Wage and Hour Laws
One of the most important things to be aware of are federal and state wage and hour laws. Employers are fined or sued more often for violating these laws than discrimination violations. There is a two-year statute of limitations for an employee to file a claim, and in some cases it is three years. Recent class action lawsuits filed against mega companies have resulted in multimillion-dollar payouts. On a smaller level, noncompliance can hurt your company, too. This is not an area in which to be careless or take chances. Negligence can multiply into substantial monetary damage, diminish the trust of employees, and harm your company's reputation.
The Department of Labor's Fair Labor Standards Act (FLSA) is something that you should become very familiar with. It regulates laws about minimum wages, youth employment, overtime, and payroll record keeping. There are a few exemptions to overtime and minimum wage eligibility to find out about, too. Keep in mind that there may be state regulations that are more generous toward the employee and overrule FLSA regulations. Contact your state labor board located in Appendix C to find out.
You may be required to pay an employee for a minimum amount of hours each time they clock in. For example, if there is a two-hour minimum of time in which an employee must be paid and you need him for only ninety minutes, he must be paid for two hours. Find out what the rule is in your state.
Hourly and salaried nonexempt employees may be called in to report to work if needed, but they cannot be put on “on call” status without being paid for the time they are on call, whether or not they work. If someone is scheduled to be on call, this usually means that they have to stay close to home and make no plans. The purpose is to guarantee their availability to come in to work if called. The employee has to remain in a position where he is able to work, such as avoiding alcoholic beverages and getting enough sleep, as they would before a normal workday.
There are laws in regards to paying hourly employees for travel time to and from a destination other than the usual workplace. If they are participating in off-site training or going somewhere that includes air travel, it is important to find out when you are, and are not, responsible for wages.
Employees who are paid by the hour are entitled to overtime pay. Generally, overtime pay is paid at time and a half of the employee's usual wages (e.g., an employee who earns $6.00 per hour will be paid an overtime rate of $9.00 per hour). In some states, overtime is paid to employees who work more than forty hours in a work week, regardless of how many hours are worked per day. However, in others, overtime is paid for any hours over eight in a day, even if the total hours for the week are less than forty. For example, if an employee worked three ten-hour days during the week for a total of thirty hours, six hours would be paid at time and a half. This represents two hours for each of the three days.
For payroll purposes, your company's work week may start on Monday and end on Sunday, begin Saturday and end on Friday, etc. It may begin on any day of the week, must have a designated starting and ending time, and remain in place unless a formal notice is distributed to employees announcing a change in policy. The designated work week is important in determining overtime pay and it may not be changed for the purpose of avoiding overtime payments.
The company's specified work week must include seven consecutive days, even if your business operates only Monday through Friday. This is the law, and will be needed for payroll purposes if employees are ever required to work a Saturday or Sunday. The days of the work week should be spelled out in the employee handbook.
Your company's typical work week will also determine when overtime is due if your state has regulations about paying overtime to employees who work more than five days in a row. Laws about consistent days of work may or may not carry over from one pay period to the next. If there are no state laws regulating this type of overtime, there may be a company policy in place that does.
There may be laws in your state that prohibit employees from working too many consecutive days (i.e., you may be required to give workers a specific number of days off per week or month). The nature of the job duties can be a determining factor, too. For instance, there are rules about how many hours a truck driver can be on the road per day.
The federal minimum wage was $5.15 per hour for ten years until President Bush approved an increase in mid-2007. The increase will take effect in three increments of seventy cents per hour, with the minimum wage reaching $7.25 per hour by summer 2009.
Your state's minimum wage may be higher than the federal minimum wage. If this is the case, the state wage supersedes the federal minimum wage.
In some states, employees who receive tips may be paid a lower salary by employers if the wages and tips combined meet or exceed the minimum wage. In 2006, this rate was $2.13 per hour but is expected to rise along with the minimum wage increase mentioned above. For any pay period that the wages and tips do not meet the minimum wage, the employer must make up the difference.
Federal rules that allow employers to pay below the minimum wage for tipped employees or workers under the age of twenty may be illegal in your state. As always, if a state law is more generous to an employee than federal law, the state law overrules the federal law.
Workers under the age of twenty may be paid a lower wage for their first ninety days of employment in some states, as long as their employment doesn't displace another worker (i.e., you release a higher-paid worker from her job for the purpose of hiring someone else to do the same job at a lower rate).