Wage and Hour Disputes

The Fair Labor Standards Act (FLSA) is a lengthy federal law that establishes guidelines for minimum wage, child labor, overtime pay, and recordkeeping. In addition to the FLSA, employers must also comply with state laws which may provide greater protections for employees.

When it comes to wage disputes, workers can contact the U.S. Department of Labor. This government agency will investigate the wage dispute on the employee’s behalf. Wage disputes are one of the most important reasons that businesses need employee leasing companies like PEP for advice on payroll.

The government often makes changes to the FLSA, and keeping abreast of these changes is a challenge for employers. For example, in 2007 the FLSA was amended to increase the federal minimum wage in three steps: $5.85 per hour effective July 24, 2007; $6.55 per hour effective July 24, 2008; and $7.25 per hour effective July 24, 2009. If an employer lapses in adapting any FLSA changes in the payroll, it could result in a costly wage dispute.

The more you delve into FLSA, the more you realize how complicated it can be. For example:

  • Overtime pay is at least 1½ times an employee’s regular rate of pay for all hours worked over 40 in a workweek.
  • Some professions are exempt from overtime pay, but establishing which employees are exempt from overtime is confusing.
  • Employers of “tipped” employees must pay a cash wage of at least $2.13 per hour. If the cash wage combined with the tips does not equal the minimum hourly wage as stipulated by the FLSA, the employer must make up the difference.

When a wage dispute occurs, the Department of Labor can recover back wages. Some wage dispute violations result in civil action, criminal action, and severe penalties. Even Wal-Mart—a huge corporation with decades of payroll experience—recently had to pay more than $33 million in back wages after a wage dispute.

As an employee leasing company, PEP can make sure your company follows all of the latest wage regulations, saving you time, money, and possible litigation from wage disputes. Call PEP at 1-800-650-3002 for more information.



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