Avoiding Penalties (CONT’D FROM PAGE 16)
Off The Clock While misclassification is the most common error in wage and hour law, employers can also be penalized for allowing work time to go unrecorded. “Employees often fail to report off-the-clock hours,” says Witte. “Maybe they work through their lunch hour, or they come in early or stay late and don’t record it because they’re afraid of getting into trouble with their boss for working overtime. This is an area that the DOL continually receives complaints about.” While one might suspect that some misguided employ- ers overlook or even encourage off the clock labor, the fact is that workers can also be to blame, says Vicki Lam- bert, director of ThePayrollAdvisor.com . “Sometimes em- ployees will get enthusiastic and think, ‘Well, I’ll just do this job off the clock real quick, and then my boss will be really happy.’ And they end up getting the employer in trouble.” Other times, employers will allow record-keeping to fall through the cracks. “Problems can arise when an hourly recording system is not sufficiently detailed, or not con- temporaneous,” says Heerde. “Later, when an issue arises, the employer has to track down evidence of work hours by sorting through old emails and other records to prove an employee was paid correctly.” The record-keeping challenge has increased as more people work from home. “One of the most common mis- takes is failing to correctly track remote workers’ time,” says Lambert. “Sometimes people will work off the clock
Up for special attention, say workplace observers, is the administrative exemption. “Many times, employees do not really qualify because they do not have sufficient authority or enough qualifiable duties,” says Witte. “This problem has been on the DOL radar for some time. Em- ployees have filed complaints, and there have been class action lawsuits.” Misclassifications can be costly for employers, espe- cially when an exempt individual’s salary has steadily in- creased over time. Should a DOL inspector issue a viola- tion the employee’s elevated salary is first broken down into an hourly rate, which is then utilized as the basis for calculating past overtime and penalties. “Sometimes an employer will react to a steadily rising paycheck by saying something like, ‘This person has been starting to work too much overtime—let’s just make them salaried,’” says Bob McKenzie, President of McKenzieHR ( mckenziehr.com ). “That’s not allowable unless the individual really qualifies for exemption.” The lesson is clear: Employers should assume non-ex- emption when classification is ambiguous. “The law is deferential to workers in wage and hour actions,” says Heerde. “The consequences can be costly for an employ- er who does not have sufficient records to refute an em- ployee’s wage and hour claims before an administrative agency or court.”
CONTINUED ON PAGE 20
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May 17, 2021
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