Certain circumstances can complicate paying nonexempt employees, also known as hourly employees. However, small business owners who have an understanding of the Fair Labor Standards Act (FLSA) can mitigate compliance risks, save money and help themselves avoid unnecessary lawsuits or fines.
Paying Nonexempt Employees for Off-site Work or Out-of-Town Travel
Under the FLSA, employees must be compensated for travel time during normal working hours that is off-site and work-related. This includes off-site lectures, meetings, training programs or other workday travel that is related to the employee's principal activity.
The FLSA also requires employers to pay employees who normally work at a fixed location for out-of-town travel, such as to another city for a special one-day assignment during normal working hours. In this instance, employees are entitled to compensation for travel time to and from the other city. Employers, however, may deduct time the employee would normally spend traveling to and from the work site.
Overnight Travel and Overtime Pay
Required travel that keeps an employee away from home also requires compensation. The FLSA covers the employee for work time during normal working hours on regular workdays and for corresponding hours on nonwork days. The Department of Labor does not consider time spent in travel away from home outside of working hours as compensable time, however state law might apply in these circumstances.
Business owners should also be aware of federal and state overtime pay requirements. The FLSA requires that employers pay nonexempt workers "at a rate not less than one and one-half times the regular rate of pay" if they work more than 40 hours per week.
When the Rules Get Complicated
The FLSA does not require businesses to pay for hours an employee did not work. Under the FLSA, if an employee is sent home early due to lack of work, the employer is typically not required to pay for the hours missed. Several states, however, have reporting time pay requirements. With these, employer are required to pay the employee a minimum amount whenever the employee reports to work even if no work is provided. However, FLSA rules are not always clear and can be difficult to interpret. For instance, in 2014, the U.S. Supreme Court ruled that, under the FLSA, an online retailer did not need to pay employees for waiting in security clearance lines before exiting the facility, because these checks occur after the working shift and are not considered integral and indispensable to the employees' duties. However, state laws may vary.
Under the FLSA, nursing mothers are entitled to break times to express milk for nursing children under one year of age. If the employer offers compensated breaks, they must compensate them the same way as other employees who take paid break time. However, this provision does not preempt state laws, which can sometimes provide better protections for employees. State law may allow a nursing mother to take compensated nursing breaks even if the employer does not offer paid breaks, for instance. Depending on their circumstances, businesses with fewer than 50 employees may not be subject to this mandate. Legal council may be able to help you understand the regulations as they apply to your specific location and business.
The Silver Lining
Paying nonexempt employees based on FLSA standards helps small business owners create compliance measures and practices that can help save them money, help protect their businesses from costly litigation issues and promote employee satisfaction.
* A U.S. District Court has temporarily blocked the new overtime rules from going into effect on December 1, 2016. Read the Eye on Washington to learn more.
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