10 Most Common Wage and Hour Violations
Most violations of the wage and hour laws that we see result from lack of knowledge of what the rules are. Below are the 10 most common violations that you should look out for as a business owner or an employee.
Incorrect Overtime Classifications
Many people assume that all employees paid on a salary basis are exempt from overtime. This is simply not the case. Under the federal Fair Labor Standards Act ("FLSA") and Massachusetts overtime law, only employees with certain kinds of job duties are exempt.
If you have salaried employees who work more than 40 hours a week, it is important to consult with an employment lawyer to make sure they are properly classified as exempt employees. Otherwise you may be at risk for an unpaid overtime claim.
Incorrect Calculation of Overtime Pay
Employers can still run afoul of the overtime laws even if they have properly classified their employees. One common mistake is when employees make a different hourly rate for different kinds of work.
For example, a home health provider may make one hourly rate for the tie they spend delivering care and a lower rate for travel time. If that employee works more than 40 hours, the overtime rate must be calculated as a blend of the two hourly rates.
Another common mistake is averaging the hours worked over the pay period instead of a single week. If an employee works more than 40 hours in the first week, they must be paid overtime even if they only worked 20 hours the second week.
Travel Time Violations
It can be hard to know what time is paid time when employees move from job site to job site during the day. The basic rule for travel time is they they are not paid for travel to and from work, but should be paid for travel between job sites. You can pay different rates for travel time as long as it is at least minimum wage.
If you have workers who travel during the day, it is especially important that you have them keep good time records of all paid time.
Deductions from Wages
Except in very limited circumstances, employers should not deduct from employee paychecks. Tax withholding and withholding for benefits like health and dental insurance are permitted. You can also comply with a lawful garnishment order.
You should be very careful about any other deductions. This specifically includes deductions for costs that might be considered the employer's overhead. Even if an employee has agreed to deductions to pay back a loan, for example, it is easy to get this wrong.
Earned Sick Time Violations
Any employer with 11 or more workers has to provide and pay for a certain amount of earned sick time under Massachusetts law. This is a relatively new law, and many businesses are still not fully up to speed on its requirements.
Even employers with fewer than 11 employees have to allow sick time even if they do not have to pay for it. This means you cannot terminate or discipline an employee for using sick time within the accrued amount.
You should also know that "sick time" under the law now includes time off for routine medical appointments, to take a family member to medical appointments, or to care for a sick family member.
Failure to Pay Employees at Termination
When an employee is terminated, they are supposed to be paid all of their earned wages and any unused vacation the day of termination. Failing to do this can be an expensive and entirely unnecessary mistake for employers. If the employee is not properly paid and brings a claim under the wage and hour laws, you could be liable for three times their damages and their attorneys' fees.
Failure to Pay Earned Commissions
Commission based employees have the same protection with respect to their commissions as any other employee has with wages. Your policy can dictate wen commissions are earned, but you have to be careful to pay out within the Wage Act time limits once they are earned.
This is especially true at termination. Employees are entitled to all earned wages the day of termination, which includes earned commissions.
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Illegal Tip Pooling Policies
There are specific limits to when a tipped employee can be required to share tips in Massachusetts. A tip pooling policy can only require tip sharing with other service staff. Tipped employees cannot be made to share their tips with kitchen staff, management, or the owners.
This is an area where many startup companies get into trouble. Before revenues start coming in, you may have key employees agree to defer their compensation. You need to know that even if they agree to this it could be a Wage Act violation. This has led to many expensive and uncomfortable legal battles when things did not go as planned with the startup.
Employees as Independent Contractors
Paying employees as independent contractors may also be a violation of Massachusetts wage and hour laws. The requirements for being an independent contractor are very strict, and many employers simply do not meet the test. You should not be reassured by the fact that others in your industry are using independent contractors. They may only be one step away from a lawsuit themselves.
How We Can Help
We can help you address any labor law, wage and hour or overtime problem. You can use the button below to schedule a call back from a member of our team, give us a call at 781-784-2322, or fill out our web form to let us know a little more about your situation.