Understanding FLSA Compliance: Pay Practices for Hourly Employees and Volunteer Work Guidelines

The Fair Labor Standards Act (FLSA) is fundamental legislation governing employee compensation in the US. Grasping the nuances of this law is essential for both employers and employees. It helps ensure proper pay for hourly employees during breaks, appropriate deductions from salaried exempt pay, and clarity around volunteer work. In yesterday's workshop, we discussed many of these topics and the answer 'it depends' came up quite a bit. This blog will offer some insights and practical examples to help navigate these important topics. And, of course, it is always recommended you partner with your employment attorney if ever unsure or in doubt.

What is the FLSA?

The Fair Labor Standards Act was enacted in 1938 to set standards for minimum wage, overtime pay, recordkeeping, and youth employment. This law applies to virtually all public and private sector employees. Its goal is to ensure fair compensation for workers. Some states and localities have regulations that extend beyond the FLSA requirements.

Employee Classifications

The FLSA classifies employees into two groups: exempt and non-exempt.

• Exempt employees: Often salaried, these workers typically do not qualify for overtime pay.

• Non-exempt employees: Usually hourly workers, they must be paid for every hour worked, including overtime.

  
  

This classification is vital for maintaining compliance and a fair workplace.

Paying Hourly Employees During Breaks

A common question regarding FLSA compliance is whether hourly employees should be paid during breaks. The rules depend on the length and type of break.

Paid vs. Unpaid Breaks

As per FLSA guidelines, short breaks lasting 5 to 20 minutes must be paid, as they are considered part of the workday. For example, if a shift lasts 8 hours, and an employee takes a 15-minute break, they should receive compensation for that time.

In contrast, meal breaks of 30 minutes or more can be unpaid, provided that employees are fully relieved of duties. For instance, if a worker takes a 30-minute lunch and doesn't have to remain on-call, this time may be unpaid.

One important item for employers to lookout for are employees working during unpaid lunches or breaks. This often occurs when an employee stays in their work area during the break and casually answers email or telephone calls. It is a best practice to have employee work and break areas separate to avoid this.

Practical Implications for Employers

Employers should communicate break policies clearly and apply them consistently. This includes training managers to understand the distinctions between paid and unpaid breaks. Clear guidelines can prevent legal issues and foster a culture of transparency at work.

Working Hours and Overtime Pay

Hourly employees are entitled to pay for all hours worked, including overtime. The FLSA mandates that non-exempt employees receive overtime pay at a rate of at least one and a half times their regular rate for hours worked over 40 in a workweek.

Tracking Hours Worked

Maintaining accurate records is essential for hourly employees. This can involve time clocks, timesheets, or digital tracking tools. Eemployers should regularly check that their timekeeping systems accurately capture hours. Inaccurate tracking can lead to improper pay practices, potentially resulting in legal actions. And be cautious of overly relying on outsourced payroll systems to ensure every compliance law is being followed. While a system may be cabable of following all requirements, it is not awlays guaranteed that all applicable requirements have been properly applied to your account set up.

Overtime Exemptions

Some employees may qualify as exempt from overtime pay. Generally, this includes executives, administrators, and professionals meeting certain criteria related to their job duties and salary. For instance, a manager making at least $684 weekly may be exempt. Misclassifying an employee can result in significant financial liabilities for the company.

Improper Deductions from Salaried Exempt Pay

Employers must be careful when making deductions from the pay of salaried exempt employees. The FLSA prohibits improper deductions, which can risk an employee’s exempt status.

Understanding Deductions

Deductions from an exempt employee’s salary are permissible under specific circumstances, such as:

• Absences for a full day due to personal reasons

• Absences for a full day due to sickness, if a valid sick leave policy is in place

• Disciplinary suspensions for workplace conduct violations

PTO deductions and compensation deductions are two separate items. It is important to follow your company's PTO deduction policy when a salaried exempt employee misses a partial day.

Consequences of Improper Deductions

Improper deductions can lead an employee to lose their exempt status, making them eligible for overtime pay. For example, if an employer wrongly deducts pay and an employee becomes eligible for overtime, this can create financial strain for the business, along with potential legal repercussions. Thus, it's critical for employers to establish clear policies regarding salary deductions and to train managers to adhere to these guidelines.

When is it Okay for Employees to 'Volunteer' for Their Employer?

Understanding the concept of volunteer work under the FLSA is essential. Many employees may wish to volunteer their time, but specific guidelines must be followed to ensure compliance.

Definition of Volunteer Work

Under the FLSA, volunteer work is defined as contributions made to public agencies or nonprofit organizations without compensation. However, employees cannot volunteer for work similar to what they are employed to do.

Acceptable Volunteer Scenarios

An employee may volunteer for activities outside their job duties. For example, they could assist in organizing a charity event or participate in community service efforts. However, if the work resembles their regular tasks, they must be compensated. Employers should clarify the difference between volunteer activities and regular job duties to prevent confusion. If uncertain, seek guidance from your legal expert.

Legal Implications

Employers must tread carefully when allowing employees to volunteer, as misclassification can lead to legal challenges. If it is determined that work being performed is compensable, the employer may face penalties. To reduce risks, employers should document volunteer activities and make sure employees understand the nature of these contributions.

Key Takeaways for FLSA Compliance

Grasping FLSA compliance is crucial for both employers and employees. By adhering to the guidelines about pay practices for hourly employees, ensuring proper deductions from salaried exempt pay, and understanding the rules surrounding volunteer work, businesses can cultivate a fair and compliant workplace.

Employers should routinely review their policies to ensure they are aligned with FLSA regulations. This not only fosters a positive work environment but also helps avert potential legal issues.

As workplaces continue to evolve, staying informed about labor laws and regulations is vital for compliance and promoting employee satisfaction.

A clock indicating break time for employees

By understanding these key aspects of the FLSA, both employers and employees can work collaboratively to create a fair and compliant workplace. If you would like to discuss these items in more detail or would like assistance with clarity on FLSA standards, please feel free to contact us at www.pulsehrsolutions.com