In today’s Human Resources industry, legal bombs can be waiting around any corner. It’s your job to protect the business by evaluating threats and determining a plan of action. Payroll and overtime disputes are some of the more common issues you’ll encounter. Here are a few tips to help you avoid them this coming year.
Stay Up-To-Date with FLSA Changes
As an employer or human resources manager, it’s your responsibility to not only comply with the Fair Labor Standards Act (FLSA), but you must ensure your knowledge is current with any new legislation. You’ll also want to stay on top of your local state or county laws.
Ensure Employees Are Accurately Classified
Do you have exempt or non-exempt employees? Maybe both? It is utterly important that each and every one of your workers is classified correctly.
To classify any given employee, you’ll need to look at their salary and the specific duties assigned to them. Exempt employees must make a salary of at least $455 per week and their position must be classified under one of these three categories:
Exempt employees are exempt from the laws stated in the FLSA, and they do not require overtime pay if worked over 40 hours in a given week.
Non-exempt employees are typically (but not always) paid at an hourly rate. Non-exempt employees are legally required to receive overtime pay (calculated as time and a half of their regular hourly rate) if worked over 40 hours in a given week.
If an employee is misclassified or is not accurately paid for overtime work, you could have a dispute on your hands.
Maintain Clear and Consistent Policies
A good way to cover your bases and avoid payroll and overtime disputes is to clearly state your policies, update them when necessary, and ensure all employees are aware of current policies.
Also, make sure every employee is operating under the same expectations. With the excuse of exempt employees. If you have a “no overtime” policy, ensure every employee adheres to the same rule.
Make sure employees sign a document stating they understand the company policies. For example, if your company policy states that you can withhold an employee’s last paycheck if company equipment is not returned, make sure you have employee signatures acknowledging this policy. Otherwise, you could have a payroll dispute on your hands.
Double Check Payroll and Overtime Rate Calculations
The Department of Labor (DOL) often finds in their audits that companies have fully trusted their payroll software calculations only to find there was a mistake. You don’t want the DOL to inform you of this.
In the Flores v. City of San Gabriel case, Danny Flores along with some of his fellow police officers sued their employer over miscalculated overtime rates. Their employer, the City of San Gabriel, had calculated their overtime rate from an hourly rate that did not include certain payments considered “cash-in-lieu” of health benefits. The court ruled that these payments should have been included in the initial hourly rate used to determine the overtime rate.
Always double check your payroll and overtime rates and make sure you’re up-to-date on current legislation. And be sure to ask questions if you’re ever unsure.