As the number of labor law violations and lawsuits continues to rise, employers must be more vigilant in properly managing employees or fall victim to the added costs of penalties and back wages. Reviewing HR policies and having employment practices liability insurance are important protections for any business.
Be Clear About Responsibilities
The key to properly classifying is to truly know what your employees do. It is crucial to understand their actual duties each day and designating them as exempt vs. non-exempt accordingly.
The law presumes employees are entitled to overtime; the burden is on the employer to prove otherwise. Having clear, accurate job descriptions on file is needed, so employers can support an employee’s exempt status. Most employees are likely to be considered non-exempt and therefore eligible for overtime pay.
It is beneficial to have employees confirm their job descriptions. If they don’t have a description, ask them to track their duties for a week and develop one. In that process, measure how they really spend their time, classifying each employee appropriately.
Accurate, Detailed Records
Keep records on name, address, gender, workweek, hourly rate, daily and weekly hours worked, daily or hourly earnings, overtime pay, and extraordinary additions or deductions from pay for three years for all hourly employees.
Making payroll can be challenging due to payroll taxes, withholdings, and Social Security issues. What NOT to do:
- Hold back on overtime pay to “make it up” on the next check.
- Pay contractors but not employees.
- Delay on your payroll taxes.
- Average employee hours over a two-week pay period. You cannot consider a 50-hour week plus a 30-hour week as 80 hours of straight time. Each work week stands alone in the eyes of the law.
- Use comp time to pay for overtime.
Better Attention to Employee Classification
Mis-classifying is costly and greatly damaging your business reputation. If you can tell a worker where to be, what to do and when to do it, that worker is probably your employee—not a contractor. Consider factors such as:
- Does the company have the right to control what the worker does and how the worker does his or her job?
- Are the business aspects of the worker’s job controlled by the payer? (This includes things like how the worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
- Are there written contracts or employee-type benefits (i.e. pension plan, insurance, vacation pay, etc.)?
- Will the relationship continue, and is the work performed a key aspect of the business?
Employers must understand that when there’s an opportunity to be fair, do it! What’s good for employees will ultimately be good for the company.
About World Wide Specialty Programs
For the last 50 years, World Wide Specialty Programs has dedicated itself to providing the optimal products and solutions for the staffing industry. As the only insurance firm to be an ASA commercial liability partner, we are committed to that partnership and committed to using our knowledge of the industry to provide staffing firms with the best possible coverage. For more information about Staffing Professional Liability Insurance or any other coverage, we have available to protect your staffing business, give us a call at (877) 256-0468 to speak with one of our representatives.