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FLSA Compliance Means Paying
Employees Fairly |
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The Fair Labor Standards Act of 1938 (FLSA) provides for minimum standards for both wages and overtime entitlement, and spells out administrative procedures by which workers must be compensated for work time. Workers covered by the FLSA are entitled to minimum wage and overtime pay at a rate of one and a half times their regular rate of pay after 40 hours of work in a workweek (overtime is paid by the week, not the day).
FLSA compliance violations cost U.S. companies millions of dollars each year. From 2002 to 2003, 314,660 employees collected monetary awards—a 30% increase. FLSA cases constitute about 83% of all cases handled by the Department of Labor in a fiscal year.
To be in compliance with FLSA, employers must retain records of employees' earnings for three years. Records should include each employee's information, such as name, address, job title, hours and days worked, amounts earned each day or week, regular hourly pay rate, total overtime pay for the week, deductions or additions, total wages paid for the pay period, and dates wages are paid. |
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| Dangers in Violating FLSA |
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| Employers who willfully or repeatedly violate FLSA regulations are subject to civil monetary penalties: |
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| VIOLATION |
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PENALTY |
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| • Minimum wage or overtime pay |
Up to $1,000 per violation |
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| • Child labor provisions |
Up to $10,000 per young worker |
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| • Willful violations |
Criminal prosecution and fine up to $10,000 |
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| • Second conviction |
Possible imprisonment |
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There is also the possibility of violation of state wage payment laws, which usually carry their own penalties, fines, and attorney’s fee awards.
For more information about FLSA compliance, click here to download a free HR compliance report. |
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NutriSystem Inc. has been accused of failing to pay overtime to approximately 400 sales associates. According to The Philadelphia Inquirer, NutriSystem’s annual report stated that sales associates are paid largely on commission. Under federal labor law, salespeople who earn commissions are not usually eligible for overtime pay. The plaintiff’s attorney said that the associates deserve overtime pay based on a calculation of their flat-rate compensation.
On May 21, 2008, the Genetic Information Nondiscrimination Act (GINA) was signed into law, in part amending the FLSA to state that employers may be fined up to $50,000 for the death or serious injury of an employee younger than 18 years old. The fine can be doubled if the violation is repeated or willful and applies to deaths or serious injuries that occur after GINA was enacted. The act also prohibits discrimination based on genetic information. GINA also increased the maximum penalty for other child labor violations and increased the cap on the civil penalty. The act included a definition of “serious injury” to the FLSA. It is now defined as:
Permanent loss or significant impairment of one of the four senses;
Permanent loss or significant impairment of the function of a body part, organ, or mental faculty; or
Permanent paralysis or significant impairment that causes loss of motion or mobility of a body part.
The new penalties for child labor violations apply to deaths or serious injuries that occur after GINA was enacted. |
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