You may be violating an employment law just by trying to be nice to your employees, says a new report.
The California Chamber of Commerce has produced a white paper cataloging the top 10 mistakes most likely to get a company sued. While a few of the laws cited apply specifically to California, some of them are federal and may apply in your state.
The report observes: "Employers may unintentionally violate employment laws simply by trying to provide some flexibility for an employee, save money for the company or just be nice."
Here are the top 10 mistakes:
1. Classifying all employees as exempt, whether they are or not
It may be easier to pay someone a salary rather than figure out overtime, meal breaks, rest breaks and the like. The time (and money) you save on bookkeeping is a false economy, however, since you could pay big time in penalties or a lawsuit. (See the report for more specifics.)
2. Letting employees work through lunch so they can take off early
A non-exempt employee is required to be given a 30-minute meal break, plus a 10-minute break for every four hours worked. If you deny one or the other, you owe the person an extra hour's wages; if you deny both in the same day, you owe an additional two hours. The wages must be paid during the pay period in which it's missed. The employee cannot waive his or her right to the breaks.
3. Making everyone an "independent contractor" because having employees is too much trouble
The report notes that contractors are happy until one of the following comes up: workers' compensation, unemployment insurance, state disability insurance or paid family leave benefits. Avoid these legal spiderwebs by determining who is and who isn't a contractor.
4. Not providing training about harassment and discrimination to managers and supervisors
Don't assume your employees won't need the information. Avoid lawsuits by providing the basic sexual harassment training required by law.
5. Letting employees decide which, and how many, hours they want to work each day
Most employees are restricted by law regarding the number of hours they can work without needing to be paid overtime. If you are allowing longer workdays for four-day workweeks, there are rules that need to be followed. Check with your state laws for specifics.
6. Terminating any employee who takes a leave of absence
From the report: "Employees have legal protection when they are away from work for various reasons, including workers' compensation, disability, pregnancy, family and medical leave, military leave, jury duty and many more."
7. Withholding an employee's final check if they fail to return company property
You may think you can withhold money while you wait for an employee to return a computer or a cellphone, but think again. Some states have laws that require you hand over the check the minute the words "you're fired" come out of your mouth. And if an employee quits and gives more than 72 hours notice, the check must be ready on his or her last day. The penalties start accruing from the moment the check is late-one day of wages for every calendar day of delay.
8. Providing loans to employees and deducting the money from their paycheck each pay period
This seems perfectly fine, doesn't it? Except most state labor codes permit only paycheck deductions authorized by law and those authorized by the employee for health insurance or other benefits. No other deductions are permitted. If you're making a loan, you should have the employee sign a promissory note and a lawyer review it.
9. Using noncompete agreements to protect confidential information
Many employers force employees to sign these agreements to protect business secrets, customer lists, and pricing information and to prevent employees from working for the competition. Essentially, you can't force your employee to stay with you, nor can you prevent him or her from making a living.
10. Implementing a "use it or lose it" vacation policy and avoid paying out all the money at termination
Accrued vacation is a form of wages and cannot be denied. You can stop an employee from accruing vacation beyond a "reasonable" amount, but you cannot take away what he or she has already earned. What is considered a "reasonable" cap? Generally 1.5 to two times the annual accrual, says the report.
Have you suffered any consequences from doing any of these things?
--
Courtney Rubin is a business writer and contributing editor to Inc. magazine.
Related Stories
| Jan 25, 2011
Top 10 rules of green project finance
Since the bottom fell out of the economy, finding investors and financial institutions willing to fund building projects—sustainable or otherwise—has been close to impossible. Real estate finance prognosticators, however, indicate that 2011 will be a year to buy back into the real estate market.
| Jan 25, 2011
Chicago invented the skyscraper; can it pioneer sustainable-energy strategies as well?
Chicago’s skyline has always been a source of pride. And while few new buildings are currently going up, building owners have developed a plan to capitalize on the latest advances: Smart-grid technologies that will convert the city’s iconic skyline into what backers call a “virtual green generator” by retrofitting high-rise buildings and the existing electrical grid to a new hyper-connected intelligent-communications backbone.
| Jan 25, 2011
AIA reports: Hotels, retail to lead U.S. construction recovery
U.S. nonresidential construction activity will decline this year but recover in 2012, led by hotel and retail sectors, according to a twice-yearly forecast by the American Institute of Architects. Overall nonresidential construction spending is expected to fall by 2% this year before rising by 5% in 2012, adjusted for inflation. The projected decline marks a deteriorating outlook compared to the prior survey in July 2010, when a 2011 recovery was expected.
| Jan 25, 2011
Jester Jones Schifer Architects, Ltd. Joins GPD Group
GPD Group is excited to announce that Jester Jones Schifer Architects, a Marion-based architectural firm, has joined our firm, now enabling GPD Group to provide architectural services to the Central-Ohio market.
| Jan 21, 2011
Combination credit union and USO center earns LEED Silver
After the Army announced plans to expand Fort Bliss, in Texas, by up to 30,000 troops, FirstLight Federal Credit Union contracted NewGround (as CM) to build a new 16,000-sf facility, allocating 6,000 sf for a USO center with an Internet café, gaming stations, and theater.
| Jan 21, 2011
Manufacturing plant transformed into LEED Platinum Clif Bar headquarters
Clif Bar & Co.’s new 115,000-sf headquarters in Emeryville, Calif., is one of the first buildings in the state to meet the 2008 California Building Energy Efficiency Standards. The structure has the largest smart solar array in North America, which will provide nearly all of its electrical energy needs.
| Jan 21, 2011
Primate research facility at Duke improves life for lemurs
Dozens of lemurs have new homes in two new facilities at the Duke Lemur Center in Raleigh, N.C. The Releasable Building connects to a 69-acre fenced forest for free-ranging lemurs, while the Semi-Releasable Building is for lemurs with limited-range privileges.
| Jan 21, 2011
Harlem facility combines social services with retail, office space
Harlem is one of the first neighborhoods in New York City to combine retail with assisted living. The six-story, 50,000-sf building provides assisted living for residents with disabilities and a nonprofit group offering services to minority groups, plus retail and office space.
| Jan 21, 2011
Nothing dinky about these residences for Golden Gophers
The Sydney Hall Student Apartments combines 125 student residences with 15,000 sf of retail space in the University of Minnesota’s historic Dinkytown neighborhood, in Minneapolis.
| Jan 21, 2011
Revamped hotel-turned-condominium building holds on to historic style
The historic 89,000-sf Hotel Stowell in Los Angeles was reincarnated as the El Dorado, a 65-unit loft condominium building with retail and restaurant space. Rockefeller Partners Architects, El Segundo, Calif., aimed to preserve the building’s Gothic-Art Nouveau combination style while updating it for modern living.