Are you an employer that sometimes gets confused about how to properly pay your employees? Do you want to understand compensation rules to be in compliance? Today’s blog will give you some of the errors made when determining wages to avoid potential penalties.

The most frequently filed lawsuits in the workplace are related to the failure to correctly pay an employee. How do you ensure you compensate your employees correctly to protect yourself from legal issues? Here are the main issues to monitor to ensure you accurately pay your workers.

  • Misclassification: One of the easiest ways to open yourself up to lawsuit is to misclassify who is not subject to overtime. To be exempt, the employee must be paid a minimum salary and perform certain duties that fall under the categories of executive, administrative, professional, computer employees, highly compensated employees, and outside sales.
  • Salary Rules: The minimum salary required to be paid is $684 a week. For computer related occupations, they must be paid the minimum salary specified above or an hourly rate of $27.63. Outside sales does not have a minimum salary.
  • Duties Rules: For executive employees, they must have the primary duty as manager of the company or supervise a recognized department that has at least two full time employees and the ability to hire, fire, or promote. To qualify under the administrative duties test, their main responsibility must be office work or tasks that are non-manual related to the basic business operations of the firm. They must also be able to make decisions on matters of significance.
  • Independent Contractors: An independent contractor is considered a worker that is free of the control of the business hiring them. This worker must also provide a service that the company  itself does not normally engage in. 
  • Off-the-Clock Work: This most often occurs when an employee prepares for the workday before being clocked in or work that is finished after clocking out such as answering emails, reviewing paperwork, or cleaning the equipment. If this is the case, you need to remind employees to report that time to you or institute a policy that prohibits off the clock work.

It is important to create procedures to ensure you classify workers correctly and enforce policies that require employees to accurately report time worked. Creating policies to properly classify workers and ensure they do not perform any off-the-clock duties will protect you against unfair labor practices suits. 

If you have any questions or need a referral to a Human Resources representative to assist you with creating your policies, reach out to us for a referral. We can be reached at 310-534-5577 or contact@abandp.com

https://www.cpapracticeadvisor.com/payroll/article/21216593/paying-people-properly

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