Tips for Getting Labor Laws Right, Avoiding Back-Pay Penalties
The Labor Department is again stepping up its crackdown on the misclassification of workers.
According to the Wall Street Journal, the Labor Department is signing agreements to share information with nine states and the Internal Revenue Service in order to identify businesses that mislabel workers as independent contractors or non-employees. It has also hired about 300 additional investigators to probe wage theft complaints in the effort.
In 2010, the government agency collected nearly $4 million in back wages on behalf of about 6,500 employees who had been misclassified, the Associated Press reported. The states that so far have agreed to work with the Labor Department include Connecticut, Hawaii, Maryland, Massachusetts, Minnesota, Missouri, Montana, Utah and Washington, while New York plans to sign up in the near future.
Elizabeth Milito, senior executive counsel at the National Federation of Independent Business, has some tips for getting these Labor laws -- especially overtime – right:
No. 1: Be proactive. Milito suggests small business owners conduct an audit on their own companies and look into their current business practices.
"Take a look at their job descriptions to make sure the employees and their classifications are correct," she said. "Don't assume they are not entitled to overtime because they are salaried." The Department of Labor has specific classifications for exempt and non-exempt workers, according to their job descriptions, she said.
No. 2: Prohibit off-the-clock work. Don't let your non-exempt employees work overtime, unless they have specific permission from their managers. If employees continue to work non-authorized overtime, Milito said you may have to take action.
"This doesn't mean you can deny them payment," she said. "You still have to pay them for all of their time worked. But, you can take disciplinary action against the employee, up to and including termination." Make sure you are communicating to your employees that these restrictions are for their benefit, Milito said, to ensure they are getting paid for all of their time worked.
No. 3: Investigate complaints promptly. If an employee alleges they are entitled to overtime, but you have classified them as exempt, be sure to launch an investigation.
"You need to take this seriously and contact a lawyer," Milito said. "Also run through the Department of Labor rules and review their job descriptions. And notify the employee of the results of the investigation."