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Wage & Hour Laws: Four Common Misconceptions

Toby Graham /
  • Categories: HR
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Ready to dispel some fake news? Let’s take a couple of moments to dive into the Wage & Hour Laws to understand a few of the common misconceptions.

What are Wage & Hour Laws?

Wage and hour laws are laws that determine the wages rates an employer can pay its employees, as well as the hours for which an employer must compensate its employees. The most well-known wage and hour laws are minimum wage laws and overtime laws. There are both federal and state wage and hour laws, and employers need to comply with both. SHRM has written up a great overview to reference >>

Four Common Wage and Hour Misconceptions

Misconception #1:
“Managers” are automatically exempt from overtime.

This is NOT TRUE. There is no exemption from overtime for managers. In order for a manager to be exempt, the individual must fit exactly into a specific exemption.

Misconception #2:
If an employee is paid a salary, he is exempt from overtime.

This is NOT TRUE. While many exempt employees are paid a salary, that is not what makes them exempt. There is no automatic exemption from overtime for an employee who is simply paid a salary.  Only if an employee fits into one of the recognized exemptions, will they be exempt from overtime. However, if the employee does not exactly fit into one of the exemptions, he or she is entitled to overtime if the individual works more than 40 hours in a week.

Misconception #3:
If an employee agrees to be paid in a certain manner, they are legally bound by this agreement and cannot later sue for additional wages. 

This is NOT TRUE. The law does not permit an employee to waive his or her right to minimum wage or overtime. So the fact that a non-exempt employee agreed to accept a large salary with no overtime pay and worked happily under that pay plan for years, would not prevent him from suing for unpaid overtime going back three years.

Misconception #4: Employees who are paid on a salary or commission basis do not need to keep records of their hours, because they are not paid “by the hour.”  

This is NOT TRUE.  Every employee must maintain an accurate record of their hours worked unless the employee is exempt from the time-keeping provisions. This applies to all employees regardless of how they are paid. In addition, in some states, ALL employees – from General Manager on down – are required by law to keep a daily and weekly time record.

Fully understanding the law, including the common misconceptions, makes it much easier to be sure you are in compliance. Need help with wage and hour issues in your organization? KPA has tools and consultants who can help.

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