American employers are subject to numerous federal, state and local laws, imposing various requirements, including wage and hour and anti-discrimination laws. Unfortunately, many employers – particularly small businesses – are unaware of their legal obligations, and often violate various worker protection laws, resulting in expensive lawsuits, civil settlements and fines. Here are some common, costly mistakes employers make, all of which are easily avoidable with proper guidance and advice:
Misclassifying Nonexempt Workers as Exempt
Unless a special rule applies, all workers in California must record hours worked, are entitled to overtime pay and meal and rest breaks. Some employees – typically executive, managerial or professional employees – are “exempt” from overtime and meal and rest break rules, and receive a flat salary. However, this exemption only applies in very specific situations outlined by law. The employer and the employee cannot agree to avoid these rules. The law narrowly defines which employees can be treated as exempt. Unfortunately, many employers improperly classify workers as “exempt” simply because the employees are paid a salary, in situations where these employees legally are entitled to overtime pay and meal and rest breaks.
Misclassifying Employees as Independent Contractors
Determining whether a worker is an employee or independent contractor depends on a multitude of factors, but primarily on the level of independence and control the worker has in completing his or her tasks; the less control exercised by the worker, the more likely he or she will be classified as an employee. Factors to consider include how the worker is compensated, whether the worker faces any risk of loss in the transaction, whether the company pays the worker’s business expenses, whether the company can withhold payment for non-performance, and whether your industry as a whole considers workers in similar positions as employees or independent contractors.
Failing to Train Supervisors Regarding Employment and Labor Laws
Employment laws prohibit employers from taking action against an employee for certain reasons, including discrimination on the basis of a protected characteristic such as race, religion, age, gender, sexual orientation and disability. Employees are also protected from retaliation for complaining about discrimination or illegal activity. It is vital that supervisors are trained to manage their employees in accordance with all applicable laws, properly investigate complaints, and not to retaliate against employees for voicing legally-protected concerns.
Failing to Use an Employee Handbook
An employee handbook informs employees about the employer’s values and policies, and facilitates compliance with employment and labor laws. A properly drafted, custom tailored and comprehensive employee handbook can serve as a strong shield for the employer against employee claims.
Failing to Properly Document Employee Job Performance
Proper documentation clearly establishes the employer’s expectations and where the employee failed to reach those expectations. Written job descriptions and employee evaluations serve as training tools, performance measures and critical evidence in the event you have to terminate an employee.
Failing to Accommodate Disabled Workers
The law not only prohibits employers from discriminating against those with disabilities, it also imposes a duty on employers to “reasonably accommodate” their disabled employees, so they can perform essential job functions. Accommodations may include assistive devices, a modified work schedule or a restructuring of job duties.
Failing to Comply with Wage Payment and Notification Requirements
California law requires employers to pay their employees in a certain manner, and provide employees with an itemized wage statement with each paycheck. Failure to comply with these detailed requirements can subject the company to penalties.
The above list highlights some of the more common – and costly – areas where employers make mistakes, but is by no means comprehensive. If you have questions about your compliance in regards to any of the foregoing employment laws, please do not hesitate to contact an employment attorney at Schneiders & Associates, L.L.P. for advice and legal guidance.