Proper Classification of Employees Under FLSA

Proper Classification of Employees Under FLSA

Should Employees Be Classified as Exempt or Non-Exempt? By Bradley Hunt, Attorney The Fair Labor Standards Act (FLSA) is administered by the Wage and Hour Division (WHD). The Act establishes standards for minimum wages, overtime pay, recordkeeping, and child labor. These standards affect more than 130 million workers, both full-time and part-time, in the private and public sectors. The Act exempts some employees from its overtime pay and minimum wage provisions, and it also exempts certain employees from the overtime pay provisions only. However, many employers unknowingly misclassify their employees which can lead to costly legal expenses and significant penalties for non-compliance. Federal and State Departments of Labor aggressively pursue and enforce these violations and the best practice to avoid running afoul of the FLSA exempt or non-exempt requirements is to take a proactive approach and be sure that your employees are properly classified. For guidance or additional information you may want to visit the US Department of Labor website or consult with legal counsel for guidance on proper classification of your employees. Within this article you will find some general definitions and guidance for complying with these standards. Employees commonly referred to as “executives,” “professionals,” and outside sales persons and certain administrative and computer employees are examples of employees exempt from the protections of Federal minimum wage and overtime pay requirements under the FLSA and the NC Wage and Hour Regulations. This type of employee typically must be paid on a salary basis with no reduction to their salary conditioned on the quality or quantity of work performed. Executive: This classification of employees must manage the day to day operations...
Options to Collect Past Due Receivables

Options to Collect Past Due Receivables

By Bradley Hunt, Attorney If you own a business and are owed money, especially if that amount is large, you know it can have an impact on your operations. Collecting past due receivables can be time consuming and frustrating. If a friendly reminder doesn’t work, what options do you have? Federal and state laws limit how you go about collecting debts owed to you by individuals (the same rules do not apply to businesses). These laws prevent creditors from harassing or threatening consumers to attempt to get them to pay a debt; they also outline what you can and cannot do in pursuit of collecting the debt. We recommend you research the Fair Debt Collection Practices Act (federal) and review the North Carolina Debt Collection Act or speak to a business law or collections attorney before pursuing action. Most businesses that invoice their clients allow a reasonable payment window (15 or 30 days, for example). When debts are not paid within that window, typical collection activities begin. These may include a friendly reminder via mail or email, followed by more forceful reminders and phone calls. When these activities have not gotten the debtor to pay, the creditor must decide how to proceed. The amount owed will often be the deciding factor on the next steps taken. The location of the client may also make a difference. The creditor may decide not to pursue legal action if the amount owed is relatively small or the client is out of state. Debt collection options include: Pursuing a judgment against the debtor. This can happen in small claims court (if the amount...

Avoiding Wage and Hour Complaints

By Bradley Hunt, Attorney There has been a huge increase in the past decade in wage and hour complaints by workers who believe their employers are breaking the law. Indeed, the increase since 2000 is more than 400%, with over 7,000 cases filed in 2011. Let’s begin by explaining the types of actions by an employer that might be considered wage and hour violations under the Fair Labor Standards Act: Failure to pay employees for working “off the clock.” If a non-exempt employee is on-call for troubleshooting after hours, checks email or handles customer calls from home or in the car driving home, meets with a client for breakfast, responds to comments on the company’s social media site, or does any work outside of the standard workday, he or she may be entitled to payment for these hours. Not paying overtime when owed. Do your policies say that employees can clock in no more than 5 minutes before or after their shift begins/ends? Do they work before or after they clock in/out? Misclassifying workers as exempt from overtime pay when they should be non-exempt. Exempt and non-exempt job classification can sometimes be subjective. Look carefully at the type of work, rate of pay and how they are paid (hourly vs. salary). Labeling a consultant as an independent contractor (or “1099” employee) when he or she technically meets the definition of an employee. If you are providing the materials and equipment, setting the hours, determining how the work is done, and the job has a level of permanence, the individual would likely be considered an employee. Deducting hours for a...

Employment Discrimination Pitfalls

By Bradley Hunt, Attorney As a general rule, information requested and obtained during the employment process should be limited to those pieces of information essential for determining if a person is qualified for the job. Information regarding race, sex, national origin, age, and religion are irrelevant in such determinations. Employers are also prohibited from making pre-employment inquiries about a person’s disability, other than regarding a prospective employee’s ability to perform the “essential functions of the job.” Such essential functions should be spelled out in a written, detailed job description. It is easy to understand that most employers have legitimate concerns about a person and their abilities and therefore it is easy for potential employers to ask the wrong questions of a job candidate. The problem is often that the concerns are addressed in the wrong way. Say, for instance, you are concerned about someone’s character, or you want to know if the employee will be prone to excessive tardiness or absenteeism, or you want to know if the candidate will remain with the company for a reasonable period of time, or you may want to know the job candidate’s health or health history. There are ways to handle interviewing a potential employee so that you get the information you need to consider them for the job without asking the candidate questions that are considered discriminatory. There is an easy way to tell if your question to a job candidate is not discriminatory; ask yourself: 1) does this information have an adverse impact on any protected group? 2) is there a business necessity behind the question? Some selection procedures have...

Protect Your Company

What Should You Do If an Employee Sues You? By Bradley Hunt, Attorney As an employer, you should take steps to protect your company and yourself in the event that an employee sues or files a complaint against your company. There are several ways your company may be sued by a current or past employee. The most common types of complaints are over wages and hours paid to the employee and complaints of harassment or discrimination. Most complaints over wages and hours arise over whether or not your company paid the employee enough for the hours they worked or were allowed to work. Under the Federal Fair Labor Standards Act, any employee who is categorized as “non-exempt” or hourly should be paid time and half for any overtime worked. “Exempt” employees are just that – exempt under the FLSA and are what are normally considered to be salaried employees who work overtime without being paid extra. You should know that it is illegal to ask your employee to sign a waiver of overtime pay as an employee cannot waive the employee’s right to protection under FLSA. Properly categorizing your employees as non-exempt or exempt is your first step towards complying with FLSA. Additionally, the use of unpaid internships can run afoul of FLSA as well. Complaints about discrimination or harassment usually stem from employees who file a complaint with The Equal Employment Opportunity Commission in regards to the company’s actions against a member of a protected class during hiring, everyday work, or discharge/termination. An employee may also file a complaint with EEOC for your company’s failure to act on...