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The Newest Wage Regulations You Need to Know

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The Newest Wage Regulations You Need to Know

With the rise of inflation and the increasing demand for fair and compliant wages, physical security companies need to be abreast of the latest US wage regulations developments. 

A tiny mistake can cost your company thousands in lawsuits and compliance penalties. 

As physical security becomes more in demand, making informed decisions on your wage schemes is critical to ensure compliance with US wage regulations and laws. 

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Today, it’s no longer enough to have a robust marketing strategy for your physical security services. Instead, you need access to vital information that can protect you from lawsuits while ensuring that your employees get the welfare state and federal laws mandate. 

Take note that most of these developments are amendments to existing regulations. While there’s not much difference, the nuance of these differences can significantly impact how you run your physical security company.  

Here are the latest US wage regulations you need to know about for your physical security company. 

The Fair Labor Standards Act 

One of the most essential US wage regulations is the Fair Labor Standards Act (FLSA). It provides the labor and wage standards for all industries, including the security industry. 

Under the FLSA, all employees are entitled to a minimum wage of $7.25 per hour. You can’t pay your employees a compensation lower than that rate. 

Furthermore, FLSA provided that all employees are entitled to overtime pay. How is work classified as overtime? 

The maximum amount of working hours for each employee in the security industry and other industries is 40 hours per week. When they exceed those working hours, your employees are entitled to at least one and one-half times their regular rate. 

For example, if they worked 50 hours in a week at $7.25 per hour, their total overtime pay for the additional ten hours should be $108.75 ($7.25 x 1.5 x 10). 

However, take note that overtime pay is not required by default on holidays, weekends, or days off — unless working on those days puts the employee into overtime.  

These FLSA provisions have existed since 2009. However, there were instances when physical security companies failed to comply with these standards. Therefore, it’s essential to keep these provisions on minimum wage and overtime pay for future wage schemes. 

Rescission of Joint Employer Status Under FLSA 

In July 2019, the US Department of Labor (DOL) issued a new rule that rescinded the joint-employer status under FLSA. 

Under this rule, an entity is only considered a joint employer if it has “actual, direct, and immediate control” over another entity’s employees. 

The practical implication of this rule is that physical security companies are no longer liable for the wage violations of their subcontractors. 

For example, suppose you’re hiring a third-party company to provide security guards for your event. In that case, you’re not responsible for their wage practices. However, you must still ensure that the third-party company complies with US wage regulations. 

The takeaway from this rule is that you must be more careful when choosing your subcontractors. Make sure to only work with those with a good track record in compliance with US wage regulations. 

Independent Contractor Rule 

The US Department of Labor’s new independent contractor rule is one of the most critical changes to wage regulations in recent years. The rule will significantly impact how physical security companies do business. 

Under the new rule, companies must prove that their workers are truly independent contractors and not employees who are entitled to benefits like minimum wage and overtime pay. The burden of proof is on the company, and the rules are complex. 

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There are a few key things that physical security companies need to know about the new independent contractor rule: 

  • The definition of an “independent contractor”: Under the new rule, workers can only be classified as independent contractors if they are genuinely in business for themselves. Workers economically dependent on a single company will likely be classified as employees, not independent contractors. 
  • Companies must show that their workers have the “right to control” their work: This means companies must give their workers the freedom to choose when, where, and how to do their job. Suppose a company controls what work is done and how it is done. In that case, the worker is likely an employee, not an independent contractor. 
  • The new rule applies to all workers: Companies will need to re-evaluate their entire workforce to determine who is an independent contractor and an employee. 

The independent contractor rule is a significant change to US wage regulations and will profoundly impact physical security companies. Companies must ensure that they comply with the new rule or face substantial penalties. 

For more information on this topic, check out our recent webinar,  Understanding the Complexities of Wage and Hour 

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