Wage and hour basics for starting employers

This guide contains only general information.
It is NOT LEGAL ADVICE.
Please note that each state may have different standards.
IB Law Firm is not responsible for the contents of external links.
Wage and hour lawsuits can take in average $4.5 million to settle. Some class actions were settled at over $100 million. In spite of the high stakes, many employers prefer to push the wage and hour compliance to the bottom of their priority lists.

This summary of general wage and hour principles will help starting employers to understand the basic steps to avoid risky lawsuits.

There are three major sections in this guide: (1) how to classify, (2) how to pay, and (3) what to record.
  • Classification
    It is essential for employers to correctly identify who is an employee and who is not. Then, employers should classify employees as salary or hourly paid employees. This classification stage is very fact-sensitive.
    C
Employee v. Independent contractor
Employers should carefully assess each position based on federal and state laws.
Salaried v. Hourly employee
Salaried employees are those with executive, administrative, or professional roles and with a higher pay.
  • Payment
    How to pay and calculate wages is a separate world of nuances. Here are some examples of common mistakes.
    P
Paid v. Unpaid time
Defining what to pay for.
Regular rate v. Hourly rate
Defining the calculation unit for the wages.
Overtime calculation
Employers must calculate wages based on federal and state formulas.
FMLA, PTO and other paid and unpaid leaves
Should I pay if the employee did not work?
Other requirements
Minimum wages, waiting time penalties, meal and rest breaks, wage statements, etc.
  • Recording
    Recording the correct wage and hour policies and practices is a gamechanger in wage and hour disputes.
    R
Recording the correct work time
Cultivating a compliant wage and hour atmosphere.
Recording the compliant wage and hour policies and practices
Employee Handbooks, written policies, and more.
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