To Minimize Strife Over Wage Laws, Watch the Clock

(Originally published in The Business Journal)

As the clock draws near to quitting time in many industries and offices around the Valley, employees are watching the clock for the end of what is often a long hard work day. 

Occasionally, however, their employers are not paying as much attention to the clock as they should to comply with Wage and Hour regulations. Inattention to detail regarding hours worked can add up to cause big problems for an employer.

Usually the problem arises when long established and accepted practices are suddenly challenged by an employee who believes they have been wronged by the employer in some way.  Years of allowing employees to come in early or stay late without an accurate accounting and payment for their time add up to big wages due and penalties accumulated if a Wage and Hour Investigation ensues.

Here are seven steps you can take now to avoid a problem later:

1. Make sure you have each of your employees properly categorized as exempt or non-exempt from minimum wage and overtime payments.  You cannot simply assume that because an employee receives a salary he or she is exempt from overtime! 

2. Review the initial determinations of the exempt and non-exempt status periodically.  As you may know, the requirements for the various exempt categories have changed over the years.  Positions that were previously exempt may no longer be and those that weren’t exempt may now qualify.

That determination should also be re-evaluated if job responsibilities change significantly.  For example, a company restructuring or attrition may result in a person in a previously exempt position no longer supervising the number of employees required to qualify for the exemption.  Salary increases or decreases may make a difference as well. 

3. Make sure your employees are accurately recording their time.  A time clock is clearly not required, but if an investigation ensues, it is the responsibility of the employer, not the employee, to prove the hours worked. Ask yourself in your situation: “How would I prove the hours worked by my employee”?

4. Don’t allow people to “volunteer” their time.  This may sound counter-intuitive but extra hours worked without pay add up.  The employee who generously and willingly offers to stay a little late without pay inevitably ends up being the one who later determines they are due compensation. 

More importantly, the State or Federal Government may make that determination irregardless of the employee’s feelings or thoughts.

5. Be careful of “rounding up” or “rounding down” time.  The bottom line is that it must be a fair accounting of the time worked.  The standard is one of reasonableness.  Five minute rounding increments have been allowed.  Although 15 minute increments are frequently used, they must be consistently applied.

6. ALWAYS pay the amount due for the hours worked. Particularly in smaller companies with a history of helping their workers, this can come into play with older workers or workers on government programs of some kind that may have benefits reduced if they exceed a minimum amount of pay.  Although an employee may ask you to ignore time, resist their request.

7. Consistently apply policies regarding the keeping of time.  If employees are to sign in or out, make sure they all do it.  If supervisors are to check on start and finish times, make sure they all do it. 

If you use a time clock, make sure the employees are clocking in and out at the appropriate time.  Accurate records are important when issues arise.

Wage and hour investigations are time-consuming and costly.  Effective steps now by management can help avoid problems down the road.

Christian can be reached at (330) 337-6586.