The Fair Labor Standards Act has tripped up many companies, costing them millions of dollars in overtime claims. Most companies falter because they simply don’t understand the FLSA or they think it doesn’t apply to them because of their size or the number of employees. The only way to be sure to avoid these kinds of lawsuits is to understand all of the basic wage laws.
The Fair Labor Standards Act is the foundation for overtime pay, and understanding it is the first step to take in preventing overtime claims. The FLSA basically states that employees who work more than 40 hours a week are eligible for overtime pay, which should be one and a half times their normal hourly rate. Some employees are exempt from FSLA rules because they are paid on a salary basis rather than an hourly basis. But it also depends on their pay rate and job duties. To determine whether your employees are exempt, see this link to the U.S. Department of Labor site.
The problem is that some employers assume that since their business is small, they are not affected by the FLSA and don’t have to adhere to its rules. Unlike most other state and federal employment laws, the FLSA does not depend on the number of employees a company has. Instead, it covers individual employees whose work affects interstate commerce. This means that if you do business outside of your home state, no matter how big a company you are, you must follow the Fair Labor Standards Act.
If you routinely order materials or supplies from out-of-state vendors, or if you sell to out-of-state customers, you’re bound by interstate commerce laws. While we could write an entire series on who is covered by the FLSA, today we want to highlight the importance of OT claims, if and when an employee brings a grievance against your company.
The benefit to a company who has had a grievance filed against it for overtime claims is that the burden of proof is on the employee. This means that employees must have enough evidence to prove that they were working overtime and not getting paid fairly for their time. When timekeeping methods are absent, the employee must prove the precise extent of uncompensated work to the best of their ability.
There are a few prominent cases that set precedence for any claims an employee has against his or her employer. The biggest is the longstanding decision in Anderson v. Mt. Clemens Pottery Company. The U.S. Supreme Court stated in this case that once the employee showed work hours for which they weren’t compensated, it was then the employer’s responsibility to provide evidence to refute it.
At the same time, a case that went through the Eighth Circuit Court of Appeals ruled that any type of sweeping accusations of not being paid a fair wage would generally be thrown out if there is not enough proof to accurately charge the employer with unpaid overtime claims.
The main story behind the FLSA and overtime pay is that companies need to keep very accurate records when it comes to timekeeping, and they need to understand the laws that determine when they need to pay an employee overtime and when they don’t. Doing so will help your company avoid lawsuits, headaches, and spending money on lawyers.
Jessica Miller-Merrell, SPHR, is an author, speaker, Human Resources professional, and workplace social media expert who has a passion for recruiting, training, and all things social media. She is the president and CEO of Xceptional HR, and a leader in the HR community with more than 12 years of industry experience. The author of Tweet This! Twitter for Business, Jessica was named by HR Examiner as the second most influential recruiter on the Internet and the seventh most powerful woman on Twitter. She is a columnist for both SmartBrief and The Huffington Post, in addition to Blogging4Jobs and Human Resources One on One. Jessica has been interviewed for professional articles in CIO Magazine, Entrepreneur Magazine, SHRM’s HR Magazine, and on CBS. Jessica earned a Senior Professional in Human Resources designation in 2008, and holds a bachelor’s degree in Anthropology and Business from Kansas State University. Originally from a small town in Kansas, Jessica currently lives near Oklahoma City with her husband, Greg and daughter, Ryleigh.