Every business owner knows that trying to decipher your employees’ payroll can quickly become a nightmare, especially if you are not well versed in the latest rules and regulations. The Fair Labor Standards Act (FLSA) establishes minimum wage, record keeping, overtime pay, and child labor standards affecting all workers in practically all areas. Listed below are a few of the FLSA specifications and how they affect the small business owner.
Every business owner knows that trying to decipher your employees’ payroll can quickly become a nightmare,
especially if you are not well versed in the latest rules and regulations. The Fair Labor Standards Act (FLSA) establishes minimum wage, record keeping, overtime pay, and child labor standards affecting all workers in practically all areas. Without keeping yourself up to date on these issues, figuring out your employee’s paycheck can become a real headache. Listed below are a few of the FLSA specifications and how they affect the small business owner.
The FLSA regulates the payment of overtime pay to employees. Unless these employees receive a salary and fall into a specific category of occupation such as executive, professional, administrative, or outside salesperson, no employee is exempt from the overtime provisions of the FLSA. The general payment is one and one half of the employee’s regular rate for every hour past 40 in any given week. Additionally, an employee must be paid for all hours that his or her skills are requested by the employer. The trouble arises when there is a dispute over whether the employee was, “engaged to wait,” or, “waiting to be engaged.” If an employee is, say, told to hang around the office in the hopes that a situation may arise, he or she is still paid for these hours, even though they may do nothing. However, if an employer does not require that they stay and the employee does anyway, they are not entitled to compensation for that time. FLSA resolves this issue by stating that "[a]n employee who is required to remain on call on the employer's premises or so close thereto that he cannot use the time effectively for his own purposes" is considered to be "working." 29 C.F.R. [section] 785.17.
Some of the factors used to determine whether an employee deserves pay for their, “on call,” time are listed below.
· Whether or not the employee can engage in personal pursuits during their working hours
· If it is possible that the employee has other methods of being “on call” rather than physically being present, that would allow them to engage in personal time while still being available
· How often the employee is required to be “on call”
· How often the employee is actually called upon
· The amount of time required once the employee is successfully called upon
There have been many court cases regarding payment for, “on call,” time for employees, showing how employers must keep up to date on FLSA rules and be prepared to defend their actions. There are a few measures an employer can take to reduce worker’s compensation claims, including auditing their FLSA compliance. This event, however, is extremely time consuming, although necessary. As you can see, issues like employee compensation extend beyond traditional exercises, and require extensive knowledge of the business field. Therefore, instead of having to educate yourself and take the time to better understand these issues, you may want to consider hiring a company that can do this for you. A Professional Employer Organization provides help in many troublesome areas that business owners dread including FLSA. After all, entrepreneurs got into business for the profit, not for the confusing government regulations and administrative duties. PEO companies allow the small business owner to get back to doing what they do best; making money and they can provide guidance on payroll compliance.
PEOs, (or employee leasing companies), provide additional benefits to the small business owner, including outsourcing payroll, sharing employment safety risks and requirements, recruiting services, and benefit outsourcing. Not only will professional employer organization services be done for you, they will do them better than you can alone. An important feature of a PEO is the ability to pool employees, acting like a large company and receiving top of the line benefits in addition to many employment services. In short, do not put the time and effort to where it is not needed; hiring a PEO just might be your better option than figuring out FLSA and other regulations.
