You know the Fair Labor Standards Act (FLSA). It’s that 1938 law that says employers have to pay minimum wage and overtime. Oh, if only it were that simple.
Despite being nearly a century old, the FLSA continues to trip up employers in often costly ways. Many of the most common issues arise not from intentional misconduct, but reflect more of the old adage that no good deed goes unpunished — or result from an employer simply not knowing any better.
Although there are many examples, below are six recurring mistakes we continue to see, along with practical reminders for avoiding them.
One of the most frequent errors involves the calculation of the “regular rate of pay” for overtime purposes for, of course, non-exempt employees. For example, another potential collective action lawsuit under the FLSA was filed this week against a Pennsylvania employer because it allegedly did not include non-discretionary bonuses in the regular rate of pay for non-exempt employees. Discretionary bonuses — like a Christmas bonus, for example — do not have to be included within the regular rate of pay.
Non-discretionary bonuses typically include:
If a bonus is promised in advance or tied to measurable criteria (i.e., if you do X, then you’ll get Y), it is almost certainly non-discretionary. These payments must be allocated back over the workweeks...
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