Let’s face it: there are a lot of regulations to follow when it comes to owning a business. Following all the applicable laws can be tough. Although it can be time consuming, you should make sure that you are always following the latest legal protocol. The best way to avoid these pitfalls is to hire an HR consultant to keep you on the right path. However, not every business can afford someone like that, so you should know where to go if you’re the self-help type of business owner. A good place to start is the Fair Labor Standards Act (FLSA) website. The FLSA establishes standards for minimum wages, overtime pay, record keeping, and child labor. So, what are some common pitfalls employers run into that lead to underpaying employees?
Category: Employment Law
The California Supreme Court recently ruled on a change to the test that a hiring entity must use in order to determine if a worker is an independent contractor or not. It’s a much stricter and, as a result, clearer test than what existed before or which exists now with the Department of Labor. Worker classification is notoriously nebulous. Now in California, with the independent contractors ABC test, the definition is much easier to interpret.
There are a few industries in which employees are often misclassified as independent contractors, and salons are one of the big ones. Most salon workers should be employees but are often classified incorrectly. It’s a widespread problem – a problem which costs workers money and, if they’re caught, costs employers a huge amount of money.
The FLSA is a set of federal laws regarding minimum wage, overtime, and other important workplace practices. The rules aren’t always easy to understand, however, and sometimes they get misinterpreted by business owners and even by the courts. (As an example, the supreme court recently had to step in and give the final word on a type of overtime exemption.) This is why the Department of Labor has provided opinion letters to help clarify some of the more confusing scenarios.
While the April 2nd Supreme Court ruling may only apply to a very small segment of workers and probably only affects a single wage and hour lawsuit currently, this departure from the longstanding approach at interpreting overtime exemption will likely have broader implications and affect more workers in the future.
On March 6, 2018 the Department of Labor launched a pilot program allowing employers to audit their own pay practices and catch and report their own wage and hour mistakes. It’s called the Payroll Audit Independent Determination (PAID) Program and will operate for six months as a pilot program.
Prior to now, wage and hour mistakes would land employers in court where they would have to pay court and lawyer fees, back wages, and liquidated damages. With the PAID program, if mistakes are caught independently and in good faith, employers can avoid the extra costs and simply pay employees back for the mistakes made.
With the exempt salary threshold saga finally behind us, the latest Bed Bath & Beyond wage and hour suit is a good reminder that following the FLSA’s exemption status requirements is just as important as ever.