Not Calculating Overtime Correctly Can Prove Fatal
Failure to correct common areas of errors in calculating overtime pay correctly, such as misclassifying non-exempt employees as exempt, not tracking time properly, not paying overtime as required, not paying for break time, travel time, and improperly classifying employees as independent contractors will lead to loss of millions of dollars.
An area in which there is considerable disagreement between employees and employers is on the topic of calculating overtime pay. The reason for this is that the Fair Labor Standards Act (FLSA), which is the guiding document on this topic, is nebulous.
Features of overtime pay disagreements
- Pay is calculated on an hourly basis
- There is no agreement on what constitutes hourly pay.
- Dispute centers around which of the employees’ working hours need to be compensated.
- Problem arises when an employee legally challenges an organization over lower-than-agreed pay.
- The Department of Labor added 200 more auditors to handle the increased volume in their investigations
- Of late, escalated audits have resulted in millions of dollars in back wage payments as well as penalties, fines and interest.
- This constitutes a clear threat to businesses
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