If your pay program for nonexempt employees isn’t kosher, you’ll likely be confronted with legal hassles.
Such hassles will result in having to pay back wages, overtime, liquidated or double damages. So, to prepare for payroll audits, the quality of your records is paramount.
Employees will be successful in suing your company – up to three years for willful errors and up to two years for non-willful errors.
A compliance program is important to avoid violating wage-and-hour laws.
You must implement and enforce policies that prevent your workers from working unpaid overtime.
Here are precautions to take:
1. Pay for employees’ work performed at different sites
If you have employees who work at multiple locations during the same week’s duration, total their hours correctly and pay them accordingly.
2. Don’t pay an average rate for different hours in the workweek
For instance, if an employee works 50 hours in one week and 30 hours the next week, you must pay overtime for the extra 10 hours in the first week. Therefore, don’t average the two weeks totaling 80 hours.
3. Pay for each of your workers’ hours – before and after business hours
Remember all activities, pre-work and post-work, must be paid. That includes seemingly minor tasks such as responding to off-hour emails and texts.
4. Pay for work during meal breaks
Make certain your software doesn’t deduct pay for meal breaks.
5. Pay for wait time
Employees’ waiting time must be compensated. Your workers who must wait to perform their duties should be paid.
That includes workers who have to spend their time waiting for work areas to be cleared after their shifts have started.
6. Pay for travel time
Naturally, you don’t have to pay for employees’ commute time. However, if your employees must travel to different work sites, they must be paid for it.
7. Pay for 1 ½ times of their hourly rate for overtime work
All of the hours employees work must be compensated, and overtime hours require time-and-a-half.
Additionally, pay for any bonuses, commissions and other incentives including shift differentials.
8. Accurately pay for all telecommuting
Make sure your telecommuting employees keep accurate records of their agreed-upon work hours. In advance of starting a telecommute schedule, this includes full documentation with a written, signed and dated agreement.
Keep an eye on their production. Make certain workers aren’t working over 40 hours a week unless more time is needed for your business.
The bottom-line: The right policies and implementation are vital. You never know when you’ll be required to prove your pay program is above board with documentation.
From the Coach’s Corner, here are relevant tips:
Employees – Overtime Pay Issues and FLSA Exempt Status — Many employers continue to violate wage and hour rules. To avoid costly and time-consuming legal hassles, you might want to review your overtime pay policy and all your exempt-employees’ status to comply with the Fair Labor Standards Act (FLSA).
Checklist to Audit Payroll Processes to Avoid Costly Mistakes — Payroll mistakes can be costly, if your company fails to comply with changes in the tax code. To avoid issues with the Department of Labor or the Internal Revenue Service, it’s best to review your payroll processes.
16 Best Practices to Stay out of Legal Trouble with Employees — Generally, in human resources, companies find themselves in legal hot water because they inadvertently make mistakes with their employees. It’s important to triple down on preventative measures and responses to legal hazards when necessary. Here are Biz Coach tips.
Employee Records: Which Ones to Save and for How Long — You don’t want to keep unnecessary employee records. Nor do you want to make a rash decision on whether to destroy records. Here are the laws you need to know.
The Planning That’s Vital to Pay Competitive Wages for Performance — Two of the most salient steps you can take in management – create a compensation plan that competitively pays your employees and rewards them for excellence. Enlightened compensation plans inspire performance and incentivize productivity.
Tips for Handling Your Employees’ Wage Garnishments — Handling wage garnishments of your employees’ paychecks – including communication – is a very sensitive issue. Here are four management tips.
“People are the most important thing. Business model and product will follow if you have the right people.”