Board Converting News, May 17, 2021

Avoiding Penalties (CONT’D FROM PAGE 20)

off the following week as compensation. This violates the law requiring overtime for any labor of over 40 hours in any single week. • Paycheck deductions: A business deducts employ- ees’ wages for such things as uniform costs or shrink- age. Such deductions can’t be made if the individual’s compensation would fall below the minimum wage or would reduce their overtime pay. Many state laws also restrict such deductions. Staying Current If payroll has become more complicated in recent years, employers are expected to encounter even greater chal- lenges as regulators at the federal, state and local levels retool wage and hour regulations to reflect a greater sen- sitivity to employee rights. Businesses must skillfully nav- igate this shifting terrain to avoid errors that spark costly financial penalties. “Employers are responsible for making sure payroll is done correctly,” says Lambert. “They must keep up to date with changing laws.” Flying without an adequate legal radar can result in a crash landing. “Many employers don’t understand wage and hour law and make things up as they go along,” says McKenzie. “They think everything will be okay, but sooner or later they get caught.” Award-winning journalist Phillip M. Perry has been pub- lished in the fields of business management, workplace psychology and employment law. His byline has appeared more than 3,000 times. Reach him at phil@pmperry.com.

istration will make it much more difficult to classify some- one as an independent contractor,” says Witte. “Things will probably head the way of California which has a very restrictive test.” In early May the DOL withdrew a regula- tion that had been introduced by the prior administration to which would have made it easier to classify someone as an independent contractor. Further moves are expected. Until the new regulations are firmed up, attorneys advise employers to play it safe. “I always recommend that employers make sure indepen- dent contractors are operating their own businesses and are in positions to make profits or losses based on their own actions,” says McKenzie. “They should also submit invoices for work done—and their payments should go through the business’s accounts payable department rath- er than the payroll account.” Common Pitfalls Employers can be penalized for errors in these other scenarios: • Stand-by time: Employees arrive at a workplace in response to a manager’s directive, only to be told to stand by because they are not needed for a while. The manager incorrectly fails to record their waiting time as compensable hours. • Substitute hours: Instead of paying time-and-a-half to an individual due overtime, the employer grants a day

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May 17, 2021

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