Knowing the wage and hour laws and applying them is one of the basic tasks of employers in general and the payroll department in specific. But if payroll must apply the laws then the question must arise—what are the laws, and which one applies? Payroll chat rooms, blogs and classrooms constantly discuss this question. How do I know I am in compliance if I don’t know all the laws to follow? We all know there are laws governing the minimum wage and overtime but what else is out there? Are the employees entitled to a break or meal period? Is vacation pay required? How is on call pay handled? Can an employer demand an employee use direct deposit? And when these questions do arise, where do you find the answers. Can a payroll professional simply check the Fair Labor Standards Act (FLSA) to find the answer with a quick verification of any state requirement? Or is the state the main source to go to first with the FLSA as the fall back? The answer is not simple. In this blog series I will be discussing areas where payroll professionals need to ensure compliance by researching wage and hour laws.
The Fair Labor Standards Act of 1938 (FLSA) sets the federal standards for minimum wage, overtime, equal pay, recordkeeping and child labor. But it does not address all the issues that arise when paying an employee. It is silent (gives no information or requirements) on such items as when an employee must be paid or the method that needs to be used. It explains what is considered hours worked concerning meal periods but does not actually require that an employee be given a meal period. States on the other hand are autonomous when it comes to wage and hour laws within their own borders. The state may mirror a federal law, exceed it, have a version of the same law with lesser requirements or no law governing an area at all. In addition, the state may have a requirement in an area that the FLSA is silent on such as paystubs or rest periods.
For a payroll department to ensure that it is in full compliance with the wage and hour laws it needs to first verify every facet of its payroll process and then verify what laws govern it. It must start with what are hours worked and how that relates to calculating the gross pay for its employees and follow that through to the rules that governing paycheck distribution and timing. Both federal and state laws need to be included. In this blog series we will review 23 general areas that could be covered under a wage and hour law on the federal side, the state side or both. We will start with the more common areas known such as white-collar exemptions and move into lesser known regulations such as paystubs and payday notices. Some areas on the list are strictly a state function and requirement while others are both federal and state. If a conflict exists between a federal and state law the law establishing the higher standard applies. In other words, the law that gives more money or more time or more benefit to the employee is the winner. It is also important to remember that not only should the labor code be verified but in some states wage orders must also be consulted. Wage orders are a set of wage and hour regulations issued by the state that apply to only a certain industry or group of workers.
In Part 2 of this blog series I will discuss the first six areas to research.
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