Webinar Highlights: FLSA Compliance for HR Managers

Webinar Highlights: FLSA Compliance for HR Managers

by Becki Leonard, PHR, SHRM-CP, on April 16, 2024
As HR managers, it is essential to understand and comply with the Fair Labor Standards Act (FLSA) to ensure fair compensation practices and avoid penalties.

The FLSA regulates various aspects of employment, including minimum wage, overtime pay, and classification of employees.

In this wrap up of our recent FLSA Compliance webinar, we will discuss the importance of FLSA compliance and its impact on your business.

Understanding the FLSA

The FLSA is a federal law that establishes minimum wage, overtime pay, record-keeping, and child labor standards for employers. It covers businesses with at least 2 employees, any company with an annual revenue volume of $500,000 or more, or any hospital, residential healthcare facility, or government agency. Additionally, individuals involved in interstate commerce are also covered by the FLSA.
Non-compliance with the FLSA can lead to severe consequences, including penalties, back pay, liquidated damages, and criminal prosecution. Therefore, it is crucial for HR managers to have a clear understanding of the FLSA and ensure compliance within their organizations.

Compensation and FLSA Compliance

One key area regulated by the FLSA is compensation. It distinguishes between non-exempt and exempt employees and determines their eligibility for overtime pay. Non-exempt employees are paid hourly and must receive overtime pay for hours worked beyond 40 in a workweek. Exempt employees, on the other hand, are paid on a salary basis and are not eligible for overtime pay.
To properly classify positions as exempt or non-exempt, HR managers need to understand the criteria outlined in the FLSA, including the salary basis test and the duties test. The salary basis test determines if the position is guaranteed a weekly salary that meets the current salary threshold. As of 2020, the weekly salary threshold is $684 per week. The duties test evaluates the primary job duties and responsibilities of employees to determine exemption status. It is crucial to classify employees accurately to avoid potential violations and penalties.
The duties test includes positions such as:

Proposed Changes and Compliance

The FLSA is subject to proposed changes, such as updates to overtime rules and contractor classification. HR managers must stay informed about these changes and ensure their organizations are prepared to comply.
For instance, the salary threshold for exempt employees may increase this year, requiring adjustments in compensation practices. Additionally, reinstating the economic reality test for contractor classification requires a thorough review of independent contractor relationships within the organization.
By proactively addressing these proposed changes, conducting internal audits, and updating policies and procedures, HR managers can ensure compliance and mitigate potential risks for the organization.

Pay Transparency and Pay Equity

Another important aspect related to compensation compliance is pay transparency and pay equity. Many states have implemented pay transparency laws to address salary disparities and encourage employers to prioritize pay equity within their organizations.
HR managers should familiarize themselves with the pay transparency laws in their respective states. Implementing pay transparency measures can help organizations identify any pay disparities and take corrective actions to ensure fairness.
HR managers should actively work towards pay equity by conducting market research, establishing fair job grades, and setting salary ranges based on research and market data. By ensuring fair and equitable pay, organizations can attract and retain top talent while complying with FLSA requirements.

Partner With a PEO to Stay Updated

Compliance with the FLSA is crucial for HR managers. It not only ensures fair compensation practices but also helps organizations avoid penalties and legal consequences. By partnering with a PEO like LandrumHR, you’ll have a personal HR Business Partner who can help you stay updated on these and other federal, state, and local employment laws.
Becki Leonard, PHR, SHRM-CP

Becki has over 25 years of Human Resources experience and holds a business degree with a concentration in HR. She is certified as a Professional in Human Resources (PHR) by the HR Certification Institute (HRCI) and a Certified Professional through the Society for Human Resource Management (SHRM-CP). She also holds her SHRM People Analytics Specialty Credential. At LandrumHR, Becki has worked with the staffing, PEO, and consulting divisions of the company. She currently holds the position of Managing Consultant for hrQ, their national Human Capital Consulting firm. Becki is passionate about helping organizations best manage their greatest resource – their people. A teacher at heart, Becki focuses on helping business leaders understand the “why” behind the “what” so they can move forward with confidence in their decisions.

View more blogs by Becki Leonard, PHR, SHRM-CP