To classify employees correctly, evaluate all three white-collar exemption tests: salary basis, salary level, and duties. Salary alone is not enough. The duties test focuses on the actual work performed (DOL, 2024). Keep short write-ups explaining why a role qualifies; they help during audits or turnover.
Overtime must be calculated using the regular rate, which may include nondiscretionary bonuses, shift differentials, and certain incentives. Missing these items is a common error for small employers (SHRM, 2023).
Accurate timekeeping is essential. Adopt a single method—paper timesheets with approvals or an electronic system—and train supervisors to avoid off-the-clock work. If records are incomplete, agencies often rely on reasonable employee estimates, which can increase back-pay exposure (DOL, 2024).
Compare federal and state rules. Many states have stricter wage standards (e.g., higher minimum wage, daily overtime, meal/rest rules). Apply the standard most favorable to employees (SHRM, 2023).
Quarterly self-audits catch issues early: sample timecards, check overtime calculations, and confirm your workweek definition is applied everywhere—from timesheets to payroll software.
References
- DOL. (2024). *Wages and the Fair Labor Standards Act.* U.S. Department of Labor. https://www.dol.gov/agencies/whd/flsa
- SHRM. (2023). *FLSA Compliance Overview for Employers.* Society for Human Resource Management. https://www.shrm.org