Wage theft occurs when an employer does not pay all the wages to which an employee is entitled. Wage theft cases can be very costly and clients could come after the staffing agency which is why employment practices liability insurance is so important.
Courts and government agencies do not accept mistakes or inadvertence as excuses for wage theft. Businesses can help prevent wage theft claims by maintaining accurate records of hours worked, types of income made and employee classification. Employers must stay up to date on industry laws and regulations.
To be exempt from overtime rules, an employee must belong to an exempt category. Courts do not look to job titles but to the actual role an employee plays.
Take note of these exemptions:
Employees must manage or direct other employees and have the authority to hire and fire.
Employees must create or perform imaginative and original work.
Outside sales exemption
Employees customarily works outside the office.
Exempt employees must truly have authority to exercise independent, professional judgment in order to be exempt from overtime rules. A court is not likely to call someone an independent contractor if they are subject to assigned or controlled routes or tasks, use company equipment, and do not decide their own hours.
Wage Classification & Timely Pay
Employers may not consider an employee’s tips part of their hourly income or vice versa. Commissions and hourly pay can not be mixed and comp time or bonuses can not be used to pay overtime.
Employees must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay.
The rules for how often an employee must be paid vary by state. In many states, employees must be paid semi-monthly, or twice a month.
Pay for All Compensable Time
Employers must be careful not to ask employees to put in extra work that they are not getting compensated for. For instance, asking them to clock out when a shop closes but are still asked to clean up. Or even if they must answer calls during a break, a court may rule that the employee is not on break and must be paid accordingly.
Never Withhold due Payment
Employers must never deduct costs such as lost or damaged equipment or money lost from the operation from a paycheck. It’s also illegal to delay payment of wages due for any reason.
Employers must ensure that records reflect that legally mandated meals and rest breaks are taken.
To avoid wage theft, complete, accurate, and timely record-keeping is a must. Secure employment practices liability insurance to protect your agency.