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The Risks Of Failing To Pay Overtime Are Real For Family Employers

Over the past few years, U.S. employers have paid billions of dollars to resolve alleged wage and hour violations for failing to pay workers overtime or for requiring them to work off-the-clock.

A recent report released by nonprofit groups listed the employers that have paid the most in settlements and fines following allegations of wage and hour violations. The biggest payout was Walmart at $1.4 billion, followed by FedEx at $502 million, and Bank of America at $381 million. The report used data maintained by the U.S. Department of Labor. Valerie Bolden-Barrett "Wage theft settlements by top US companies amount to billions" (Jun. 07, 2018).

Commentary and Checklist

Family employers are not immune to federal wage enforcement actions, including claims of failing to pay overtime.

Because of the lower number of employees, an overtime claim against a family employer may not be as large as the ones discussed above; however, any lawsuit can affect a family office, especially in the time loss and costs of mounting a defense. 

Without a doubt, the biggest wage risk for family employers is failure to pay overtime. Here is the rule regarding overtime for your non-exempt staff:

Non-exempt staff are employees that do not fall within a qualified exemption from paying overtime. Family employers should assume that all staff members are non-exempt and eligible for overtime. Should you wish to designate a staff member as exempt from overtime, you should seek the advice of an attorney before doing so.

All non-exempt staff must receive minimum wage (state or federal, whichever is higher) for all hours worked, as well as overtime pay of one-and-one-half times the normal pay rate for hours worked over 40 per workweek. Certain staff may be exempt from overtime pay requirements based on their job duties. However, family employers should have their legal counsel review all job descriptions before designating staff as overtime exempt. Routinely revisit job descriptions for any changes in duties.

Have staff clock in and out every time they are required to be at work, including for meetings outside of their normal work schedule. Doing so means you will not inadvertently miss paying staff for work time.

Here are some additional tips for family employers to prevent claims of wage and hour violations:

  • Understand the federal, state, and local laws that affect your organization and staff. Keep in mind that if your state's laws are more favorable towards staff, the state law will control.
  • Establish an equal employment opportunity policy that reflects your intent to pay staff fairly based on skill and performance.
  • Periodically audit your staff's compensation levels to make certain that protected class employees are paid fairly and awarded overtime, including paying women equally to men.
  • Train managers and supervisors on best practices to avoid wage discrimination.
  • Establish an internal procedure for staff to discuss compensation, including overtime pay, without fear of retaliation.
  • Investigate promptly and fairly any claim of discrimination, including claims of unequal pay.
  • Do not prohibit staff from discussing wages.
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