HR Solutions: Selecting right payment options can help reduce payroll

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Lynne Haggerman is president/owner of Haggerman & Associates, a firm providing outplacement, retained search and management consulting/training on human resource issues.|ret||ret||tab|

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The Fair Labor Standards Act governs how a small business may pay employees. |ret||ret||tab|

The two basic principles for nonexempt positions include paying a minimum hourly rate of $5.15 and no less than one and one-half times the regular rate for hours worked in excess of 40 hours in a workweek. |ret||ret||tab|

For exempt positions, companies do not have to pay minimum wage or overtime. Other than these rules, however, several additional provisions of the law remain unknown to many small businesses.|ret||ret||tab|

A small business may require a jobholder to work overtime. Overtime must be paid on the staff member's regular payday.|ret||ret||tab|

When calculating overtime, the employer is allowed to determine which, if any, paid time off benefits will count as time worked. To determine the rate for overtime, include productivity bonuses, commissions on sales, shift differentials, prizes for good behavior and the fair value of employer-furnished facilities if associate acceptance of those facilities, is voluntary. |ret||ret||tab|

A small business is allowed to exclude the following when computing overtime: gifts; profit sharing; reimbursable expenses; truly discretionary bonuses; exclusions for union contracts; retirement and insurance plan contributions; percentage bonuses based on the worker's total compensation; premium rates for working over eight hours a day or 40 hours a week; overtime for working Saturdays, Sundays, holidays, and regular days off; and payment rendered to laborers when no work is performed, such as vacation, holiday and sick pay.|ret||ret||tab|

Belo plans named for a U.S. Supreme Court case in which A.H. Belo Corp. was one of the parties remain an option for small businesses with a team member working significant but irregular overtime. The individual must be guaranteed certain compensation each week, including a predetermined amount of overtime. To comply with the law, the job duties of the position need to necessitate irregular working hours, and the person in the position must voluntarily agree to being paid under a Belo plan.|ret||ret||tab|

The business must pay the associate at least minimum wage for all hours worked up to 40 and time and one-half for all hours worked over 40. The small business is required to guarantee the number of hours of pay each week and ensure no more than 60 hours will be worked each week.|ret||ret||tab|

Time off or prepayment plans allow a business to balance overtime one week with the next week. To take advantage of this FLSA option, the organization must determine a guaranteed salary for each week. |ret||ret||tab|

If a staff member is laid off one week, he is allowed to work overtime hours another week in the same pay period. This choice is not available for salaried staff or if the pay period is weekly.|ret||ret||tab|

Exceptions and special rules to the Fair Labor Standards Act occur in the following industries and situations: retail, service, tobacco, agriculture, seasonal, petroleum, law enforcement, family members working in a family business, in-house care of the physically and mentally ill, and those working in Puerto Rico, American Samoa and the Virgin Islands. |ret||ret||tab|

Additional exceptions and specific regulations occur in the following jobs: apprentices, firefighters, ship crew, trolley drivers, the aged, tipped laborers, domestic help, electric railway drivers, taxi and bus drivers, full-time working students, the mentally and physically disabled, some motion picture theater associates and various broadcasting station and newspaper staff. |ret||ret||tab|

The Fair Labor Standards Act is enforced by the Wage and Hour Division of the Department of Labor. Pay discrimination due to gender is unlawful, with violations punished by the Equal Employment Opportunity Commission. Small-business owners and managers have personal liability. The statute of limitations is two years for nonwillful infractions and three years for willful violations.|ret||ret||tab|

Compliance with the Fair Labor Standards Act need not be complicated and will ensure fair payment of workers, as well as payroll cost savings to small businesses.|ret||ret||tab|

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