Charles Vethan: Hi, I’m Charles Vethan. Welcome to the Vethan Law Firm P.C.’s Video Educational Series. Today’s topic is the US Fair Labor Standards Act or the FLSA. Specifically today’s discussion on the three or four main mistakes that employers make, when confronted with FLSA claims.
Seth Grove: Our topic today is the Fair Labor Standards Act also known as FLSA. Andrew, as you know the FLSA is the federal law that requires employers to pay their employees for overtime for any hours worked over 40 hours. Why are employers running into trouble with this federal law?
Andrew Walker: Employers are trying to do more with less. We are facing tough competition in a global company and they are trying to maximize the most human potential of every person working for them and all of the resources they have. Then we have a law from the 1930s and early 1940s that was design for a different economy at a different time.
Seth: Andrew we are seeing a spike in this litigation and I think one of the problems we are seeing is that employers aren’t aware of the, like your saying, the very strict nature of this law. For example, we have employers that aren’t paying overtime at all because they think someone is an independent contractor, instead of an employee. They think because they give them 1099 Tax Form that, that means that they don’t need to be paying overtime. However, under the FLSA the determining factor if someone’s an employee versus an independent contractor has to do with how much control an employer has over that person. If someone is coming in to work at their own pace, if someone is bringing their own materials or something like that, it maybe. However, in most cases, if you are giving them their materials, giving them a time of work and if it’s an ongoing, it’s most likely an employee and over time will be required.
Andrew: What I hear you are saying Seth is that what you call the person as an employee or as a contractor, it’s the reality of the structure of their work and what they bring to the work and how much control you have, however you measure it.
Seth: Exactly. I think on that same line, there’s also employers that are running into trouble regarding labeling or someone a manager or giving someone salary and thinking that under the FLSA, that a salaried employee doesn’t have to paid over time. However, this isn’t correct, isn’t Andrew?
Andrew: Well, there are limited exemptions under the Fair Labor Standards Act but most people have certain pay requirements and just calling somebody a manager, calling somebody an administrator doesn’t make it so. The payment has to be to meet the over time requirements, has to make all payments, no matter how you call or how you don’t or how ever well you’ve think it through in advanced, you must think it through the Fair Labor Standards Act.
Seth: I think the biggest risk that employers are facing is even if they want to comply with this law, you can still be faced the liability of not paying as the law intends. For example, we have employers who are paying straight time for overtime. They are trying to pay overtime but they are not paying at the right rate, they are still going to be faced with the risk of a lawsuit, which includes twice the damages of what money is owed and as well as the attorney’s fees for the lawsuit having to be brought.
Andrew: What does an employer do? The most important thing for an employer to protect himself from the strictures for the Fair Labor Standards Act is to keep good records. While the law may appear complicated, what it comes down to was good record keeping. Document what it is that your employers do. Many companies say their employees are generalists that everybody is a jack of all trades but we need to have what the roles and responsibilities are. This also helps with the business plan but with the idea of what they do, what they’re paid or when they’re work. This really lowers the risk of a lawsuit or if the lawsuit is filed.
Seth: From the Vethan Law Firm, we’d like to ask you, what steps have you taken to protect your company from the potential liability under the FLSA?
Andrew: Come visit us at vethanlaw.com, we’d love to hear from you.