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Wage and Hour Compliance

The Department of Labor has enforced the Fair Labor Standards Act (FLSA), particularly cracking down on misclassification errors and asking employers to pay millions in overtime back pay. Are your compensation practices in compliance? Here are some tips to keep in mind.

  1. Follow the Three "Tests" to Determine Exemptions to the FLSA Generally, an employee is exempt if he or she is paid at least $23,600 every year ($455 per week), is paid on a salary basis, and performs exempt job duties. Other exceptions to the FLSA include certain computer programmers and employees at hospitals, nursing homes, fire and police departments, seasonal and recreational establishments, agricultural enterprises, rail carriers, or domestic employees.
  2. Apply the Right Formula for Wages To determine whether an employee has been paid the minimum wage for all hours worked in each week, you need to:
    • Add up all compensation received
    • Divide that amount by all hours worked for the week.
    Keep in mind that "compensation" includes wages (salary, hourly, piece rate), commissions, certain bonuses, tips received by eligible tipped employees, and in some cases, reasonable cost of room, board, and other "facilities" provided by the employer for the employee’s benefit.
  3. Identify the Six Issues to Determine Who is an Independent Contractor
    • Right to control manner in which work is performed
    • Opportunity for profit or loss based on skill
    • Worker’s investment in equipment or materials
    • Necessity of special skills
    • Permanence of relationship
    • Integral part of employer’s business

Taken from the "Wage and Hour Compliance" training program, part of the DuPont Sustainable Solutions human resources training curriculum. Watch a free full-length preview.