Below are the top 10 myths employers across the nation are guilty of following. Take a look and see if you might be one of them.
Myth #1: Paying an employee a salary or commission exempts an employer from paying overtime.
One of the most common mistakes employers make is assuming that every employee who is paid on a salary or commission basis can work unlimited hours without being paid overtime. Many employees who are paid on a salary or commission basis must also receive overtime pay when they work more than 40 hours in a 7-day workweek. In order to be exempt from overtime pay requirements, an employee who is paid on a salary or commission basis must meet specific requirements.
Myth #2: Paying a salaried employee at least $455 per week exempts a retailer from paying overtime.
The $455 per week figure is only one of several criteria that must be met in order for a salaried employee to be exempt from overtime pay requirements.
Myth #3: Giving employees titles such as Manager, Office Manager, Stockroom Manager, Executive, etc. exempts an employer from paying overtime.
An employee’s job title has no bearing on whether that employee is exempt from overtime pay requirements. While it seems as if a “Manager” should automatically fall under the Administrative Exemption category, the actual job duties – not the title – must be considered.
Myth #4: Paying all hours of work at straight time and having the employees sign something releasing the business from the obligation to pay overtime is legal.
An employee is either entitled to overtime pay under federal law, or they are exempt. If an employee is entitled to overtime pay and they sign a waiver saying they agree to work for straight time pay regardless of the number of hours they work, that agreement isn’t worth the paper it’s written on. The employer is still obligated to pay time and a half for all hours worked over 40 within a 7-day workweek.
Myth #5: Hiring minors under 16 years of age can be beneficial because young workers don’t cost as much, don’t know overtime laws, and rarely complain.
It doesn’t matter how old an employee is, the minimum wage is still $5.15 per hour. If you own a retail business, you better not be hiring anyone under the age of 14 unless it is your own child. Federal law restricts the hours that 14 and 15 year old employees can work – and restricts the types of work they can do. And yes, teenagers (and their parents) DO complain when they figure out a business is violating the law. That’s why so many businesses get whacked with penalties for child labor law violations.
Myth #6: It’s safe to assume a competitor is paying its employees correctly, and you should model your business upon theirs.
Don’t assume the guy down the street knows more than you. Just because they don’t pay overtime doesn’t mean you shouldn’t either – do your own checking.
Myth #7: If your business grosses less than $500,000 a year, your employees are automatically exempt from overtime pay.
Some or all of your employees may be entitled to overtime pay, depending on what their job entails. If an employee handles credit cards or checks, picks up mail at the Post Office, or receives goods shipped in from out of state, then that employee is engaged in “interstate commerce” and is entitled to minimum wage for all hours worked, and overtime pay (time-and-a-half) for all hours over 40 in a 7-day workweek – unless the employee falls into a specific exempt category.
Myth #8: I do not need to include hours spent by my employees traveling or training towards calculating overtime.
Guidelines for payment for travel time, training time, or other work activities. Attendance at lectures, meetings, training programs and similar activities can be unpaid time only if four criteria are met:
- It is outside normal hours,
- It is voluntary, not job related, and
- No other work is concurrently performed.
- Whether or not travel time is compensated depends on the kind of travel involved.
If, for example a worker drives from home to the store where they work, that travel isn’t work time. If an employee travels from the store to another work location for a special one day assignment, that may be considered work time. Time spent by an employee in travel as part of his/her principal activity, such as travel from job site to job site during the workday, is work time and must be counted as hours worked.
Myth #9: Seasonal businesses are always exempt from paying overtime.
The exemption for seasonal businesses only applies to seasonal amusement or seasonal recreational establishments. It does not apply to seasonal restaurants or lodging establishments.
Myth #10: All that matters is keeping track of the total time not the hours worked by my employees.
Record keeping is important. If you employ someone – no matter if it’s temporary, permanent, full time or part time – you must keep records of hours worked, the basis on which they were paid, their regularly hourly rate, total earnings, date of payment, and how much they were paid, among other things.