There are more than 180 federal labor laws administrated by the US Department of Labor (DOL) that cover workplace activities for about 150 million workers in 10 million workplaces. These laws cover wages, hours, safety and discrimination. Additionally, there are state-level laws that impact employment, such as right-to-work laws, which are currently in effect in 26 states.
These laws are not static and often change with increased or even reduced regulations. And adherence commonly falls to your company’s human resources department. Tracking, updating and enforcing these HR laws ensures your company’s compliance.
Labor laws tied to wages carry high risk due to the complexities of construction payroll like multiple job sites, varying wage rates and worker classifications. This is especially true for companies managing payroll for contractors, union payroll management, or specialty trade payroll.
Here is a breakdown of labor laws you need to know.
Misclassifying your workers as independent contractors could make you liable for unpaid payroll taxes like the Federal Insurance Contributions Act (FICA) and Federal Unemployment Tax Act (FUTA), wage underpayments and overtime.
For example, if a framing subcontractor treats all crew members as independent contractors to avoid payroll taxes, he or she could face payroll taxes, penalties and owed benefits if audited by the DOL or IRS.
The big differentiator between an independent contractor or an employee who is entitled to benefits and overtime under the FLSA is the amount of control the worker has. An independent contractor has complete control over how and when the work gets done, typically negotiating the contract before the work begins.
A construction payroll software solution – custom-built for construction, can help make sure once you classify an employee, the classification doesn’t change between your workforce management system and your integrated payroll software.
Failing to correctly calculate or pay overtime—especially with multiple pay rates or blended workweeks—can result in major wage and hour violations.
Administered by the Wage and Hour Division, the Fair Labor Standards Act (FLSA) sets standards for wages and overtime pay. Employers who have nonexempt employees are required to pay at least the federal minimum wage and overtime pay at one-and-one-half-times the regular rate of pay.
Tracking all hours worked can keep employers compliant with the FLSA. A construction time tracking payroll solution, such as Arcoro Time, automates time tracking so no hour or minute is missed. Arcoro’s Time (formally ExakTime) solution can even require employees to sign off on their electronic time cards, creating an employee-substantiated record of time worked, making sure all overtime is accounted for.
The FLSA does not mandate payment for time not worked, such as vacations, sick leave or holidays; these benefits are typically determined by employer policies or state laws. There are 24 states with existing PTO payout laws or statutes regarding the payment of PTO accrual. The states include: Alaska, Arizona, California, Colorado, Illinois, Indiana, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Nebraska, New Hampshire, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, Tennessee, West Virginia and Wyoming—and the District of Columbia. It’s important to note that most laws are dictated by existing company PTO policies.
Improper tracking or non-compliance with accrual and payout of paid sick leave can lead to fines or back pay obligations. In California, penalties for violating paid leave laws can include fines, civil actions, and potentially back pay for employees. Fines can range from $50 to $4,000, and the state’s Labor Commissioner can order reinstatement or back pay. If a contractor fails to accrue paid sick leave for part-time laborers per state law, the company could be forced to retroactively adjust payroll and pay penalties if a complaint is made or the company is audited.
A good HR system with time tracking, like Arcoro Manage and Time, can give you more visibility and help employees stay on top of hours worked and PTO accrued. These HR tools can also send automated alerts to employees who could lose PTO if they don’t use it.