5 Reasons Small Business Employers Get Sued
Larger business may face a higher risk from employer liability issues, but because small businesses don’t have deep pockets and legal teams, they absorb a proportionally higher risk potential. Small businesses simply need to work harder to prevent legal issues related to employees. It’s easier than you think to stay out of court. With a little knowledge and preparation, you can bulletproof your company against employee Labor Board complaints and lawsuits.
Here are the top 5 reasons small business wind up in court…
Meal and Rest Breaks
Meal and rest break violations are by far the most common complaint and can stem from employees shorting themselves for lunch, or the employer interrupting an employee’s meal break. Same goes with rest breaks, but they are harder to prove, and disprove. Complicating the meal break issue is sloppy timekeeping and lack of solid policies outlining the requirement for breaks during the day.
Easy Fix
Implement electronic timekeeping and ensure all employees and managers understand that uninterrupted 30-minute meal breaks are required for the typical 8-hour day as are two 10-minute paid rest breaks. Alerts and restrictions can be set up in electronic timekeeping to prevent short or missed meal breaks.
Final Check Late Payment Penalties
Employees that quit must receive their final check within 72 hours of resignation, and immediately if terminated involuntarily. Weekends count! Confusion arises if the employee is not present to receive or won’t pick up their final check. Regardless of the terminated employee’s failure to pick up their check, it’s up to the employer to ensure that check is delivered on time.
Easy Fix
Record all communications with the employee and use certified mail or overnight deliver with a signature, or direct deposit with employee’s written approval. Just make sure you have a record that you made every attempt to deliver their final check.
Working off the Clock
Working off the clock issues can result from asking hourly employees to answer emails or phone calls during off duty hours. This could be something as simple as delivering mail to the Post Office on their way home or staying after regular hours without clocking in to avoid overtime. In some situations, employees have intentionally worked off the clock to set up a lawsuit or settlement demand. There is no minimum time worked before an employee should be paid. It can be as little as one minute.
Easy Fix
Employees should be clearly clocked in when working. If they work at home occasionally, make sure they are clocked in (remote timekeeping is possible) and that they are paid overtime if applicable. Be sure to consistently communicate the clear policy that employees are not to work off the clock in any curcumstance.
Unpaid Overtime
Unpaid overtime should never happen, even it was not approved prior to working the hours. If employees work unapproved overtime, you must pay them for the time, but then handle the issue through a disciplinary process or counseling. Employees cannot waive their right to overtime and employers may not offer anything else in lieu of overtime pay.
Easy Fix
Make sure you have solid policies regarding overtime work and track all hours worked using an electronic timekeeping system. Know the rules regarding regular hours, overtime hours (over 8 day/40 week), and double time (over 12 in a day). Use electronic timekeeping to accurately record regular and overtime hours worked.
Improperly Classified as Exempt
Exempt employees must fit into to 3-4 very specific job descriptions and pay levels. They might be a Manager (manages 2 or more and earns salary equal to double minimum wage), Outside Sales (works outside sales more than 50% of the time), or one of the specialty categories in the professional, educational legal professions. Claims associated with misclassification usually stem from unpaid overtime hours.
Easy Fix
Know the rules surrounding exempt status and make sure your employees are classified as hourly non-exempt unless they clearly fit into one of the exempt descriptions. If you are not sure, always err on the side of caution and classify the employee as hourly.
Conclusion
Sure, these are simple wage and hour claims, but they are the primary reasons employers wind up in front of a labor board court or plaintiff attorney.
Know this, labor “shark” attorneys are looking for quick settlements and will include all the above in any formal complaint to scare you into settling quick. If you have all your processes and policies in proper order, the chances of you making that attorney skulk back under the rock the came from, are very high.
Contact Infinium HR today for a 30 minute review of your HR practices so you can sleep better at night, and keep those shark attorneys from biting off a piece of your business.