30 Jul Four Compliance Issues to Overcome in 2024
Family Medical Leave, Paid Sick Leave, and PTO
Employees need to take time off for various reasons, such as medical emergencies, recovery from an illness, planned medical procedures, family support, or leisure. Several laws govern the management of employee leave, and they affect most employers.
Family and Medical Leave
The Family and Medical Leave Act (FMLA) allows eligible employees to take up to 12 weeks of unpaid, job-protected leave for qualified reasons related to family and medical needs, while maintaining access to employer health insurance coverage. Tracking the time taken is essential in ensuring compliance with this law.
Paid Sick Leave
No federal laws are currently in place requiring employers to provide paid sick leave. The Families First Coronavirus Act (FFCRA) mandated the provision of 80 hours of paid sick leave in relation to the COVID-19 pandemic, but this legislation has since expired.
However, many states, cities, and counties have laws requiring employers to offer paid sick leave.
Paid Time Off
Paid time off (PTO) is a benefit that most employers offer. Accrual policies can vary, although it’s most common to offer a specific number of hours based on the number of hours worked. This number may increase as the number of years of service with the organization goes up. Tracking the hours accrued and used is a complex task that can open the door to compliance challenges when employers use manual processes.
Although no federal law mandates the provision of PTO, employers generally choose to offer it as a benefit to their employees. The following states currently have laws in place regarding the payment of accrued vacation time:
Alaska, Arizona, California, Colorado, Illinois, Indiana, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Nebraska, New Hampshire, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island (after one year of employment), Tennessee, West Virginia, Wyoming, and Washington, D.C.
‘Use it or lose it’ policies are prohibited in California, Montana, and Nevada. In addition, some cities regulate PTO. Check with your state and local departments of labor to find out what laws apply in your area.
Tracking Meals and Breaks
While no federal law currently mandates the provision of work breaks, many states have laws that apply to rest periods. Generally, the laws mandate one paid or unpaid break for a specific number of hours worked. Thousands of employers violate these laws every year.
Protect yourself with:
- Time clock prompts for unpaid breaks
- Manager alerts for missed break punches
- Real-time manager oversight of mobile employees on break
- Automated recordkeeping of shift punches including rest periods
- Automated payroll review to double check timecards before submitting to payroll
Managing Overtime
Wage and hour laws, particularly those that involve minimum wage, can cause a number of issues. Often, these problems create a domino effect, resulting in multiple instances of non-compliance.
Working off the Clock is Illegal
Employers cannot ask or require non-exempt employees to work “off the clock.” A Florida restaurant had to pay $19,000 in back wages and penalties when they failed to pay servers for their entire shift. During an investigation, it was determined that the restaurant failed to compensate employees for time worked prior to the arrival of the first customers.
Automated time and attendance ensures that your employees are recording their hours, as well as their breaks and overtime.
The following features protect you from violating minimum wage laws:
- Biometric time clocks with schedule enforcement
- Configurable pay rates
- Tip tracking
- Meals/breaks prompts
Managing Overtime
The Fair Labor Standards Act has been around since 1938, and thousands of employers still fail to comply (either knowingly or unknowingly) with the overtime rules.
When is overtime pay mandatory?
Employers are required to pay overtime when a non-exempt hourly worker works more than 40 hours in a defined work week. Under the FLSA, the overtime pay rate must be at least one and one-half the employee’s regular rate of pay. For employees over age 16, there is no limit on the number of hours worked in a workweek. Overtime pay is not required for work on holidays, weekends, or regular days of rest, unless the employee has exceeded the overtime hours limit in the workweek. Additional laws that may apply include those imposed by the state, a union or industry.
- Ensure all overtime-exempt employees meet FLSA duties test
- Verify that independent contractors meet the IRS criteria
- Know the overtime laws around piece-rate work and tips
- Don’t require off-the-clock work (it’s illegal!)
- Compensate correctly for “call-in” shifts or “on-call” work
- Be aware of the laws mandating meals and breaks
- Pay employees for training time, putting on uniforms and traveling between job sites throughout the day (traveling from home to the first job site or client is not generally compensable time)
Automated time and attendance tools and include the following tools for overtime compliance:
- Alerts for overtime hours thresholds
- Meal/break early punch lockout
- Overtime calculation by job code
- Tip reporting
- Flexible scripting for state or local overtime laws
- Audit-ready recordkeeping and reporting
- Mobile location management with geofencing
Employee Classification (Exempt vs Non-Exempt, Contractor, etc.)
It’s essential for employers to properly classify employees. Federal and state laws around variable pay schedules, overtime, and other aspects of compensation depend on the proper classification.
An exempt employee is one who is not required to be held to the overtime protections outlined in the Fair Labor Standards Act (FLSA). Sometimes referred to as the “white collar” exemption, specific employee categories are outlined by the Department of Labor. An exempt employee cannot just hold a title that qualifies under an approved category—they must perform the duties outlined as well.
A non-exempt employee does not meet the duties and salaries requirements and tests outlined above, and they must receive overtime pay for any hours worked over 40 during a workweek.
Classification impacts more than just laws that mandate overtime pay. It impacts an employee’s eligibility for benefits, minimum wage protections, and workers’ comp eligibility. Additionally, failing to pay OT can put employers at risk of facing federal and state penalties.
The three main steps for complying with classification laws are:
- Follow the federal and state classification rules,
- Track all time worked by all employees regardless of classification, and
- Maintain all time and payroll records.
Automating employee timekeeping makes it easier to follow the steps above and manage time and labor. Employees punch in and out with a clock or mobile app, and the software creates and saves virtual timecards to comply with recordkeeping requirements.
Automated Time and Attendance for Compliance Confidence
Our time and attendance solution serves as a simple and effective way to comply with the challenges that come with employing others.
Ready to step up your compliance game and protect your company? Give us a call.
This information is provided with the understanding that Payroll Partners is not rendering legal, human resources, or other professional advice or service. Professional advice on specific issues should be sought from a lawyer, HR consultant or other professional.