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CAN YOUR BUSINESS AFFORD TO PAY FOR WAGE AND HOUR VIOLATIONS?

A recent Newsday article reported that a Smithtown body shop had to pay $400,000 to settle federal charges that it failed to properly pay employees overtime. That amount includes $185,000 in back wages, $185,000 in damages and $30,000 in civil penalties. Violations of wage and hour laws carry significant liability (and notoriety) that few businesses can afford. That’s why it is crucial for all employers to understand and comply with federal and state wage laws. Common danger areas for employers include:

  1. Overtime. Non-exempt employees who work over 40 hours in any given work week are entitled to “time and a half” or 1.5 times their regular hourly wage. Whether or not an employee is “exempt” is determined by multiple factors including a “duties” test as well as a salary threshold.

2.  Minimum Wage. Employers must pay each employee minimum wage for each hour worked. Effective January 1, 2018, New York State minimum wage applies as follows:

  • In New York City, employers with 11 or more employees must pay their employees a minimum of $13.00 per hour.  New York City employers with 10 or less employees must pay a minimum wage of $12.00 per hour.
  • On Long Island and in Westchester Counties, minimum wage is $11.00 per hour.
  • Everywhere else in New York State, minimum wage is $10.40 per hour.
  • These amounts are scheduled to increase every year for the next few years.
  1. Time Records/Payroll Statements. In some instances, the failure to maintain proper records and to issue appropriate payroll is as damaging to the employer as the actual failure to pay wages. All non-exempt employees are to be paid hourly. The employer must track employee time through some timekeeping device, and the employee’s wage statement must reflect his/her hourly rate and the hours that he/she worked on a weekly basis.

4.  Cash Payments. Cash payments in and of themselves are not unlawful. Tax issues aside, the failure to properly document the cash payments is where the inherent risk lies for the employer. Absent an employee acknowledged document indicating the cash payments, there is no way for an employer in a contested litigation to be able to prove the wages were paid.

5.  Misclassifying employees as independent contractors. Liability for misclassification may arise under various federal and state labor, employment and tax laws. In New York City, additional laws apply to freelancers.

Don’t be the subject of the next story in Newsday. Contact us about reviewing your payroll practices to help ensure you are in compliance.

For more information on how to protect your business, read our related posts:

6 Employment Law Mistakes That Can Cost Your Business

Employment Law Changes Employers Need to Know For 2018

NYS’ New Anti-Sexual Harassment Law