by Deena B. Rosendahl, Esq.
Is your business prepared to defend a Wage and Hour complaint? It only takes one disgruntled employee and the Department of Labor will be at your doorstep to investigate. And guess what? The investigation won’t be limited to the complaining employee but rather, your entire pay practices for every employee will be audited. Do you have what you need to defend a wage and hour complaint?
Oftentimes, the biggest hurdle an employer has in defending a Wage and Hour complaint is not that they didn’t pay their employees all wages due, but rather, proving they did. Employers (not the employee) bears the burden of proof in a wage and hour complaint. In fact, employees need only make the allegation that wages are due to them. The burden of proof then immediately shifts to the employer to disprove the allegations. Below are five essential practices your business must implement now to ensure you are prepared:
- Never pay ‘off the books’…for anything! Business owners sometimes get in the habit of giving their employee some extra cash, literally out of their pockets, for staying late. This is especially true when working overtime is not a regular occurrence. But these payments (even if they exceed the required time and half) are untraceable. You will not be able to prove the payment was ever made. Every payment made to your employees must go through payroll.
- Track all hours worked for non-exempt employees. This includes meal breaks. Employees need only allege they weren’t provided a meal break and you could be missing an hour of pay per day. Consider your clerical/office staff. Employers whose administrative staff typically works a standard 40-hour workweek often fail to record their time. Many of these employees are even paid a straight salary rather than an hourly rate. Even if your method of pay is by salary, your administrative staff are likely non-exempt employees whose hours must be tracked. Staying late here and there (even if it’s only 10-20 minutes) adds up and your employees know it. If you haven’t tracked your employees’ hours, you won’t be able to disprove the number of hours they claim they worked and weren’t paid for.
- Have a job description for every position. You’ve determined a given position falls squarely within one of the exempt categories disqualifying the position form the overtime provisions of the FLSA. Great! This employee does not need to track their hours worked because they are not eligible for overtime. An employee may still allege their position is actually a non-exempt position and they worked overtime and weren’t paid for it. Not only do you not have time records to dispute overtime was worked, but you can’t defend the claim that the position was exempt without a job description. A well written job description may be all the proof you need to successfully defend a claim.
- Make sure your Employee Handbook policies are updated. Your employee handbook should contain policies which substantiate your pay practices, meal break requirements, time recording policies and others. Your employee handbook policy can be just the proof you need to defend your pay practices.
- Keep meticulous records. Track and record any employee absences, business closures, delayed openings, early closures, etc. This past winter our State has seen severe weather which caused many businesses to open late, close early or not open at all. Most employees at one time or another missed work. Some employees make blanket accusations about their hours of work such as “I worked 9 hours a day, five days a week, each and every week”. Being able to demonstrate the days and/or hours your business was closed or your employee failed to report to work is sufficient proof of hours your employee did not actually work.
The common thread among all these practices is documentation. Maintain your records! There is a two year statute of limitations on claims for unpaid wages. All other claims have a six year statute of limitation. For more information on how to protect your business, contact Deena B. Rosendahl at firstname.lastname@example.org or 201-947-8855 x212.