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Are your Pay Practices Compliant? Enforcement and Penalties are On the Rise

Would you expect a speeding ticket for doing 56 in a 55?  Well, if the wage and hour investigators were handling traffic violations, you might even expect jail time.

In recent months, we have seen a tremendous increase in claims involving wage and hour violations.  When wage and hour investigators conduct an audit, they can be extremely particular.  Well meaning employers have been tripped up by slight technical violations.  One client was recently fined several hundred dollars for not having a poster. 

Here are some costly mistakes you can avoid:

Laws Changed, but Your Practices Didn’t:  As politicians and policies change, so do employment laws.  If you have not had your practices reviewed in over five years, they are possibly outdated.  Have your wage and hour practices professionally reviewed by labor and employment counsel. 

Applying the Same Practices to Employees in Different States:  State laws vary widely.  For example, while many states only require hourly employees get overtime after 40 hours in a week, California requires overtime after 8 hours in a day.  Whenever you open a plant or office in a new state, do not just carry over your existing practices to that new state.

Ignoring Industry-Specific Regulations: Many states have specific rules based on industry.  For example, Connecticut restaurant employees must generally receive minimum pay of two hours if they come to work and are sent home in less than two hours.  A similar rule applies to hotel workers in New York.    

Ignoring City Ordinances:  Many major cities impose additional requirements on employers.  San Francisco, for example, requires employers provide one hour of paid sick leave for every 30 hours worked up to a maximum of 72 hours.

Poor Recordkeeping: Wage and hour laws generally impose some form of recordkeeping requirement.  Not only must you know what records to keep, but you need to know where they must be kept and how long to keep them.  For example, while many states require time and payroll records to be kept for two to three years, New York requires they be kept for six years.

Forgetting to Check for Exemptions:  As with  filing your tax return, forgetting to look for an exemption can mean lost savings.  For example, although many states have a default rule that employees be paid weekly, often employers are allowed to file a request to pay less frequently (e.g. semi-monthly) which can save payroll processing costs.  Also, although many wage and hour laws require you to keep records at the worksite (which can be expensive when you have multiple locations), you can sometimes request permission to store records in a central location or store them on a centralized computer server.

At a time when employers are looking to save money and cut costs, keeping your pay practices current is key.  It takes a lot less time for attorneys to review your wage and hour compliance than to pore over audit reports and years of weekly time sheets and payroll records to defend a five- or six-digit penalty; a stitch in time can save nine.