Litigation can cost a small business an incredible amount money, but it also takes away valuable time that could be spent growing the business. So here are some tips that will help you avoid a major source of business litigation which are employee lawsuits. Keep reading to learn how you can best avoid them.
1. Follow the rules for nonexempt employees. Employees who work more than 40 hours a week are entitled to overtime pay unless they are not qualified under the Fair Labor Standards Act which has strict criteria. Usually, most employees are nonexempt and you must pay them overtime if they work more than 40 hours per week. It’s also good to note that employees can’t waive their right to overtime pay.
2. Exempt employee paychecks must be paid in full. Though you’re not required to pay exempt employees overtime, you can’t subtract from their paychecks for things like tardiness or taking a long lunch. By doing so, you turn them into a nonexempt employee and must therefore pay overtime.
3. Don’t discriminate. As an employer, you’re not permitted to discriminate because of an employee’s race, age, gender, national origin, disability, religion or pregnancy. In some states, you’re also not allowed to discriminate on the basis of sexual orientation.
4. No working off the clock. Hourly employees must be paid for all the time they work, even if an employer has not asked them to do it.
5. Make reasonable rules. All workplaces require guidelines to govern behavior and manage expectations. However, be sure not to make any rules that could lead to discrimination lawsuit. Keep them limited to job performance standards.
6. Base pay on job requirements. The salaries you pay should be based on job market standards, not what a potential employee made in their previous job. Employees working the same job should be paid about the same with allowances for experience and performance.
To learn more about good legal employment practices, call us today at (209) 877-7457 to schedule your comprehensive LIFT (legal, insurance, financial and tax) Foundation Audit. If you mention this article and we still have room on our calendar this month, we will waive our normal fee.