5 Common Employer Violations of the Fair Labor Standards Act

 Posted on March 17, 2023 in Employer Defense

Navigating the complexities of the Fair Labor Standards Act (FLSA) can be a daunting task for employers, regardless of their industry, size, or experience. However, small business owners may encounter confusion about whether the FLSA applies to them and what requirements they will need to meet. Certain requirements apply to all businesses, while others may apply based on the type of business, the annual sales volume, and the number of employees. Failure to comply with the FLSA can result in significant fines and penalties or potential lawsuits. By understanding some of the most common ways that businesses violate the FLSA, employers can ensure that they remain in compliance to avoid potential pitfalls.

When Does the FLSA Apply to a Business?

In most cases, a business's employees will be covered by the FLSA if the business has annual gross sales of $500,000 or more. In certain industries, the number of people a business employs may also affect coverage. However, regardless of the size of the business, if an employee handles money or goods that are part of "interstate commerce," they will be covered. So, for example, if an employee accepts credit card payments from customers, they will be covered by the FLSA.

FLSA Violations by Employers

In many cases, employer violations will be related to paying employees appropriately for the hours worked, although there are a few other types of violations as well. These violations may include:

• Overtime pay violations - One of the most common FLSA violations occurs when employers fail to properly compensate employees for working more than 40 hours in a workweek. Under the FLSA, non-exempt employees are entitled to receive time-and-a-half pay for all hours worked beyond the 40-hour threshold. Overtime violations can occur for a myriad of reasons, such as misclassifying employees as exempt or not counting certain hours as work time (e.g., mandatory meetings, training, or meal breaks).

• Employee tip credit issues- For employers in the service industry, understanding the tip credit rules under the FLSA can be particularly challenging. Some employers may be eligible to take a tip credit against the federal minimum wage, allowing them to pay a lower hourly rate to tipped employees. However, employees must still be paid at least the minimum wage. If an employee's hourly pay plus the tips they receive is lower than the applicable minimum wage, the employer must make up the difference. Failure to do so is a violation that could result in penalties.

• Off-the-clock work violations - These work violations occur when employees perform work duties without being paid, resulting in unpaid wages and potential overtime violations. Such violations can stem from employees feeling pressured to work through meal or rest breaks, performing tasks before or after their scheduled work hours, or responding to work-related communications during unpaid time off. Employers should make it clear that all work must be performed on the clock and properly compensated.

• Improper deductions from pay - The FLSA prohibits employers from making certain types of deductions from employees' paychecks that would reduce their pay below minimum wage or reduce their overtime compensation. Common examples of improper deductions may include taking deductions for uniforms, tools, or other job-related expenses. Employers should ensure that any deductions made from employees' pay are lawful and do not result in the employee receiving less than minimum wage or overtime pay.

• Misclassifying employees as exempt - Another violation that can lead to significant financial and legal consequences is the misclassification of employees as exempt from overtime pay requirements. This can be a complicated area, as the FLSA provisions for exempt employees are often confusing. Generally, employees who perform executive, professional, or administrative duties as their primary job function may be classified as exempt, but only if they satisfy other criteria related to salary and job duties. Misclassification can result in employees not receiving the overtime pay they deserve, which can accumulate over time and lead to substantial back-pay claims.

Contact Our Illinois FLSA Violation Defense Lawyer

Compliance with the Fair Labor Standards Act is essential for all employers, not only to avoid potential fines and penalties but also to maintain a positive working environment and protect the rights of employees. By identifying and understanding the most common FLSA violations, employers can take proactive steps to ensure their company remains in compliance with the law. Regular self-audits, policy reviews, and employee training can all help to minimize the risk of wage and hour violations and the negative consequences they can bring.

At The Miller Law Firm, P.C., we work with employers to address FLSA issues and other aspects of employment law. If your business has been accused of committing one of the violations listed above, or if you are facing any other related claims, contact our Schaumburg FLSA litigation attorney at 847-995-1205 and set up a free consultation.

Source: 

https://www.dol.gov/agencies/whd/fact-sheets