NAVIGATION

Common Mistakes That Get Employers Sued

Common Mistakes That Get Employers Sued

There are practical strategies every employer needs to know and best practices to use that will minimize their chances of being sued. Here are a few things you might want to avoid:

MAKE EVERYBODY “EXEMPT”

The simple fact is, not every employee can be classified “exempt.”

State and federal laws provide that certain positions may be exempt from overtime requirements, meal and rest breaks, but merely paying employees a fixed salary isn’t enough. An exempt employee is normally someone who is a high-level executive, administrative or professional employee, and sometimes artists and outside sales staff.

Employers sometimes designate employees as “nonexempt salaried,” but that term is mutually exclusive and misleading, as that status does not exist. A non-exempt employee earns an hourly wage that must be paid for all hours worked in their pay period. A salaried employee is paid a fixed amount that does not depend on the hours worked.

Misclassifying employees as “exempt” can be costly. Increasingly, employees are suing employers for off-the-clock work by employees who are challenging the exempt status of their job. In such cases, the additional wages and penalties including back pay for overtime, penalties for failure to provide meal and rest breaks, and penalties for failure to pay all wages at termination can add up.

MAKING EVERYONE AN “INDEPENDENT CONTRACTOR”

Just because the employer – or perhaps the employee – wants to be considered an independent contractor doesn’t make it so. The primary determining factor is the degree of control: who determines the manner in which the work is performed, how it is performed, who supplies the tools and equipment, and where is the work performed?

Whether the work performed is a regular part of the employer’s business is also important. If a company makes a product and hires someone to help make that product, chances are the person is an employee, as opposed to someone who is hired for a one-off task, like painting the building.

Independent contractor status can come back on the employer if the contractor hasn’t been paying their taxes, owes a significant amount of money, has no assets, or can’t be found. The employer who didn’t make the required tax withholdings may now be on the hook for that money.

FAILING TO PROVIDE SUPERVISORS WITH TRAINING ABOUT HARASSMENT AND DISCRIMINATION

The best defense against a discrimination or harassment complaints is usually the front-line supervisors, because they are the eyes and ears of the organization. Training supervisors on topics such as sexual harassment, discrimination, disability, safety, and wage-and-hour laws can provide an additional layer of protection from lawsuits.

Employers with 50 or more employees are required by law to provide two hours of sexual harassment training for their supervisors every two years. Employers also have an affirmative duty to take reasonable steps to prevent and promptly correct harassing conduct, and training can be a vital component.

LETTING EMPLOYEES TAKE THEIR LUNCH AT A TIME OF THEIR CHOOSING

It might seem like you’re just trying to be nice, but giving employees too much flexibility about when to take their lunch and rest breaks can be hazardous to your wealth.

Employees must be provided an unpaid, off-duty meal period of at least 30 minutes if they are employed to work for a period of more than five hours. Importantly, the meal break must be provided no later than the end of the fifth hour of work. Failure to provide the meal break within that time frame can result in one additional hour of wages owed at the employee’s straight-time rate.

WITHHOLDING THE FINAL PAYCHECK OF AN EMPLOYEE WHO FAILS TO RETURN COMPANY PROPERTY

While it may seem reasonable to hold the final check of an employee who doesn’t return tools, laptops, cell phones and other company property, California law provides a hefty penalty is the deadline for giving the final paycheck isn’t met.

If an employee is terminated or quits with at least 72 hours’ notice – actual hours, not business hours – the employee’s final check must be ready on their last day of work and must include payment for all hours worked through the last day, including any overtime and accrued but unused vacation time.

IMPLEMENT A “USE-OR-LOSE” VACATION POLICY

“Use or lose” vacation policies are not permitted in the state of California. Accrued vacation time is considered a form of wages which cannot be taken away. Further, all accrued but unused vacation must be paid out at termination at the employee’s current rate of salary.

Employers can place a reasonable cap on the accrual of vacation time, after which no additional time can be accrued, but they may not take away what the employee has already accrued. While “reasonable” is open to interpretation, an employer who provides two weeks vacation a year may have a policy that caps the accrual at four weeks. An employee who has four weeks, or 20 work days, accrued and unused will not accrue additional time off until the employee takes vacation and uses some of the accrued leave.

For help with strengthening your business and understanding business mistakes to avoid in the New Year, contact the Economic Development Collaborative-Ventura County. Conveniently located in Camarillo, California, we’re here to help.

Source: California Chamber of Commerce


©2018 Economic Development Collaborative - Ventura County | All Rights Reserved.
Privacy Policy | Powered by: SMS