When money is tight and employers look to cut costs across every aspect of their businesses, they may feel they have no other choice than to trim back on payroll. Employees are often the biggest overhead costs for companies, and reducing hour assignments or rescinding a recent bonus might seem like the best way to balance the budget.

Before taking any action on payroll, employers should be certain the changes they intend to make will not put them in violation of the Fair Labor Standards Act (FLSA), which dictates that all covered employees must receive at least minimum wage for all of their hours worked and overtime if they are on the timeclock for more than 40 hours in a single workweek. If employers' decisions are not compliant with these standards, they face a number of significant consequences:

- Investigations by the Wage and Hour Division

- Orders to pay back wages

- Poor employee relationships

Because the FLSA was established to preserve employees' rights, it is often used to penalize companies that are not paying their employees the wages they have rightfully earned for their time and attendance. If the Department of Labor is tipped off about sudden changes that might not be compliant, they can send Wage and Hour Division representatives to investigate the matter. If violations are uncovered, employers are asked to pay back wages to make up for the missing remuneration.

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