Wage and Hour laws can be confounding for employers, particularly small businesses. There is no other law about which employers are more misinformed. The most common mistake that we see is small employers who incorrectly believe that if they pay salary to their employees, then there is no need to pay overtime. Beyond that, many employers don’t know that in order to be properly classified as exempt, the employee and their duties must meet a number of very specific and demanding criteria. The law is complicated and good intentions to treat employees fairly rarely coincide with Fair Labor Standards Act (FLSA) compliance.
When we uncover improperly classified employees, the reaction of business owners and managers is often one of fear- rightfully questioning whether reclassifying employees to bring them into compliance with the FLSA will raise a red flag as to past pay practices and invite lawsuits. The response typically is “I’ve been okay so far, so I think I will just let sleeping dogs lie.” While many are lamenting the new overtime regulations that, among other things, raise the threshold salary for many exemptions to $47,746, one silver lining is that the change in the law does provide an impetus to address lingering improper payroll issues or questionable classifications. With all of the media attention surrounding the newly adopted regulations, the explanation that payroll practices are changing to be in compliance with the new laws is legitimate and will not necessarily cause employees to scrutinize past practices.
However, employers who ignore the coming changes will do so at their own peril. Employers who do nothing to respond will find themselves eventually asking the familiar question, “do I change my practices to comply with the law when doing so will raise red flags with my employees?” But this time, because of the new regulations, the number of impacted employees will be much greater.
If you have questions regarding FLSA compliance, please contact one of our employment attorneys.