Incorrect Payment of Wages Can Be Very Costly
The Fair Labor Standards Act (FLSA) is the federal law that governs employment matters regarding how to pay an employee. Since the law’s revision in August of 2004, there have been substantial increases in the number of claims relating to unfair pay practices. They may come in the form of Department of Labor audits on a company or legal action in the courts. The claims may range from those of not being paid overtime to not being paid at all for hours worked.
The most common employer misconception is the belief that they are able to choose if someone is paid overtime. That is not the case. The actual duties of the employee are what dictate how they must be paid.
Employees may be classified as being either non-exempt (entitled to overtime) or exempt (not eligible to be paid overtime). Under the FLSA there are certain criteria that an employee must meet to allow for exempt status. These categories include Executive, Administrative, Professional, Outside Sales and Computer Professionals. Within these categories are requirements of job duties, and in most cases a guaranteed salary amount, that must be part of the equation in order to meet the exemption.
An employee may be classified as exempt and salaried under these criteria. However, another employee, who does not meet the exemption from overtime, can also be paid as salaried but must remain classified as a non-exempt employee. This means that any hours they work over 40 would have to be considered overtime and paid in accordance with the FLSA guidelines.