How to Stay Compliant with Wage & Hour Laws (Without a Full HR Team)
Because ignorance isn’t bliss when it comes to the DOL.

One of the most common pain points I hear from small businesses and nonprofits is this:
“We want to do the right thing—but we don’t have an HR department to figure it all out.”

Good news—you don’t need a full HR team to stay compliant. But you do need to understand the basics. Let’s break it down into four key areas.

1. Misclassification: Employee or Independent Contractor?

Classifying someone as a 1099 contractor might seem easier (and cheaper), but if they should legally be a W-2 employee, you're risking fines, back wages, and legal headaches.

I wrote a full blog breaking this down—check it out here:  Employee or Contractor? How to Classify Workers Correctly
Use the “right to control” test—do you control how and when the work is done? If yes, they’re likely an employee.

Nonprofits, take note: Even if you’re mission-driven, the law still applies. Nonprofit status does not exempt you from wage and hour laws.

2. Overtime Rules: Exempt vs. Non-Exempt—Know the Difference

Under the Fair Labor Standards Act (FLSA), non-exempt employees must receive overtime pay (1.5x their regular rate) for hours worked over 40 in a week.

But not all employees are entitled to overtime. To be exempt, an employee must meet all three of these:

• Salary Basis Test: Paid a fixed salary, not hourly

• Salary Level Test: Earn at least $684/week ($35,568/year)

• Duties Test: Job must involve executive, professional, administrative, or certain IT duties

Common exempt roles: Managers, HR Directors, Accountants, certain IT professionals
Common non-exempt roles: Admin staff, customer service reps, warehouse workers, hourly employees

Industry Exceptions:
Some jobs are exempt from overtime due to specific FLSA carve-outs—like:

• Certain truck drivers (Motor Carrier Act exemption)

• Live-in domestic workers

• Seasonal amusement workers

• Certain farmworkers

When in doubt, check the specifics or consult an HR expert.

3. Meal & Rest Breaks: Know Your State Laws

The FLSA doesn’t require meal or rest breaks—but many states do. Some require a 30-minute unpaid meal break after 5 hours; others mandate paid 10–15-minute breaks every 4 hours.

Important: If you offer short breaks (under 20 minutes), they must be paid. Meal breaks (30+ minutes, uninterrupted) can be unpaid—but employees must be relieved of all duties.

Pro tip:
Always check your state laws, as they override federal rules when they offer more protection.

4. Recordkeeping: Keep it Clean, Keep it Safe

Solid documentation is your best defense. You’re required to keep detailed records for non-exempt employees, including:

• Daily and weekly hours worked

• Regular and overtime pay

• Pay changes and deductions

• Time off, leave, and break records (if your state requires it)

Retention Tip:
Keep these records securely (paper or digital) for at least 3 years.

Even simple tools like Google Sheets or free time-tracking apps can go a long way in staying compliant.

What Happens If You Get It Wrong?

Here’s what’s at stake if you misclassify exempt vs. non-exempt employees or violate wage & hour laws:

Wage & Hour Penalties Snapshot:

• Back pay for up to 3 years

• Double damages (liquidated damages)

• Civil penalties up to $1,000 per violation

• Employee lawsuits + legal fees

• DOL audits that can damage your brand and reputation

Bonus Note for Nonprofits:
“Volunteers” who regularly perform business-critical duties can be considered employees if they’re unpaid. Proceed with caution.

Final Thoughts

You don’t need a big HR team—but you do need the right systems.
Understanding how classification, overtime, breaks, and documentation work can protect your organization—and your people.

If you're unsure whether your practices are compliant, that’s where we come in. We help small businesses and nonprofits set up the right HR foundations—without the overhead.