Is Your Employer Paying You Correctly?

It has been a little over four years since congress increased the minimum wage from $5.15 in 2007 to $7.25 in 2009, but many Americans claim to be earning considerably less than this, with more claiming to be exempt from the ruling than are eligible for it. For example, the Fair Labour Standards Act (FLSA) states that ‘tipped employees’ can be paid less than the national minimum, as long as the average amount of tips earned boosts the hourly wage up to the minimum – if not, the employer has to make up the difference.  Tipped employees includes anyone working in food service, yet it appears to be the minority of people who are aware of this clause, or confident about speaking up and challenging companies who do not comply.
There have also been some changes to the way overtime is classified and paid, and there are some simple guidelines that companies must follow to remain within the law. Colorado overtime laws and their effect on wages has had meant serious implications for employers, with eligible employees requiring overtime pay if they work over twelve hours in a working day, or over forty hours in a working week.  This applies to both salaried and hourly paid staff and should be paid at a rate of one and a half times the employee’s hourly rate.  In Colorado, that rate is set higher than the national minimum at $7.36.
It is a little known fact that any overtime pay should be in cash, and not in ‘comp’ time, i.e an employer cannot ask you to work sixty hours one week in exchange for time off the following week.
Breaks and lunches also seems to be an area of confusion for employers and employees, with many not knowing whether lunch and breaks are entitled under the law. The answer is that longer breaks and lunches (generally of over half an hour or more) are not permissible for overtime hours and should not be counted as hours worked when working out the number of hours worked during a workweek.
Unfortunately, many employers are violating these laws whether purposely to avoid costly wage and overtime bills, or through ignorance, and are misclassifying staff as ‘exempt’ within their payroll to avoid paying anything extra!  Companies have been known to incorrectly classify permanent members of staff as ‘independent contractors’ in order to escape the law.
Other examples of exempt staff include:

  • Salaried employees rather than those on an hourly rate
  • Administrative, executive and professional employees
  • Anyone earning over $455 per week.

As a general rule, any non-exempt employees earning less than $455 per week (that’s $23,660 per year) are guaranteed overtime pay. However, you should remember that most states and local governments have their own wage and labor laws and companies should follow the law in their local area.  An employer who is subject to more than one law, for example if the minimum wage has been set above $7.25, then they must follow the law that is most generous to the employee.
This article was written by Amanda Walters, an experienced freelance writer and regular contributor to Huffington Post. Follow her here: @Amanda_W84