As an employer, there is a lot to consider concerning your employees. There are many laws in place to protect both you and your employees. Failure to follow even the smallest nuances of these laws can result in serious litigation and legal headaches. Employers should be sure to follow all laws and regulations to avoid facing legal repercussions.
At the same time, you want to protect your business as well. While it’s important to follow the law, it’s also essential to make sure that your employees aren’t taking advantage of you or the system you’ve set up. Remaining hospitable to your employees while protecting your business is a delicate balance.
Understanding the most commonly litigated wage and hour violations can help you to be on the lookout for these instances in your own company. The more you understand laws surrounding employment, the better you can implement them in your company and identify areas where the laws are being broken. This benefits you, your employees, and your company’s future.
Incorrect Overtime Classifications
One of the most commonly litigated wage and hour violations is incorrect classification of workers when it comes to overtime pay. Many employees should be compensated if they work more than 40 hours in a week or 8 hours in a day. Certain employees are exempt from this standard because of their classification, meaning that they should not be paid overtime wages over 40 hours per week.
Since there is ambiguity for salaried employees, it’s easy to misclassify and find yourself facing legal issues. If you have salaried employees who are regularly working over 40 hours per week, it’s important to find an employment attorney to help you correctly classify the worker’s job. Correct classification saves you time, money, and the risk of legal repercussions.
Incorrect Overtime Pay
Once you’ve correctly classified your employees, you still must pay them correctly for any overtime hours. In the state of California, this generally means 1.5 times the employee’s regular hourly rate for any time exceeding 8 hours in one day or 40 hours in one week. Two times the employee’s regular pay is expected for any hours over 12 in any given workday.
Often, employers incorrectly think that they can average the hours over a pay period. For example, if an employee works 50 hours in the first week of a pay period and 30 in the second, it averages 40 per week, which is not overtime. However, this is not accurate. The employee must be paid overtime for any hours exceeding 40 in a given week, even if the other week of the pay period they work less than 40 hours. The system is on a week-to-week basis, not a pay period average.
Meal Times and Breaks
Many businesses are busy throughout the day, and it’s difficult to track who takes their lunch break and who eats at their desk or while doing work. It’s important to be aware of this and make sure you are offering all non-exempt employees the correct opportunities for breaks and meals.
The law states that you must provide a “reasonable opportunity” for each employee to take a 30-minute unpaid lunch break. The worker may opt not to take the lunch break, but it’s important that you offer it. Simply making the break time available and obvious to the employee helps to protect you from meal and break time violations.
Tip Pool Violations
If you run a business in which tipping is common, you must be extremely careful about your employees’ tips. Tip pooling is a common setup in which all tips are added and evenly divided between applicable staff. This is a great way to make employee income fairer and more stable and eliminate unfair tip-outs from certain employees.
Though a tip pool system can be beneficial, an employer cannot mandate it or have any influence on the decision to have one. Employees must decide together on the tip pool system without any input at all from you. If you give your opinion or try to sway employees one way or another, you may face tip pool violation litigation, which can be extremely bad for business and expensive for you.
If your employees discuss tips, tip pooling, or any similar subject, ask them to wait until you’re out of the room. Give them plenty of space so that it’s clear you didn’t have any influence. This is the safest way to approach potential tip pooling scenarios.
Independent Contractor Designation
It’s easy to get into legal trouble if you pay employees as independent contractors. Though this designation is appropriate in some scenarios, it’s not always applicable. In these scenarios, an employer is not responsible for paying payroll tax or taking out certain deductions from employee paychecks. This is appealing for many companies, but it can put you in a precarious situation if done incorrectly.
If you have any employees you’re paying as independent contractors, it’s important to work with an employment law attorney to ensure you are within your right to pay your employees this way.
Wage Deferment
Many new companies, such as startups, may have employees who opt to defer payment until the company is more stable and successful. In some scenarios, the employer asks the employees to do this to help keep things going when money is tight. It’s important to know that this is a dangerous situation. Many times, wage deferment is illegal, even if the employee voluntarily defers their wages.
It’s best to avoid deferring wages if you can. If you feel you must or someone offers, be sure to check with a legal representative first. The ultimate result could be much more expensive than paying your employees on time.
Contact Us Today
Our team at Fishman, Larsen & Callister offers strategic legal guidance to employers in the Fresno area and around the state. We can help you set up and run your business legally and responsibly to minimize your risk of litigation down the road.
For more information or to schedule a meeting, please contact our team online.