Pay reductions, exempt v. non-exempt employees, independent contractors — all those issues have created a legal minefield for employers. And more people are waiting for you to take one wrong step.
Things aren’t looking up for employers these days:
- The Department of Labor’s Wage and Hour Division just got a 28% budget boost for enforcement efforts
- The Office of Federal Contract Compliance Programs has increased its staff by nearly 26%, and
- The average amount of back wages collected in court continues to increase every year.
Two areas where employers are getting tripped up the most: independent contractors and pay deductions that jeopardize employees’ exempt status.
Independent contractors
Employee misclassification is on the rise — and independent contractors are on the feds’ must watch list.
The following scenarios could tip federal investigators off that workers are misclassified. Watch out when contractors:
- perform the same type of duties as employees
- are asked to do work that other companies in the same industry use employees for
- perform tasks that are essential to the production of the business
- are banned from selecting their own personnel and must personally provide services, and
- aren’t allowed to perform similar services for other organizations.
Pay deductions
If employers aren’t careful about when they make deductions from exempt workers’ pay they can easily defeat their exemptions.
Here are five things that allow employers to make deductions from exempt employees’ pay, courtesy of attorney Christine Walters of FiveL Company:
- Full-day absences
- Intermittent FMLA leave
- Safety penalties that result in a suspension
- First and last week of employment, and
- Disciplinary suspensions.
Note: When it comes to full-day absences, safety penalties and disciplinary suspensions, you must have policies in place that outline what’ll cause a deduction to be made (and for how much) — and make sure the policies are applied consistently across your entire workforce.
