requirements of the FLSA’s regulations.

 Steps for Prevention 

1.      Conduct an internal audit vs. the written job description

2.      Examine new positions your company has added

3.      Conduct  Exit Interviews with departing workers

4.      Ask employees what is on their minds and listen

Employers should take a more proactive approach, and not wait for employee wage and hour complaints to result in lawsuits.

Internal Human Resource Audits/Evaluations and well written job descriptions are critical to determine the employee wage classification.