In 2019, the Department of Labor (DOL) fined companies over $333,000,000, far surpassing any other. This trend will continue, and we expect more investigations for Fair Labor Standards Act (FLSA) compliance are on the horizon.
One common misconception among our clients is that wage and hour disputes are protected under their employment practices liability insurance. Although limited coverage may be found there, it is unlikely. As such, we recommend your businesses perform labor and employment law audits, including compliance to the FLSA. Clients of Bankers Insurance can take advantage of professional consultation services to guide in this regard, provided at no cost. More details below.
The most common wage and hour violations we find include:
- Working off the clock or improper deductions: such as working before work, during breaks, or after work. Short breaks are compensable. Know the break laws for your state.
- Paying nonexempt positions on an exempt salaried basis: paying managers and administrative staff on an exempt guaranteed salary basis when, in fact, these positions are typically nonexempt and thus due overtime for hours worked in excess of 40 per week.
- Not paying overtime on bonuses and incentives: employers must compute overtime on non discretionary bonus and incentive pay such as commissions for sales, attendance bonuses, safety bonuses, and incentive payments for a job well done.
Minimum Guaranteed Salary
The new minimum guaranteed salary will become $35,568 annually or $684 per week on January 1, 2020, replacing the current levels of $23,660 and $455 respectively. This revision allows the salary to include up to 10% non-discretionary bonus and incentive payments to meet the minimum.
Note: If an employee is paid on a guaranteed salary, they are not exempt from overtime. For that to happen, the position must meet a white-collar classification, normally the executive/management classification, and receive the guaranteed salary amount. As noted above, co-managers, assistant managers, and the like are typically nonexempt.
Fluctuating Workweek Pay Method
The fluctuating workweek is a nonexempt pay plan that allows a guaranteed salary. It assumes the employee’s hours will vary from week to week. To calculate overtime, each week’s effective hourly rate is computed by dividing their weekly salary by the number of hours worked for that week. Overtime then adds another one half (1/2) of that rate on top of this weekly salary for any hours over forty. The guaranteed salary simply needs to yield minimum wage for all hours worked. Under a new proposed rule, fluctuating workweek can include supplemental pay and bonuses.
Information contained herein is provided by SESCO Management Consultants. Clients of Bankers Insurance can contact SESCO for questions regarding human resources, wage-hour audits, the Fair Labor Standards Act, or similar issues. As our client, such services are provided free of charge, or at greatly reduced rates. Contact your Bankers Insurance agent regarding how to access this valuable service.
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