Read on for some helpful information about the 2 most common HR mistakes, so you can avoid them in your business.
All employees are either exempt or non-exempt. It is important to properly classify each employee in order to ensure compliance with wage and hour laws.
Non-exempt employees are those who, while paid in a variety of methods (hourly, daily, piece rate, commissions, etc.), are entitled to certain provisions under the law. Non-exempt employees:
Exempt employees are generally paid on a salary basis and their pay does not fluctuate based on the number of hours they work (or any other factors); they are paid for the job they do. And while an exempt employee generally cannot have their pay reduced for working fewer hours (with limited exceptions), they also are not entitled to overtime pay for working more.
Business owners sometimes assume that if they pay someone a “salary” they do not have to pay them overtime. A salary is simply a method of pay and does not automatically mean an employee is exempt (from the overtime provisions of the law). The U.S. Department of Labor has established certain criteria which must be met in order for an employee to be considered exempt. Those positions generally include executive, administrative, learned professional, computer professional, creative professional, and outside sales.
Always consult with a HR professional for guidance on proper classifications of your employees to avoid these costly mistakes.
The fundamental purpose of wage and hour laws is to protect employees’ wages and ensure they receive all the wages to which they are entitled under the law. As such, (other than mandatory deductions such as taxes), employers are limited when making deductions from employees’ pay.
Even when an employer feels an employee “owes” the company money for something (damaging company property, not returning uniforms, an error that resulted in a loss to the company, etc.) it does not mean that a deduction from pay is the appropriate remedy. While it may be convenient to simply deduct it from their pay, employers must be careful when taking money the employee has earned. Important things to consider:
Again, wage and hour laws provide protections to employees. So, while these laws may not seem “fair”, the logic to limiting deductions from pay is that the employer has control of the employees’ money and it is not appropriate to allow the employer to be the judge and jury and decide what an employee “owes” them and simply keep it.