Wage and hour laws have a number of aspects, including counting overtime, days taken for leaves, sick leaves and other wage issues, and overlooking any of these at the workplace can result in a number of costly lawsuits that can oftentimes be harsh and unforgiving. With little to no gray areas in the regulation of wages and hours worked, many employers end up paying massive legal fees along with other damages to keep their business reputation as intact as possible.
The following are some 3 of the most common wage hour violations that an employer can commit unknowingly or otherwise:
1. Calculating overtime incorrectly
As a manager, you must know that you need pay non-exempt employees at least $7.25 for each hour they work. Some employers can miscalculate the overtime premium when they forget that overtime wages cannot be less than one as well as one half times the regular wages after 40 hours of work in a single workweek.
According to the law, ‘regular pay’ refers to the hourly wage rate which has to be calculated on a weekly basis. In order to ascertain an employee’s regular wage rate (who is a salaried employee who is not paid on an hourly basis), use the following formula:
(wages for a single workweek )/(number of hours worked in a workweek)
These rates are not based on the take-home pay, but they do include stipends paid, shift differential, bonuses, incentives, commissions etc. In other words, any compensation that is owed to an employee for extra work even if it is not part of the regular rate constitutes the legal regular rate owed. If you have part timers on the payroll, you have to calculate this rate in order to determine overtime.
2. Inaccurate record keeping
One of the most common reasons for wage miscalculations is inaccurate or unreliable record keeping. Surprisingly, a large number of employers have almost no means to calculate this rate accurately or record the hours worked by non-exempt employees. Some even depend on an honor system or presume that their staff should adopt a set schedule. This approach might work in a white collar company, but it typically backfires in hospitality businesses or the service industry which depend on part-time besides full-time workers.
3. Inaccurate pay at termination
Many employers are unaware that when they terminate or fire employees, they are entitled to the wages they are owed in full. This includes accrued annuals and vacation pay (if any) and staff members who resign have to be paid on the next payday. The process can be made easier if the employer has access to or maintains timekeeping software that can provide a list of all of the hours an employee worked for him.
To ensure you do not violate any of the abovementioned wage hour violations download an automatic payroll system such as Zip Clocks. Besides helping you save money by the hour, it will notify you if you are in danger of committing labor law violations by preventing you from scheduling too many hours for your employees and by notifying you if your staff is about to violate any as well.