Are You Properly Paying Your Workers? Posted on May 19, 2017

Being prepared for a wage and hour lawsuit against your company is the best example of the adage "an ounce of prevention is worth a pound of cure." All companies should perform routine wage and hour audits to determined if their internal controls and procedures are adequate and properly administered. The focus of these audits should be on the most common areas in which employers face liability. The most common types of wage and hour violations/lawsuits are listed in the following descending order of frequency:

  1. Not properly classifying/paying employees as exempt or non-exempt
  2. Not providing required meal and rest periods
  3. Not properly recording/paying all compensable time
  4. Not paying employees timely at separation
  5. Making unlawful deductions from an employee’s wages
  6. Failing to properly reimburse employees

In conjunction with these audits, a written policy should be created to address and guide contractor’s management in each of the main areas of potential liability, as well as to provide documentation that the contractor’s practices conform to the law. Other than ensuring that each employee charged with a role in carrying out the functions related to the policy is properly performing his/her duties, the following actions listed under each issue should be taken to prevent liability for wage and hour violation lawsuits:

1. Issue: Properly recording and paying all “hours worked”

  • Adopt a written policy – approval, disbursement, etc.
  • Have time cards include with the following language:
“Record the actual start and finish times of meal periods not standardized times. For example, enter 12:45 pm to 1:45 pm if meal taken during that time.
By signing this time sheet, you are confirming the following:
i. you have taken one full 30-minute meal period for a workday of 10 or less hours, or you have taken two full 30-minute meal periods for a workday of more than 10 hours;
ii. you have taken all the required rest periods described in the employee handbook;
iii. this time record accurately reflects all of the hours you worked during this pay cycle.”
  • Have paychecks include the following language:
“You must review your paycheck and immediately contact Human Resources in the event the check does not list all of the hours worked.”
  • Institute disciplinary action for employees that fail or refuse to comply with contractor’s wage and hour policies.
2. Issue: Provide all required meal periods and authorize all required rest periods
  • Adopt a written policy – approval, disbursement, etc.
  • Have time cards include the language stated above c. Have paychecks include the language stated above
3. Issue: Paying employees timely at separation
  • Adopt a written policy – approval, disbursement, etc.
  • Ensure that handwritten checks are issued for any employee that is terminated and was paid by direct deposit
4. Issue: Properly classify employees as exempt or non-exempt
  • Adopt a written policy – approval, disbursement, etc.
  • Fill out a self-audit form for each exempt position to document that the job category complies with exemption requirements (generic to place in HR files)
  • Have each person’s job category/exemption status in contractor’s accounting system (employee specific)
  • Draft job descriptions that include exempt or non-exempt language
5. Issue: Discrimination and Harassment
  • Adopt a written policy – approval, disbursement, etc.
  • Perform training as required by law
6. Issue: New Hire Orientation
  • Adopt a written policy – approval, disbursement, etc.
  • Follow up with supervisors to ensure orientation is occurring
7. Issue: Workplace Safety Requirements
  • Adopt a written Illness and Injury Prevention Program (IIPP)
  • Provide IIPP training for all employees
  • Draft and adopt an emergency action plan for each of contractor’s offices
8. Issue: Arbitration Policy
  • Adopt a written policy
  • Include in employee handbooks and distribute
9. Issue: Overtime Compensation
  • Adopt a written policy – approval, disbursement, etc.
  • Implement routine self-audits by payroll and accounting