Knowing how much to pay your employees should be simple: hourly workers are paid time and a half for hours worked over 40; salaried employees are not. Of course, it is not that simple. Not all hourly employees are necessarily non-exempt (meaning they must be paid overtime) nor are all salaried ones exempt. What is more, companies big enough to fall under the federal Fair Labor Standards Act (FLSA) have record-keeping requirements regardless of whether its employees are exempt or not.
The FLSA is triggered by total sales, not the number of employees. Because of that, many businesses are caught off guard, unaware that how they pay their employees became federally regulated when they acquired those last few big accounts. They may resist if they feel the company worked so well in part thanks to a dose of informality, and bureaucratic time-keeping will only do harm. But a DOL audit catching an FLSA business not keeping proper records will hurt more.
Record-keeping is not the only hassle. The company’s human resources staff will now have to receive some training in determining who is or is not exempt (unless that pronouncement is outsourced to counsel, not always a bad idea). As we started with, it is not always an easy call. The regulations are littered with exceptions and exceptions to the exceptions. Yet a company found both violating overtime laws and with an untrained staff may face even stiffer penalties, especially in a lawsuit.
Growing up is hard to do. For businesses, a good attorney can help ease some growing pains.