First, take a look at the Guideline on Fair Labor Standards Act (FLSA) that is provided by the Department of Labor. It is recommended to get the most current version of the Guideline as there might have been some amendments or revisions that have taken place. The best way to check this out is at your Department of Labor website. Globally speaking, each country has its own equivalent of Labor department.
Secondly, after reviewing the Guideline, identify who are the employees who were misclassified.
|credit: US DOL|
Pay attention to the following sensitive areas:
1. Compensation and Wages
2. Exemptions on both minimum wage and over time pays
3. Duties and functions of those positions that are generally fall into six categories: executive, administrative, learned professional, computer professional, creative professional and outside sales
4. Subminimum Wage, Child Labor and all other pertinent areas of the regulation
5. Location where the worker is located and where the work duties are performed
6. Tax liabilities and implications
7. Unfair business practices
8. What to do in order to be compliant
Thirdly, create a compliance plan. However, if you are not certain as to what actions to be taken. Engage with an experienced human capital management consultant professional who could assist you in the compliance management.
There are penalties to violators of misclassifying employees whether or not they are wage earners, salaried, or independent contractors. When conducting a business in California, beware of the State FLSA Guideline. In 2012, the new law which took effect in January 1st, impact the classification of employees particularly those that are being classified as Independent Contractor / Consultant but do not meet the test on a real independent contractor.
What this means to you?
Execute a review of your employee classification to make sure that everyone is classified correctly.
Conduct a workshop for your team and or manager to let them understand the scope of FLSA for the benefit of your organization in the long term.
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