Monday, September 24, 2012

7 Paycheck No-No's the Department of Labor is Focusing On

Here is a quick, easy-to-understand list of the top 7 law violations the Department of Labor targets as they prove to be the biggest laws employers break.  Employers are always encouraged to evaluate how they classify and pay employees to avoid expensive lawsuits and litigations and employees are encouraged to speak with wage & hour attorneys if they suspect they are not being paid properly.

1. Failure to insure that subcontractors follow the law

General contractors are responsible not only for their own violations of federal labor law, but also for those committed by their subcontractors.

2. Employees working more than 60 hours per week without proper payment

The most egregious problem with workers who work over 40 hours a week is failure to pay at all for all hours worked. It’s not unusual to find workers who are paid for 40 or 50 hours but essentially forced to work 60 hours.

3. Failure to pay required prevailing wages and overtime compensation

Prevailing wage is generally interpreted as the union wage for the area. Of course, any overtime earned must be paid at the prevailing wage rate.

4. Providing inaccurate or falsified payroll records to the government

Obviously, providing falsified records is not a wise practice. However, many submitted records are merely inaccurate. In fact, most experts admit that probably no organization has perfect pay records. But there are common problems that you can watch out for:
  • Clock in and clock out procedures, including especially rounding rules that favor the company and not the employee.
  • Automatic deductions for meal periods. Problems tend to occur when an employee works through part or all of the meal period, but the time tracking system deducts the time. For example, if employees are taking phone calls during lunch, they are probably working.
  • Changes made by supervisors and not checked by employees.
5. Failing to keep accurate records of hours employees worked

Records must be detailed. For example, “8 hours” today is not enough. Note time in, time out for lunch, time in from lunch, and time out at the end of the day. Have employees sign that their time card or other record is “an accurate and full accounting of hours worked for the period.”

6. Failing to pay for all hours employees worked

As was mentioned in yesterday’s Advisor, this failure usually arises from people taking work home or being requested to work before clocking in or after clocking out.
One important point: If employees do work extra hours, you have to pay them, even if you have specified that they can’t work extra hours without permission. (You can discipline them for doing the work, but you still have to pay them for it.)
One new twist here is the rise of cell phone/e-mail use outside of work hours. If non-exempt employees are answering phone calls or dealing with e-mail off hours for more than a de minimus time frame, they are probably working and need to be paid for those hours.
7. Improperly classifying employees who performed work on the projects, resulting in the underpayment of wages and fringe benefits.

Misclassifying (calling employees exempt who should be classified as non-exempt) is a sticky problem. There is a lot of grey area in the supervisory ranks. The general rule is that it’s better to sort out these difficulties before work begins. After the fact, there are lawsuits, class actions, and other expensive challenges to be dealt with.

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