What do HR Professionals Need to Know about Minimum Wage?

Minimum wage laws fall under wage and hour regulations that regulate salary standards for employees. The Fair Labor Standards Act (FLSA) sets most wage and hour laws at the federal level, but states also control their minimum salary standards. Here is what HR professionals need to know about wage and hour laws in order to maintain legal compliance.

The FLSA

The Fair Labor Standards Act (FLSA) affects almost all employers with non-exempt employees. Eligible employees must be paid for all the hours they work, which includes the time employees are on duty or at designated work areas. Depending on which is higher, these employees should be compensated based on the state or federal minimum standards. The FLSA also regulates the employment of teens. Youth who are 14 to 15 can work in places like retail and grocery stores, youth 16 to 17 cannot perform any hazardous jobs and 18 year olds have no restrictions. Since 2009, the federal minimum wage has been 7.25. The Department of Labor regulates wage and hour laws, which are governed by the Wage and Hour Division (WHD).

Overtime

The FLSA requires almost all employers to pay employees overtime at a rate of one and one-half times the regular rate if they work more than 40 hours in a given week. Non-exempt employees are those who qualify for overtime. These employees tend to work set schedules with consistent duties. HR professionals must be very careful when it comes to classifying exempt employees. Basically, the FLSA contains guidelines to help employers, but they are ultimately responsible to the DOL and the IRS when it comes to wages for exempt employees. Most exempt employees are the white-collar variety, such as executives, administrators and traveling sales staff. HR professionals must also be careful when classifying workers as independent contractors because there are applicable FSLA exceptions and potential fines for misclassification.

Wage Requirements

Part 516, section 29 of the Code of Federal Regulations (CFR) sets the FLSA’s regulations for wages and record-keeping. Employers must display an official wage poster that outlines the basic FLSA rules and a poster that displays the state’s wage rules. Employers must maintain wage records for every non-exempt employee. Although the FLSA does not require specific forms, they do require that records contain certain information, such as hours worked, wages earned and employee personal data. Employers must document the employee’s full name, address, date of birth, gender, social security number and occupation title. They must also document the time and the day of week when each employee’s workweek begins and ends. Total hours worked each day and week must be recorded along with straight-time and overtime earnings. Payroll records must be archived for three years and documents used for wage computations, such as wage tables and work schedules, must be kept for two years.

In order to avoid penalties and legal issues, every HR professional must pay close attention to relevant state and federal minimum wage laws and regulations.

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