OTHER EMPLOYERS (all employers, except public agencies)
Virtually any type of employer, in any industry, will have obligations under one or more of the laws that are enforced by the Wage and Hour Division.
Consultation with a Wage and Hour expert can help you know to what extent these laws apply, and how you can enhance your compliance status (avoiding aggravation and expenses).
A page has been dedicated to public agencies, including municipalities, counties, state agencies, and school districts.
Several specific categories of employers are discussed below, with emphasis on FLSA and the government-contracting statutes.
Scroll to see each of these categories:
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Small Businesses
Many small firms have the impression that failure to meet the $500,000 annual gross “business done” enterprise coverage threshold results in no coverage under FLSA. This is usually a misconception. Even if there is only one employee, that employee may very well be individually covered and subject to FLSA requirements.
The owners of many small businesses are not knowledgeable of FLSA requirements. Many of them, prior to starting their businesses, were not paid overtime compensation. In some cases, they were treated as "contractors." The misconceptions of their former employers accompany them into their new business venture.
When a small business owes back wages, civil money penalties, and/or liquidated damages, it can be economically devastating. Incorporation does not provide insulation against personal liability; the primary owners and/or other managers are treated as joint employers (with the entity).
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Not-For-Profit Organizations
If the employer is an eleemosynary or religious organization, FLSA enterprise coverage will ordinarily not apply on the basis of dollar volume. However, the employer may be a part of a "named" enterprise and/or employees may be individually covered (traditional coverage). Many not-for-profit organizations have a high number of misclassifications with respect to exemptions. The application of a "comp time" plan to nonexempt employees is also a common practice that leads to overtime violations (see OVERTIME COMPENSATION).
The fact that FLSA enterprise coverage typically does not apply (unless your activities fall within a "named" enterprise) means that some employees might be covered on traditional grounds, while others might not be covered at all. This more narrow view of coverage is important if you are being investigated by the Wage and Hour Division. If you are asked to pay back wages to all nonexempt employees, scrutiny of the accuracy of the investigator's conclusions might help your organization to avoid paying back wages if individual coverage is dubious.
DOL assesses civil money penalties as a result of monetary violations in not-for-profit organization investigations, as in other cases - if the facts warrant such assessment. One of Morris’s eleemosynary organization investigations, several years prior to retirement from DOL, resulted in significant back wages and $99,000 civil money penalty assessment.
If you are the executive director or in any other position that could be construed as an employer jointly with the organization, it is possible that you could be held individually liable for back wages and/or civil money penalties.
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House Parents Exemption: FLSA section 13(b)(24) overtime exemption is often misunderstood. Some employers have the impression that dorm supervisors and dorm mothers qualify for this exemption (not so, in the usual case). The exemption does not apply precisely as it is worded in the law. There are very specific requirements that must be met in order for the exemption to apply. If your organization or institution is not treating house parents as being subject to the overtime standards, seeking expert assistance can either confirm application of the exemption or guide you in achieving compliance.
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Multiunit Organizations, Large Enterprises
Decisions regarding compliance policies under these laws are typically made by the corporate office human resources department, chief financial officer, and/or the firm's general counsel. Mistakes, such as FLSA exemption misclassification or flawed overtime pay computation methodology, can affect all locations and a large number of employees. When an establishment investigation reveals compliance failures, DOL insists on corrections throughout the enterprise (compliance and payment of back wages). An example is the exemption misclassification of "personal bankers" that resulted in several large banking corporations paying millions of dollars in back wages.
In addition to DOL enforcement, large firms are seriously impacted by employee suits. For example, there has been publicity regarding FLSA litigation against several large retail enterprises (many suits involving thousands of plaintiffs seeking recovery of back wages and liquidated damages as a result of alleged exemption misclassification, failure to pay overtime wages, and unpaid hours worked).
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Professional Employer Organizations (PEO) and Other Types of Employee Staffing Firms
For purposes of the laws enforced by the Wage and Hour Division, you are a joint employer with each of your clients. If violations result, for example, from an exemption misclassification, or if the client falsifies records or otherwise causes violations to occur, you can be held fully liable for back wages. Civil money penalties may be assessed against you and/or your client. As an example of your vulnerability, if you have a client who fails to submit to you all hours worked by employees, resulting in overtime violations, and the client refuses to voluntarily pay the back wages (or goes out of business), DOL will assert that you have an obligation to pay the back wages. You should be very cautious regarding exemption determinations and carefully examine your clients' methodologies with regard to timekeeping and submission of data to you for wage computation.
Many PEOs and other third-party employers serve a variety of industries. Not only do you and your clients have the typical "white collar" exemption quandaries, but your diverse clientele may set the stage for consideration of some of the more obscure exemptions. The diversity also leads to the use of unusual pay plans which might not be compliant with FLSA.
Some of your clients may be contractors who are subject to the labor standards provisions of the Service Contract Act (SCA), the Davis-Bacon Act, or one of the laws related to Davis-Bacon (DBRA). If the service employees or construction workers who are covered by one of those laws are on your payroll (or if you are a joint employer with your clients in some other way), you will be viewed by DOL in the same light as your client (you are obligated to comply with the wage determination and other labor stipulations that are a part of the federal or federally-assisted contract).
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Government Contractors (Service or Construction)
If some of your employees are subject to the Service Contract Act, the Davis-Bacon Act, or one of the approximately eighty federal laws related to Davis-Bacon, you know that these labor standards are quite different from FLSA requirements (although FLSA applies, you have numerous additional obligations). See the "SCA/DBRA" page for more details.
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Domestic Employers
Many employers of domestic workers are not aware of their obligations under FLSA or of exemptions that might apply. There is a tendency to erroneously treat such workers as “independent contractors,” or to otherwise assume that the usual FLSA standards do not apply.
If your domestic employees also work for you in connection with some other endeavor, such as a business, joint employment concepts are likely to apply.
SERVICES - OVERVIEW
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