This article explains in simple terms how small business employers can navigate through complex compliance rules for Fair Labor Standards Act (FLSA) and how good time keeping can help with the compliance.
The following, at the minimum, should be taken into account for smooth onboarding:
According to the DOL timekeeping policy , any timekeeping system is acceptable as long as it gives complete and accurate information. The following are some of the important points:
In addition to the DOL labor compliance, employers will need to comply with the state's law. Employees' always get the maximum advantage of these two laws. For example in California:
You, as an employer, should contact the state agency to get more information for your state.
There are two types of people working for your company or project: Employees and Contractors. Employees in turn can be classified as Exempt or Non-Exempt Employees.
This classification is important because an employer must withhold taxes (Social Security and Medicare) for Employees. Consultants are independent business persons who have contractual relationship with the company and they are responsible to pay their taxes.
Employers often makes mistake in classifying them correctly. Individual state laws in the United States make this more complicated. Internal Revenue Services (IRS) has designated how to classify between employees and consultants. In simple terms, the following may be pointing to an employee:
In short Non-Exempt employees are eligible for overtime when they work more than 40 hours a week. Exempt employees mostly do executive and administrative management and do not receive any overtime. Exempt employees receives bonuses and other perks from the company. As of Jan 1, 2020, workers who do not earn at least $684 per week should be paid overtime.
There are federal and state laws governing the classification of the employee's exempt status. These laws changes very often, here we will attempt to provide the most recent information and provide reference to the up-to-date information in this regard:
A state may have its own minimum wage law that is different from the federal minimum wage. If the state minimum wage is different from the federal minimum wage, the employee must receive the higher wage of the two.
Federal laws require non-exempt employees who work more than 40 hours should get overtime at least 150% of the regular pay.