There’s nothing sinister about most FLSA violations. Routine errors in record-keeping or communication breakdowns are the main causes.

But with a record number of FLSA being filed each year, i’s more important than ever to avoid these three easily made mistakes:

1. Breaks in the paper trail

The biggest mistake employers of all sizes make is to over-rely on time cards or time sheets to record hours for their non-exempt employees.

As Wal-Mart has learned the hard way in class-action suits that it has lost, FLSA requires all employers to record (and pay applicable overtime for) all off-the-clock work activities. In Wal-Mart’s case, courts ruled the wage-and-hour violations were a deliberate (and illegal) strategy for cutting OT costs.

More commonly, employers get tripped up because they lack a system for recording “borderline” work time spent by non-exempt employees. The errors need not be intentional to violate FLSA.

These errors can occur either on the front- or back-end of your compensation system.

The biggest front-end danger area: FLSA requires employers to log and pay for time non-exempt employees spend logging onto computers or donning safety equipment.

The second most common front-end error is lack of a tracking system for work-related travel time by non-exempts. The price is steep for non-compliance: One employer got hit by the DOL with a $72,664 fine for back wages and penalties because it failed to account for OT-eligible travel.

On the back end of record keeping, FLSA requires you to track total compensation (not just base pay) when calculating overtime. Case in point: An online recruiter failed to include the commissions and other bonuses it paid to non-exempt employees when figuring overtime pay rates. The damage: $524,216 in fines.

2. Faulty OT-authorization policies

What can do you to stop employees from working unwanted overtime? To many employers, the answer is, “Require employees to get supervisor approval before working overtime.”

That policy is OK under FLSA, but be careful how you apply and communicate it.

What you can’t do: refuse to pay someone for unwanted OT or dock pay in retaliation. Once it’s worked, you have to pay it.  Under FLSA, your organization must pay even unauthorized OT in full.

What you can do: Create a written authorization procedure, and set disciplinary steps for its violation.
Supervisors (and, to a lesser extent, Payroll) will likely need education on their roles in this process.

The central message to get across: “Unwanted overtime is a thorny legal issue, due to FLSA. Never handle the case yourself – refer it directly to HR.”

3. Outdated job descriptions

Is your organization doing more with less these days? Have employees’ job responsibilities changed?
If so, their overtime-eligibility status may have changed, too.

Common example: Due to under-staffing, exempt employees perform clerical duties formerly delegated to hourly employees. Remember, a salaried employee isn’t automatically OT-exempt. You must still determine:

• if the employee spends 20% or more of the day on non-exempt tasks, and
• whether at least 50% of the day is still spent on primary job duties.

In many cases, hourly or non-exempt salaried employees consider a switch to exempt salaried status to be a step up in prestige. While exempt/non-exempt status is a legal issue – not a professional one — employee perception can be a surprising ally to management.

Meanwhile, fixing payroll overtime mistakes needn’t be ultra-expensive in the long term.

Some short-term pain is unavoidable. In order to comply with FLSA and minimize lawsuit risks, your firm should voluntarily offer to pay re-classified employees back wages for any overtime that was missed. Don’t forget to base the OT rate on total compensation, not just base salary.

Going forward, however, many firms adjust salary or hourly wages, bonuses, and other compensation accordingly so that the future cost to the company is similar to past costs.

Be sure to avoid one of the most common blunders employers make in trying to correct missed overtime. Managers often have the mistaken belief that paying employees an end-of-year bonus makes up for unpaid OT.

What this practice actually does is brings up a non-exempt employee’s total compensation without satisfying a penny of the overtime thats owed. In other words, you still owe time-and-a-half for the overtime, but now the OT pay rate you owe has gone up.