Common Areas of Noncompliance, Part 1
As federal and state regulations continue to evolve and increase, companies are challenged with remaining compliant with employment laws and ensure their employment practices remain within the confines of the law. But this can be hard as these laws and mandates are complex, ever changing, and confusing. Below are some common areas of noncompliance to double check within your company. We’ll continue to add to the list with upcoming posts in our noncompliance series.
Exempt or Non-Exempt?
That is the question. Companies can misclassify employees as “salaried exempt” simply because the employee receives a salary. But the real classification of “exempt” means that the employee must be paid a certain amount per week on a salaried basis (regardless of actual hours the employee worked), and satisfy the job duties associated with the exemptions (i.e., executive, professional, outside sales). Employers who wrongly classify their employees as exempt violate the Fair Labor Standards Act (FLSA) and so should audit their staffs’ job descriptions to ensure each employee meets all criteria for exempt status.
Another common misclassification is mistakenly qualifying an employee as an independent contractor. To truly be an independent contractor, the contractor – and not the employer – must exercise control over his or her own daily job duties. If an employer has control over the employee’s day-to-day tasks, the employee is usually NOT an independent contractor. In addition to expensive litigation, employers who misclassify employees are subject to unemployment and workers’ comp claims as well as healthcare reform liability. If you’re an employer, be sure to evaluate all your “independent contractor” arrangements using opinion letters from the Department of Labor of IRS for guidance. Next up? How to legally handle employees who don’t return to work after medical leave. Stay tuned for part two!