According to the Department of Labor, among the most common complaints it receives are those which involve wage and hour penalties. In fact, the department also stated that in 2019 it uncovered over $322 million in back wages. This has prompted states such as Pennsylvania and many more in the union to take a closer look at the businesses operating within their respective states. As a business, you may be thinking about how you can avoid making these very serious legal mistakes. Thus, the following information has been compiled to help you understand what you may implement into your company to avoid this issue.
Wrong employee classification
Perhaps the most common legal mistake made by a business owner is wrongly classifying its employees. According to the FLSA, an employee must be either exempt or non-exempt. Issues arise when an employee files a complaint stating that he or she has not been paid for overtime work. The reason an employer would not pay overtime is that the employee is considered exempt, which means he or she is on a yearly salary rather than hourly.
Keep detailed records
Unfortunately, you may face situations when an employee is wrongly stating that you owe them back pay. It is important to ensure that you are keeping a detailed record of all your employees to protect yourself from these very events. Here are just some of the documents to record and protect:
- Work week
- Overtime pay
- Deductions
- Employee information
- Pay on time
The best way to keep yourself and your company out of trouble is to pay people on time. Understandably, running a business can be extremely difficult. However, if you owe compensation, it always has to be paid in full and not in half or in the form of an IOU. The attorney representing your employees will take legal action and go after your assets to recuperate what you owe.
As a business owner, you have a lot of things on your mind on a daily basis. That is why it is so important to have a professional accountant and an attorney at the ready in the event that issues with the department of labor arise.