A Look at Recent FLSA Guideline Changes

HR Resource
August 22, 2012 — 1,770 views  
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Payroll managers might have to deal with compensation issues, overtime pay and various personnel matters. When the U.S. Department of Labor (DOL) made changes to the Fair Labor Standards Act (FLSA) guidelines in April 2011, it essentially tossed a monkey wrench into these supervisors' operations.

Take a look at how these modifications could impact payroll managers going forward.

The fluctuating workweek

In 2008, the Bush administration proposed changing the regulations relating to the "fluctuating workweek" method of determining overtime pay for nonexempt employees. If these workers agreed to receive pay in the form of fixed payments rather than an hourly wage, they would be eligible for bonuses and incentives "without invalidating the guaranteed salary criterion required for the half-time overtime pay computation," according to the proposal.

However, the DOL failed to include this measure in its final rules. The department justified its decision by noting that this modification would have allowed employers to lower workers' fixed weekly salaries and move the bulk of their wages to bonus and premium pay.

This impacts your business in a number of ways. Be sure that you are compensating a nonexempt employee - a worker who is eligible for overtime pay - if he or she spends 40 hours or more working over the course of seven consecutive days. While some workweeks contain fluctuating schedules, employees who complete swing shifts - typically a 4 p.m. to midnight shift - and surpass the aforementioned 40-hour threshold should not be offered bonus or incentive compensation.

Compensatory time

Public-sector employers must allow workers to use compensatory time on the date they specifically request, as long as it does not cause undue disruption to the agency. The Bush administration proposed allowing employees to receive compensatory time "within a reasonable period" of the request. However, the DOL's longstanding position remained intact in April 2011.

Tipped workers

Tipped employees must receive advanced notification regarding the credit an employer is allowed to take based on workers' tips. Additionally, employers need to be able to provide information to employees about how they calculate the tip credit.

The FLSA defines tipped workers as staff members who regularly receive over $30 per month in tips. These are considered property of the employee, and an employer is prohibited from using a worker's tips for any reason other than as a credit against its minimum wage obligation. 

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