3 ways businesses may accidentally violate wage and hour laws

Any company that has employees has certain legal obligations to fulfill. There are safety standards that apply to a variety of industries, from food service to construction. There are also rules regarding the conduct of employees that the company will need to enforce, such as laws against discrimination and harassment.

Additionally, businesses need to comply with wage and hour laws when paying their workers. Occasionally, organizations unintentionally run afoul of wage and hour laws through what a company believes are reasonable business practices. These organizations may end up facing either civil litigation initiated by employees or enforcement efforts from state or federal agencies. The following are some of the most common unintentional wage and hour violations that businesses make.

Misunderstanding who is and who isn’t exempt from overtime rules

Many entrepreneurs and executives have an oversimplified idea of what overtime laws require. They may believe that only hourly workers qualify for overtime pay, for example. The truth is that daily workers also need to receive overtime pay, and so do workers who receive a low salary that does not meet the federal minimum standard.

Requiring unpaid work

Many restaurants and retail establishments have relatively small profit margins. Ensuring that the company stays in the black may require very careful control of the staffing expenses at the company. Businesses sometimes train workers to do certain tasks before they begin a shift or after they clock out at the end of a shift. Consistently requiring that workers do job tasks without compensation could lead to wage claims and even overtime claims in some scenarios.

Misclassifying workers

One of the ways that a business might seek to minimize the costs associated with employing new workers is to classify those employees as independent contractors. However, if a company treats the worker as an employee, those workers or state agencies might eventually take legal action. Claims of misclassification can lead to wage claims and also tax violations, as employers have an obligation to contribute to payroll taxes based on the labor provided by their workers. There could also be challenges related to on-the-job injuries and workers’ compensation coverage.

Any of these violations could lead to litigation that could drain a company’s coffers and damage its reputation. Avoiding the most common wage and hour violations beyond obvious attempts at underpaying workers can help protect an organization’s reputation and profit margins in addition to workers’ rights.