Wage and Hour Myths

Although the federal law governing workers' wages and hours of employment is among the oldest legislation on the books, it is perhaps the one least complied with by employers. According to National Economic Research Associates, employers spent $467 million settling wage and hour lawsuits at both the state and federal level in 2012. That's nearly half a billion dollars on lawsuits related to wages and salaries and overtime.

More often than not when wage and hour laws are violated, it's not an intentional act by an employer, but rather a misunderstanding of the rules. It may be a surprise to some managers to learn that a few commonly held beliefs and practices are actually illegal.

Below are three myths related to wage and hour laws and suggested steps human resource (HR) professionals can take to make sure their companies stay within the law.

Myth #1: Employees paid a salary are not entitled to OT

It's not just employers that have this misconception. Many employees wrongly believe that if they're salaried, they don't have the right to ask for overtime. But salary is only part of the equation when it comes to determining whether or not an employee is entitled to overtime pay.

Generally, under the Fair Labor Standards Act (FLSA), employees are considered "exempt" from overtime if they are paid a salary of at least $455 per week and they perform certain duties falling within one of the exemptions as defined by the FLSA. Therefore, HR professionals should closely review the roles and responsibilities of all of their employees as well as all new hires before assuming that offering a salary eliminates the need for overtime pay. A careful reading of the FLSA will make it clear which employees are "exempt" and which employees are "non-exempt."

Myth #2: Employees who take work home for convenience are not entitled to OT

False again. Any non-exempt employee who takes work home, even if the employer has not encouraged them to do so, is entitled to overtime pay if the work at home results in total time worked for the workweek in excess of 40 hours.

This may have been less of a concern a decade ago, but in an age when employees are constantly "connected" via the Internet, mobile phones and tablets, employers need to be extremely mindful of when their employees are engaging in work related activities.

HR professionals can protect their companies by outlining overtime and clear remote work policies and establishing consequences for employees who bring work home when they are told not to do so.

Myth #3: Employers can give comp time instead of overtime

For many employees, the idea of receiving time-off for extra hours worked instead of additional pay is an attractive option. In fact, it's something that many employees request.

Unfortunately, under the FLSA, it's not a legal practice for private sector employees. It should be noted that a bill that has been proposed in Congress that would enable private sector employees to choose between receiving overtime pay and comp time.

In the public sector, this choice already exists for state and federal workers. But as it stands today, it's something that private sector employers must stay away from.

It should be noted that "comp time" should not be confused with "flex time." If a non-exempt employee works 10 hours in one day and an employer wants to give them the ability to work six hours on a day later in the week, it is completely acceptable as long as the employee does not work more than 40 hours total in a given week. Once that threshold has been crossed, the employee must be paid overtime.

SESCO Management Consultants is available to assist with your human resource issues. You may contact us by phone at 423-764-4127 or by email at sesco@sescomgt.com.