Common FLSA Mistakes Virginia Employers Should Avoid

The Fair Labor Standards Act (FLSA) is a landmark employment law that establishes federal rules governing minimum wage, overtime pay, employee record-keeping, and other matters. While most employers understand the basics of the FLSA (e.g., paying employees for their work), they may be unaware of how easy it can be to inadvertently violate it in other ways. Virginia employers are also subject to state-level wage and hour laws, thus creating a patchwork of potential compliance issues. Below are some of the most common FLSA mistakes employers make, as well as our Richmond employment lawyers’ tips for avoiding them.

What’s the Most Common FLSA Mistake Employers Make?

Employee misclassification is one of the leading causes of FLSA non-compliance and lawsuits. That’s because many employers assume that just because they pay an employee a salary, that employee is exempt from the FLSA’s overtime requirements. However, employee classification depends on more than just how an employee is paid. 29 U.S.C. § 213 requires employees to satisfy both a salary test and duties test to be considered exempt. Executive, administrative, and professional employees generally are considered exempt, but only if their job duties meet the statutory requirements. Because employee responsibilities often evolve over time, employers should periodically review the employees they classify as exempt instead of assuming that they stay exempt indefinitely.

Can Employers Violate the FLSA by Calling Workers Independent Contractors?

Yes. While misclassifying a non-exempt employee as exempt is one common form of FLSA misclassification, another common form is misclassifying employees as independent contractors. Generally, courts do not rely on labels when determining a worker’s employment status. Rather, they examine the economic realities of the employment relationship to determine whether it is more like that of an employer-employee or principal-independent contractor. Relevant evidence includes:

Behavioral, e.g., how much control does the company exercise over the worker’s performance of their duties?
Financial, e.g., does the company or the worker determine the rate and frequency of pay?
Relationship, e.g., is the worker free to perform work for other companies simultaneously?

Before classifying a worker as an independent contractor, employers should carefully evaluate the working relationship rather than relying solely on labels or independent contractor agreements. For more information about how to ensure that a worker you hire truly is an independent contractor, please contact a Richmond employment lawyer.

Does the FLSA Require Employers to Pay for Work Outside Scheduled Hours?

In most cases, yes. Non-exempt employees must be paid for all hours worked — not just those for which they have officially “clocked in.” This type of work may include:

Preparations before a shift
Closing duties after a shift
Mandatory training
Required meetings

A particularly risky area is remote and hybrid employees who can easily perform work outside the office without formally recording their time, potentially leading to wage and hour claims. To minimize such risks, employers should establish clear timekeeping procedures and train managers to ensure that all hours employees work are accurately captured.

What Are Some Ways Employers Miscalculate Overtime?

Many overtime-related mistakes are not failing to pay overtime, but calculating the employee’s overtime pay rate incorrectly. The FLSA requires most nonexempt employees to be paid overtime at one and one-half times their regular rate for hours worked in a 40-hour workweek. So, for example, if an employee’s regular rate is $40 per hour, their overtime rate would be $60 per hour. However, some employees’ regular rates include more than just their hourly wage, often including other sources like non-discretionary bonuses, commissions, and incentive payments. Employers can err in the calculation of an employee’s overtime rate by failing to consider all sources of said employee’s overtime rate. To reduce these mistakes, employers should periodically review their payroll practices.

Why Is Accurate Timekeeping Important for Employers?

The FLSA places the responsibility for record-keeping on employers, requiring them to maintain records regarding employee hours and wages for all employees. Incomplete records can make defending age-and-hour lawsuits significantly more difficult, as they have an incomplete basis on which to ground their claims. Failure to maintain accurate records can result in the plaintiff (i.e., the employee) being allowed to estimate the hours they worked, potentially increasing the risk of back-pay awards. Modern electronic timekeeping systems can help employers maintain accuracy in their records. For more information about how to reduce litigation risk through diligent record-keeping, please speak to a Richmond employment lawyer.

Can Payroll Deductions Increase the Risk of FLSA Lawsuits?

Yes. Some deductions that appear reasonable for employers can inadvertently create FLSA compliance issues if they reduce an employee’s compensation below the required minimum wage or result in underpayment of overtime. Common examples of potentially problematic deductions include those for:

Uniforms
Equipment and tools
Cash shortages
Property damage

Before implementing payroll deductions, employers should ensure that those deductions do not cause their employees’ pay to fall below both the federal and the Virginia minimum wage.

Can Remote Work Cause Wage-and-Hour Law Challenges?

In some cases, yes. Remote work can cause wage-and-hour compliance issues because employers typically have less visibility into when employees are actively engaged in work duties. For example, non-exempt employees may answer emails before or after business hours, complete projects into the evening, or work through meal breaks without reporting their time to their employers. Even if overtime was not authorized, employers may nonetheless be required to compensate employees for that work if they knew or reasonably should have known that work was being performed. To mitigate those risks, employers should create clear remote work policies, train supervisors, and implement flexible timekeeping systems.

Minimize FLSA Compliance Risks by Working With a Richmond Employment Lawyer

While the FLSA may seem straightforward at face value, employers expose themselves to legal risks through ignorance of the FLSA’s finer details. The best way to avoid such risks is to design compliance policies with the assistance of experienced legal counsel. To get started, please contact a Richmond employment lawyer at Pierce / Jewett by calling 804-502-2320 or using our online contact form.