Companies want to conduct business in the best possible honest and efficient ways — a noble goal that can be upended when a business is hit with an employment lawsuit. These things don’t often happen in a vacuum, though.
Sometimes even the most well-meaning employers run afoul of state labor law and federal employment laws like the federal Fair Labor Standards Act. That’s why it’s important for Naples business owners to know as much as possible about the law.
If you want to avoid getting hit with a wage-and-hour, misclassification, or other such suits after an employee hires an employment attorney, there are a handful of violations to avoid. However, the most common ones center on the question of whether a worker is an employee and if that employee is eligible for overtime. They are described below.
“Employee” is a fairly universal word for a worker, but in the realm of employment statute, it has a specific meaning. Just who is an employee compared to an “independent contractor” depends on the nature of the worker’s relationship with the employer.
Generally, the law considers someone an employee if they are economically dependent on the business of an employer and if the employer controls the workers’ hours, place of work, and means and methods for completing work, among other things. Conversely, an “independent contractor” is just that: an independent person or entity who contracts to do some type of work according to his or her own methods, and the employer only has control over approval of the finished product. Unfortunately, the definition isn’t black and white and has been the subject of state and federal legal disputes for years.
The implications of misclassification are huge, though. “If you, as an employer, misclassify someone as an independent contractor, you could be on the hook for violations of the FLSA, the Family and Medical Leave Act, the National Labor Relations Act, and several other federal and state laws” explains Morgan & Morgan attorney Blake Lange. Statutory employees are entitled to a minimum wage, overtime, unemployment insurance, and workers’ compensation benefits, as well as unpaid family and medical leave, among other things. The Internal Revenue Service could also require you to pay back taxes the agency deems you should have withheld from a bona fide employee.
Even if you do correctly classify your employees in a definitional sense, there is another type of misclassification you should mind: exemption from or eligibility for overtime.
Sometimes employers make the mistake of thinking that just because they gave an employee a certain title with “manager” in it, or gave them a few duties in the professional or managerial sphere, that the employee is a salaried, overtime-exempt worker. However, this is not always the case. Futhermore, the fact that an employee is salaried doesn’t always mean they’re ineligible for overtime.
Florida’s overtime regulations are governed by the FLSA and the U.S. Department of Labor’s rules enforcing the law. If a business brings in at least $500,000 of volume a year, then its employees can be examined through a salary level and “duties test” to determine if an employee is eligible for overtime. Note that the number of employees isn’t factored into the threshold: If you bring in revenue of that threshold and only have two or three employees, you’ll still need to mind their rights. There are other considerations too numerous to outlay here.
The USDOL updates the salary threshold on occasion. In 2004 it set a standard of $455 per week and in 2016 essentially doubled that to $913, however, a court overturned it. The duties test can determine if an employee is ineligible for overtime based on their status as an executive, administrative, professional, computer, or outside sales employee.
The complexity of this is rather vast, but employers must follow the law. Those that don’t could risk mistreating their employees, who might consider a knowledgeable employment attorney to help them sort out the mess. For more information, refer to the USDOL’s overtime guide.
Minimum Wage and Overtime Violations
Determinations of whether someone is an employee and therefore eligible for things like minimum wage and overtime are only the start. Both protections need to be minded and implemented in a legal fashion, and employers who violate those protections can get into serious trouble.
In Florida, state law sets the minimum wage at $8.10 per hour, which went into effect in January of this year. (The federal minimum wage of $7.25 is lower than the state’s, so the state’s applies.) There are a number of ways an employer can run afoul of minimum wage laws. This can include not paying an employee for all hours worked (which could drop the employee below $8.10 per hour or $5.08 per hour minimum wage for tipped employees).
Deductions from an employee’s salary could also violate wage-and-hour laws. Docking an employee’s paycheck to cover uniforms, supplies, loss of merchandise, among other things, could reduce an employee’s pay to below minimum wage, thereby violating state and/or federal law.
As mentioned earlier, Florida doesn’t have a particular law for overtime and instead relies on the FLSA and USDOL’s enforcement of it. Florida employers looking to treat their employees fairly and lawfully, while avoiding a lawsuit, need to mind the nuances that aid in determining whether an employee is exempt or nonexempt from overtime.
Once eligibility for overtime is established, the next step is to make sure you, as an employer, follow the law. A common area of confusion is how overtime hours are determined. By law, overtime pay is time-and-a-half for every hour worked over 40 in a week. If an employee works 50 hours one week and 30 hours the next week, all in the same pay period, the employee is still eligible for overtime for that first week; even though the paycheck is still for 80 hours.
Those are just some of the primary violations that employers tend to commit out of confusion over the content and character of the laws. For more information, refer to both federal and Florida guidelines.