5 Legal Pitfalls Every Employer Must Know
By Jeffrey Ettenger
Whether you have 1 employee or 1,000, every employer has had that moment when they realize they may have put the company at risk by failing to act appropriately and possibly legally when it comes to their employees. Here are five pitfalls every employer should know, to avoid these very real risks:
1. Exempt Employees May Qualify for Overtime
Even if an employee is paid a yearly and not hourly salary, they may be entitled to be paid overtime. Employers frequently believe that if they pay their employees a generous weekly or monthly salary, that they are exempt from overtime. This is not accurate and can pose huge liabilities for the employer. The status of an employee is determined by their duties, not their wages.
2. Accurate Record Keeping For Non-Exempt Employees is Crucial
Employers who fail to provide wage statements, do not have written commission policies and pay their employees informally, are putting themselves at risk. Many businesses, especially in food services, deal with a lot of cash and keep very informal records. Even if the employer pays or intends to pay employees correctly, lack of accurate records is a huge problem. A non-exempt employee needs to clock in and out and accurate records must be kept.
3. Employers Can Be Over-Generous to a Fault
Non-exempt employees only get paid when they work. Employers do not always have to pay non-exempt employees for meals (in certain circumstances) or time off, nor do they do have to pay extra for nights, weekends or holidays. Employers need to know what the law really is so that they can pay appropriately.
4. Misunderstanding the Laws Will Cost Employers Significantly
Most employers really do not understand discrimination or harassment laws. If you are in business long enough, employee claims are a cost of doing business. Most employers are their own HR department. They don’t know how to handle claims or protect against them. This lack of knowledge can cost the employer tens of thousands of dollars.
5. Misclassifying Workers Could Lead to a Labor Audit
Designating workers as independent contractors is a risky proposition. Temporary, seasonal, part time workers are often classified as independent contractors by employers. It benefits the employee and employer until they get fired. This could trigger a labor audit and cost the employer significantly in fines and penalties. Employers need to know how to properly classify workers.
Scary enough? The New York and Federal labor and employment laws are a virtual minefield that must be properly navigated to avoid huge loses by employers. Be sure to consult an expert for advice if you are unsure how to handle these issues.
Jeffrey Ettenger is a labor and employment specialist with Kaufman, Dolowich & Voluck, LLP. He has substantial litigation experience defending federal and state law unpaid wage claims involving collection and class actions, as well as New York State and Federal Department of Labor investigations regarding alleged unpaid wages. He has over 15 years of active experience litigating cases in New York Courts.
- On February 2, 2015