Office Management & HR
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If you have employees, you're probably familiar with the federal Fair Labor Standards Act because it addresses some key employee pay issues, in particular the minimum wage and overtime pay.
But did you know that it also addresses an assortment of other employee issues, such as whether you can employ children and which records you have to keep? Let's take a look at a few of those less well-known, but no less important, aspects of the FLSA.
Child labor. The FLSA restricts, but doesn't prohibit, businesses from employing children. Virtually all businesses are subject to these federal child labor rules.
There are a few situations, however, in which businesses are exempted from the child labor restrictions. These include parents who employ their own children, farm employment outside of school hours, and theatrical employment. If one of these doesn't apply, then the federal child labor rules specify what types of work children can do, when they can do it, and how old they have to be to do it.
The FLSA doesn't limit the hours that employees under 18 may work when the next day is a school day. It does, however, specifically prohibit minors under the age of 18 from working in occupations deemed to be hazardous. Hazardous occupations that might be found in the small business context include driving motor vehicles, operating power equipment and construction machinery, installing roofs, and excavating. The prohibitions aren't absolute; an employee under 18 may engage in some hazardous occupations if special safety procedures are followed.
Equal pay. If you're subject to the FLSA, you're also subject to the Equal Pay Act. The Equal Pay Act (part of the federal wage and hour laws) requires you to provide equal pay for equal work. The Act is very limited in its scope. It applies only to pay differences between men and women. In a nutshell, it says that you can't pay a person of one gender less than an employee of the opposite gender who is doing the same or substantially the same work.
If no two people in your office do the same job, you probably won't need to address this issue at all, but if you have people of different genders who do the same or substantially the same job, you should look for differences in the pay they receive. For example, suppose you employ three salespeople and five customer service representatives. Salespeople get paid an average of $20,000 annually, and customer service representatives get paid an average of $15,000 annually. All of your salespeople are males, while four out of five of your customer services representatives are female.
If you see a situation where there is clearly a problem with females being paid less than males for the same work, or vice versa, you need to fix the problem by making the wages more equitable. It is illegal to reduce the pay of one gender to match the lower pay of the other
Recordkeeping. If you have employees who are covered by the federal minimum wage, equal pay, and overtime provisions, you must maintain and preserve records. What's more, even if your employees are exempt from the federal law, you'll have to keep records to prove that fact. Your payroll records must be kept for three years from the date of the last entry you made on them.
Supplementary records (including basic employment and earnings records; wage rate tables; order, shipping, and billing records; and records of additions to or deductions from wages paid) must be kept for two years, but it's easier to just keep everything for three years (or longer, if your state requires it).
Which records? The information that you'll need to keep will vary depending on each employee's status. And you'll need to keep some information just to prove that each employee's status was correctly determined. Federal law also requires you to keep specific additional information for each of the various classes of employees.
State laws. In addition to the federal requirements set out above, states have comparable laws that you'll need to be aware of, particularly if, as in many cases, the state laws are more onerous than the federal ones. Since you must comply with both sets of rules, make sure that you check out your state's child labor laws and recordkeeping laws.