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The Importance of Completing an FLSA Compliance Self-Audit

The Importance of Completing an FLSA Compliance Self-Audit

Learn more about the ways FLSA compliance auditing can benefit your company’s performance.

  • The organization must undertake an FLSA audit at least once per year to ensure conformity in accordance with FLSA rules and rules and regulations.
  • The FLSA regulates wages for employees and overtime pay, as well as record-keeping child labor, and exemption status.
  • FLSA violations can be costly, ranging from $2,000 to $10,000 per violation.
  • This article is written for HR managers and business owners who wish for ways to carry out the FLSA audit.– The Fair Labor Standards Act (FLSA) is a law that was that was enacted to set an annual minimum wage, govern the hours of work each week, establish the amount of overtime that is allowed and protect children from unjust working conditions and require an established system of recording.

If you do not adhere to FLSA rules You could be penalized around $2,000 for each employee who violates overtime and minimum wage penalties. Children’s labor violations could cause even more severe sanctions per instance. Do your conduct a self-audit every so often to ensure you’re not breaking any FLSA regulations.

What exactly is what is an FLSA audit?

A compliance audit conducted for the FLSA is also known in the form of an FLSA audit is a thorough review of the company’s policies, procedures and documents in line to FLSA laws and guidelines. Employers are required to conduct a self-audit at beginning or at the end of every year. The audit will cover a broad array of data about the payroll employees’ hours, earnings, as well as exemption status.

What are the reasons why an FLSA audit so important?

An FLSA audit can ensure you’re in compliance in accordance with FLSA guidelines and rules. FLSA violations that are not intentional or accidental could result in severe fines and penalties that range between $2,000 and $10,000. Intentional violations could lead to criminal prosecution or even imprisonment, along with fines in the form of money. In addition, violating specific FLSA rules could result in the requirement to pay the back of wages as well as legal actions.

What exactly is what is involved in an FLSA audit?

Because the FLSA regulates various employment rules, an extensive FLSA audit should analyze a variety of aspects of your company.

Non-employees and contractors

This is among the more difficult points for small-scale business owners. If your company employs an excessive amount of contractors or consultants who are independent that actually serve as employees, you may have a problem.

Is it difficult to determine what the difference is? It’s easy to understand. U.S. Department of Labor (DOL) offers a fantastic misclassification informationgraphic that explains the difference between an employee and. an independent contractor. When you employ a person you’re calling an independent contractor, yet you control what they do and when they’re working for you, then they’re probably an employee.


Be sure that the way in which your non-exempt employees document their time is in compliance in accordance with FLSA. To ensure that your business adheres to the correct procedure examine when you are required to record hours worked. DOL requires employees to start recording hours they work and the way they are expected to keep track of the hours they work.

If your employee is performing specific tasks for you, or isn’t able to do other things because they have to be available to you, then they’ll need to record their time as hours they worked.

The way in which hours are to be recorded is regulated which requires that employers keep the following records of each employee:

  • Your full name as well as Social Security number
  • address with zip code
  • Birth date If younger than 19 years old
  • Sex
  • Occupation
  • Weekday day and time at which the workweek starts
  • Hours they are working each day
  • Hours worked per week
  • The basis for employee wages (e.g., “$11 per hour,”” “$540 an hour,”” “piecework”)
  • Hourly rate for normal hours
  • Daily or weekly total of earnings that are straight-time
  • Earnings from overtime for each week of work
  • Any additions or deductions to an employee’s salary
  • Total earnings for each Pay period
  • Date of payment as well as the time period during which the payment will be made

Exemptions for overtime

Certain job positions can be exempt from earning overtime. When you’ve got employees classed as being exempt from overtime earnings examine their duties and compare them with FLSA regulations on a regular basis to ensure that their status doesn’t change. Make sure your payroll department is able to verify they’re only taking allowances from the paychecks of employees. [Read the related article: What Are Payroll Taxes?]

Child working

The FLSA is the main regulation that safeguards young children against being subjected to unjust and unsafe working conditions. The federal government closely monitors every aspect of how employers can hire workers who are who are younger than 18 years old.

The kinds of jobs that children can be employed in and the amount of time per week they are permitted to work, differ based on their age. In general 14 is the age at which you can apply for working, and children who are younger than 16 are subject to strict restrictions.

The DOL offers a wealth of child labor information to help you have children working who are younger than 16 and you want to ensure that you are in conformity with FLSA rules. Related: 7 Labor Laws You Should Be aware of [Related: 7 Labor Laws You Must Know

State laws

If you’ve completed your FLSA self-audit in a blazer It’s time to consider the law of your state. Are you making your employees the minimal wage according to the requirements of the state government? You are able to get information about the state’s minimum-wage laws on the internet however, keep in mind that some towns have minimums that are higher than what the government of their state requires.

Extra credit

It is also possible to use the DOL’s local and state government self-assessment tools. It’s a good idea if believe you may be in violation or wish to know the more specific aspects in the laws.

If you’re fully in compliance with current standards, good! Federal and state laws can change without notice and you should take the time every year to check if that you’re in compliance, or else you’ll be liable for severe federal sanctions.

However If you’re not sure whether you’ve addressed one of these issues take the time to do some additional work. Contact your lawyer and be sure to determine and correct any possible infractions.

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