In the human resources and employment law trade journals that I regularly read, the headlines proclaim repeatedly that employers are paying their employees incorrectly and getting in legal hot water because of those mistakes. The penalties range from the expensive for any small business owner to the absurd for Wal-Mart.
At the lower end of the spectrum is the nearly $90,000 that a Houston landscaping company paid in February to settle an audit by the Department of Labor for misclassifying office staff and others as exempt from overtime and minimum wage laws. The company also got in trouble because they apparently weren’t paying workers for the time spent loading and unloading materials and tools at the start and end of each workday. These activities generated overtime hours for the workers, but they weren’t paid overtime. In addition, the DOL found recordkeeping problems.
At the high end of the scale, this month Wal-Mart agreed to pay as much as $86 million for a wage and hour class-action suit in California involving about 232,000 former and current employees who weren’t paid correctly for overtime and vacations. This is separate from a 2008 agreement that Wal-Mart made to settle 63 other wage-related suits for $640 million.
Whether you are a large or small employer, you must pay your employees correctly to avoid costly litigation by the Department of Labor, or worse, the employees and their attorneys looking for double damages and attorneys fees.
I have written other blog entries on paying overtime correctly (click here and here), keeping proper compensation records (click here), the new enforcement efforts by the DOL (click here) and the pitfalls of compensation mistakes (click here). I don’t want to sound like a broken record, but I constantly find companies who still don’t take wage and hour issues seriously and who haven’t conducted an audit to determine if they are paying their employees correctly (when in doubt, pay hourly and overtime). Please invest the time and effort to correct these issues now so that your company will not face costly overtime litigation.