We all have read about employers in the throes of wage and hour compliance problems. Unfortunately, certain misconceptions about wage and hour compliance seem ingrained in workplace lore, with many employers making the same mistakes over and over again. The result: an increasing number of wage and hour lawsuits filed by employees – including class action suits – that are time-consuming, frustrating and costly. The truth is, many employers unwittingly make mistakes that expose them to unplanned back wages and legal fees.

Employers who want to stay on the right side of the law must re-examine and manage their wage and hour practices. For employers in Maine, the task is especially challenging due to parallel – and sometimes inconsistent – state and federal wage and hour laws.

Employers can avoid costly and aggravating claims by watching for common workplace missteps. These top five wage and hour mistakes are lurking undetected in many workplaces:

• Salaried employees are not always exempt employees. Just because a company pays an employee a “salary,” as opposed to an hourly wage, it does not mean the employee is exempt from overtime. Salaried employees also must meet strict duty tests to be exempt from overtime. For example, to be an “executive” employee who is exempt from overtime wages, the employee must be paid on a salaried basis, must manage a department or subdivision, and must customarily and regularly direct the work of two or more full-time employees. Remember, it is what employees actually do, and not what title they hold, that counts. Employers can avoid many wage and hour traps by properly classifying exempt employees.

• BlackBerry pitfalls. The BlackBerry is a great way to work from home, but the innovation also represents a lurking wage and hour trap. If employees use a BlackBerry, iPhone or other PDA to check or send e-mails or make business-related phone calls outside of “normal” working hours, then that time may very well be compensable work time. Establishing effective workplace policies regarding work outside of regular hours can reduce the risk of an offense. Remember, employers must pay for all work that the employer knew or should have known the employee was performing. For example, if on Monday morning an employee turns in a project that was unfinished as of Friday, then the employer knows that the employee worked over the weekend and the employer may be required to pay for the extra work.

• Contractor questions. Employers often misclassify workers as “independent contractors” instead of as employees, and “doing what the rest of the industry does” can lead to claims for back wages, as well as unwanted inquiries from state and federal agencies. In fact, the U.S. Department of Labor intends to focus its upcoming compliance efforts on investigating employers’ misclassification of employees as independent contractors. The government has earmarked millions of dollars for this campaign, known as the “Misclassification Initiative.” Minimize exposure to an adverse investigation by reviewing the status of all “independent contractors.”

• “Voluntary” overtime. Employers must pay employees for all hours that they are “suffered or permitted” to work, even if the employee is working “off the clock.” The truth is, an employee cannot “volunteer” or be required to work unpaid overtime. Employers must pay non-exempt employees for all time they spend working, including overtime hours at 1 1/2 times the regular rate of pay.

• Bonus blunders. Non-exempt employees must be paid overtime for hours worked in excess of 40 in a workweek, based on what is called the “regular rate” of pay, but many employers fail to calculate the proper regular rate for overtime payments. The regular rate of pay must include the normal hourly rate plus certain other payments such as non-discretionary bonuses. For example, if an employer pays non-exempt employees a bonus each quarter based on meeting certain production goals, the employer must include the amount of the bonus in – and recalculate – the employees’ overtime payments over the course of the quarter.

The biggest mistake employers make is assuming that their wage and hour practices are sound. While these are five of the most common errors, employers are often guilty of other wage and hour infractions, including making improper salary deductions, failing to pay for training and travel time, and failing to completely relieve employees from duty during unpaid break time.

In the case of wage and hour compliance, an ounce of prevention truly is worth a pound of cure. Given that wage and hour violations often lead to liquidated double damages and attorneys’ fees, it makes sound business sense to ask your attorney to audit whether workplace practices and policies are accurate and up to date. Make sure that your workplace is free of wage and hour problems before the problems find you.

 

 

 

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