I hope you read last week’s post with numbers 10 through 6 because we’re ready for the top 5 claims a large employment law firm says it defends against most often:
5. Misclassifying Workers – You either have workers classified as exempt (salaried) when they should be hourly or you have them classified as independent contractors when they should be employees. Exempt employees must pass both a salary test and a duties test. An independent contractor agreement is irrelevant; it will always come down to a control issue. If you didn’t completely hand off (sub-contract) the work to the contractor, you may be retaining too much control over the worker.
4. Paystubs (Wage Statements) – You don’t have the required information listed on every paystub. They must include all hourly rates in effect and hours worked for that pay period, gross wages, all deductions, dates of the pay period, the employee’s name and last 4 digits of the SSN or ID number, number of piece-rate units and rates (if applicable), and the name and address of legal entity of the employer.
3. Reimbursements – You aren’t reimbursing the employee for business-related expenses. This might include personal cell phone use, internet use at home offices, hand tools (unless the employee is earning double the minimum wage), and use of a personal vehicle.
2. Arbitration Agreements – You don’t understand arbitration agreements. There are mixed opinions on using these agreements. If you want to go on the defense, they can prevent class action lawsuits by requiring mandatory arbitration and the process moves faster, potentially resulting in lower attorney fees. If you prefer the offense, requiring arbitration may result in high fees to the arbitrator over time and the plaintiff’s attorney knows this and uses it to leverage a quick settlement.
1. Making Changes – You see a problem with your handbook, timecards, and written policies and rush to make a change. This is noticeable to employees and makes them realize you may have been out of compliance before the change. It’s a red flag. While you do want to make changes as soon as possible, do it consistently. Review your policies and practices for compliance annually or semi-annually and make all changes at that time. If it’s done regularly, you’re less likely to grab their interest in why you made the change because they get used to continual updates and changes.
Time to confess to your HR Consultant… and let us help you clean up any of these targeted areas!
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