In order to ensure that everyone is treated fairly in the workplace, the Fair Labor Standards Act (FLSA) sets forth very clear guidelines of how workers are meant to be paid. In the event that a violation occurs, then an employee may be entitled to compensation, including back pay. In order to avoid any run-ins with the Department of Labor’s Wage and Hour Division, you should make sure you understand every aspect of fair pay laws so that you avoid any future lawsuits.
Circumstances Where Wage Laws Are Violated
There are several different ways in which employers can violate the FLSA.
- Paying Lower Than Minimum Wage: The FLSA established a clear federal minimum wage. Currently, the minimum wage at the federal level stands at $7.25/hour. However, each state has its own minimum wage in effect, and it is your responsibility to pay your employees, at the bare minimum, the higher wage.
- Making Employees Work Off the Clock: Every hour an employee works for you should remain on the clock. You are not allowed to force an employee to continue doing work after he or she has already signed out. In the event that you do need someone to work more than 40 hours a week for you, then you need to pay overtime, which comes out to time and a half.
- Not Paying Tipped Workers Enough: Some states have laws saying that even if workers receive tips, you still have to pay them at least minimum wage. However, other states allow you to pay less than minimum wage because it is assumed that your employees will make up the difference in the tips they receive. However, if an employee has a shift that is particularly slow and ultimately does not receive enough to make minimum wage, then you are accountable for making up the difference.
- Taking an Excessive Amount of Deductions out of a Paycheck: If an employee owes a debt to the business owner, then sometimes an automatic deduction will be taken out of the paycheck to go toward that. However, deductions cannot be removed so excessively to the point where a worker receives less than minimum wage. Some states have laws against taking deductions out at all, so check with your local laws to make sure you can do it.
You may be violating a wage law without even knowing it, so it is always best to brush up on both federal and state laws. You can also consult with your company’s human resources department to see if they have any additional information.
How to Handle a Wage Dispute
Many times, an employee will bring up any issues to the human resources department first. If the complaint can be resolved in-house, then it will be much easier for all parties involved. You and potentially a team of experts should look at the matter carefully to see if any laws have, in fact, been broken. There is always the possibility that an employee was paid less than minimum wage without any malicious intent. If the worker has a valid case, then you should offer the appropriate amount of back pay and take the necessary steps to ensure that this does not happen again.
However, some employees may skip directly to filing a lawsuit. If multiple workers were paid less than minimum wage, then they may be able to work together to file a class action suit. An investigation will likely take place and payroll records may be examined. If you are found guilty, then you will need to offer back pay and potentially pay a fine, and you may face imprisonment.
Saving a little bit of money by paying your workers an illegal wage is not worth the potential risks. Brush up on both federal and state laws concerning wages and overtime.
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