All Human Resources Managers have a responsibility to their organization and their employees to full understand the guidelines of FSLA. In our mission to support your role as the Human Resource Manager, we have outlined the 10 biggest mistakes we have seen lead companies into class action lawsuits. Don’t make these FSLA mistakes!
- Providing Compensatory time off in lieu of overtime. Private employers in California may provide compensatory time off to non-exempt employees in lieu of overtime compensation according to very strict and specific regulations. These regulations make it impractical for employers to utilize comp time as an alternative to overtime in most instances. Employers should also keep in mind that if an employer classifies an employee as exempt, but grants compensatory time off to them when they work in excess of eight hours in a day or 40 hours in a week, it may compromise the exempt status of such employees.
- Compensatory time off is generally not recommended for either non-exempt or exempt employees.
Deducting from Exempt Employee Pay. There are very specific rules on when deductions can be made to exempt employee’s pay. Violations may result in having to reclassify the employee as non- exempt (and may include back pay and penalties). - Paying Incorrectly for Non-Exempt Travel Time. Regular commuting from home to work is not compensable. Out of town travel, whether for a day or an extended period of time, must be paid, with some limited exceptions.
- Misclassifying Independent Contractors. Recently, there has been more government emphasis given to the financial impact of the relationship (e.g. I.C. can suffer a loss like any business) rather than the employer control of the I.C.
- Expense Reimbursement Mistakes. California requires reimbursement of actual expenses. Per Diem does not suffice and may need to be included in overtime rate.
- Focusing only on the FLSA or CA Law. Do not overlook that you must comply with federal AND state law, whichever one provides more protection to employees.
- Not Paying Overtime on Incentive Pay. All commissions must be included in the employee’s regular rate of pay for the purpose of calculating overtime. (Note: This applies to calculating sick time rate, as well)
- Not Tracking Hours Actually Worked. Time records must reflect actual hours worked, not just the employee’s work schedule. Beware of employees who arrive early to work or stay late. This is compensable time. If the employee is violating the employer’s working hours, it is a performance issue, but the employee must be paid for these hours.
- Rounding. Familiarize yourself with rounding rules in California.
- Misclassifying Employees as Exempt. A job is exempt, not the person. There are strict government guidelines that assist employers in determining the exemption status of a job. Although the job may qualify on some of the requirements, the majority of the tasks must qualify as exempt duties. When in doubt, classify the job as non-exempt.
Now you have the ten most common FLSA mistakes Human Resources Managers make, that cost the organization. Therefore, you have the tools and knowledge to avoid these mistakes! If you feel your Human Resources Department needs extra counsel, contact us. We can cater trainings and FAQ sessions to suit your immediate and long term Human Resource needs.