Too often, I find there to be a huge misunderstanding about employee wage classification and so this month’s blog provides a very narrow look into FLSA (Fair Labor Standards Act) rules that affect you as an employer. FLSA Compliance is something you should take seriously. In 2008, the Department of Labor (DOL) recovered $220 million in back wages and employees are filing record number of lawsuits under state and federal wage and hour laws.
The rules tend to be a bit confusing; however, start by no longer referring to your employees as “salaried”or “hourly”because in doing so you might make certain inaccurate assumptions. Instead, the proper way to classify employees should be “exempt”or “non-exempt.”What’s the difference? A non-exempt position must be paid at least minimum wage on a salary, hourly, piece rate or commission basis and subject to the overtime rule while exempt status is reserved for TRUE office managers. I emphasize “true” because classification does not revolve around an employee’s title; rather, around their job duties and many “office managers” are not given the level of responsibility necessary to fit this job description. Just because a staff person is assigned the title “Office Manager” or is “salaried”, that does not necessarily qualify them for exemption. To clarify: an exempt employee must be salaried; however a salaried employee may be non-exempt. Non-exempt is the proper classification for the overwhelming majority of podiatric staff.
Some employers assume that because their business is small, they are not covered by the rules of FLSA. Unlike most state and federal employment laws, the FLSA rules do not depend directly upon the number of employees. While proper exempt/non-exempt classification may seem vague, the repercussions and penalties for non-compliance are very real. Keep in mind too that non-exempt employees who volunteer to take work home, work through lunch, work overtime and waive OT pay for doing so; although tempting, is not legal.
Finally, please note that State law supersedes Federal, so e.g., in cases of OT and Comp Time, you should refer to your own state jurisdiction. Heed the warning. While these issues might not ever present a problem in the “harmonious” workplace, they could become a bone of serious contention in the event of a parting of ways.
Download a free slide presentation created by the US Department of Labor that helps explain more about FLSA federal law at: http://www.dol.gov/whd/regs/compliance/fairpay/presentation.ppt