Employers have to navigate a myriad of federal and state employment laws. One very important, and frequently overlooked area is wage and hour laws. At the federal level, the Fair Labor Standards Act (FLSA), 29 U.S.C. §201 governs employers engaged in interstate commerce. Many states have wage and hour laws that closely mirror the FLSA and some states, like Kentucky, actually provide greater benefits to employees. It is very important that employers fully understand their obligations under both federal and state wage and hour laws.
What common mistake do employers make?
One of the most common pitfalls involves employers that misclassify employees as exempt from overtime payment by paying an employee on a salary basis rather than as an hourly employee. Under both the FLSA and Kentucky law, employers are required to pay non-exempt employees 1.5 times their regular hourly rate for all work over 40 hours in a work week. Some employers think they can get around having to pay overtime wages by paying employees a salary, however, there are only certain circumstances where an employee can be exempt from overtime wages.
Know the consequences
Ignorance of the law is not a defense to a wage and hour violation. The consequences for employers that violate wage and hour laws can be substantial, especially if the unlawful practices span across the employer’s workforce. Not only can an employer be on the hook for back pay to make up for the appropriate wages they failed to pay, but they can be subject to penalties, employees’ legal fees and litigation costs even in a violation was not intentional.