The Number One Cause of Wage and Hour Claims

Raffa Financial ServicesRaffa Financial Services on 04/11/2019

Wage and hour claims are a big headache, a big deal, and a really big expense.

The good news is that most wage and hour claims are completely avoidable. Why? Because they’re caused by preventable employer mistakes.

What kind of mistakes?

We’re glad you asked! Here are some common employer mistakes that can result in some very expensive outcomes.

Avoiding overtime: The law says employees are entitled to overtime, unless the employer can prove otherwise. But many companies still aren’t paying up. Overtime strategies that can get you in trouble include:

  • Misclassification of positions and duties
  • Averaging weekly hours over time instead of treating each work week as its own entity
  • Offering comp time in exchange for extra hours worked

Even if your employees wholeheartedly agree to one of these “solutions,” you’re still in violation and if push comes to shove, you’ll have to fork it over.

Not keeping good records: In order to pay people accurately, you must have a time tracking system that works accurately. Relying on memory, estimates, text messages, verbal exchanges or other such methods is unreliable at best and disastrous at worst. Without well-documented records and processes, you have no way of ensuring you’re in compliance and no way of protecting yourself if a wage and hour claim is filed. 

Inaccurate payroll: Making payroll isn’t always easy, but scrimping on paychecks can cost you big in the long run. Always pay your employees what they’ve earned in full and on time. This includes any overtime they may have worked. Also be sure you don’t miss those deadlines for your payroll taxes. Just like your employees expect to get paid, so does the government.

Mistakes with breaks: Sure, you have a break policy. But is it clear and documented? Better yet, is it communicated and enforced?

Your employees are legally entitled to lunch and rest breaks, but many employee workloads aren’t break-friendly. And some employees will want to skip their breaks in favor of taking off early. While you may have some flexibility with lunch breaks, rest breaks are mandatory. Often, they are required for health and safety reasons.

Don’t accept that your team is “too busy” to take a break. This mindset isn’t just unhealthy, it can also be very expensive.

Some keys to making sure breaks happen:

  • Put rest breaks in your policy and communicate it clearly to staff
  • Train management on the policy and to recognize signs that it’s not happening
  • Maintain adequate staffing levels to facilitate breaks
  • Check in with employees to make sure they are taking them

Employees who want to opt out of breaks can be problematic. Even if these folks are willingly defying the rules by not taking their breaks, ultimately employers can be held responsible. Don’t look the other way here. All it takes is one unhappy employee to file a claim, and you could be looking at a class action suit. 

Allowing off hours work: Technology can give employees 24/7 availability and access to their work. This can be super convenient, but if your non-exempt employees are working on their devices after hours, that time needs to be logged. And yes, you’ll need to compensate them for it. This can get messy fairly quickly.

Think carefully about whether or not your non-exempt employees should have work-issued smart phones and laptops. Essentially, you’re providing them with devices designed to help them work after hours, which may or may not make sense.

How to stay in compliance

Are you tired of just hoping you’re in in the clear? Here are some steps you can take to make sure you are.

  • Train your HR team on the law and any changing regulations
  • Structure positions and compensation that fall within FLSA guidelines
  • Keep accurate job descriptions and make sure they get updated
  • Classify employees correctly, including independent contractors
  • Put policies in place to explain and enforce meal and break times
  • Invest in an accurate timekeeping system and documentation
  • Pay overtime when earned
  • Deliver paychecks in full and on time
  • Be aware of the pros and cons of technology and offsite work
  • Stay vigilant

The beautiful thing about compliance is that you don’t have to rely on market conditions, social media magic, or positive Yelp reviews to be successful.

All you have to do is know the rules and follow them.

 

Is your benefits broker also a compliance consultant? What about a trusted business partner? Are you confident your policies and processes are doing what they need to ensure that your company—and your employees— are healthy and productive?

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Photo by Theeradech Sanin 
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