Hanger
National Clothesline
National Clothesline
A good message worth repeating
This is my second effort to prepare an appropriate column for the New Year.
The first one, while fun to write, was really a rant against the government. I hate the
government telling me what is appropriate “for my own good.” There is too much of that going
on, in my humble opinion.
Instead, I thought I would revisit several topics I have discussed in the past. Given that the
same problems keep cropping up, I suspect
that people are either not reading this column
or ignoring it. Then again, I’ve been flying for
over 50 years and the airlines still seem to
think I need to be told how to buckle my seat
belt. I guess there is no harm in repeating a
good message.
Let me start with “employees cannot agree
to be paid improperly under federal and state
wage and hour laws.” Moreover, a mistaken belief that you are paying an employee properly is
not a defense to a wage and hour claim.
If you are not paying an employee at least the minimum wage for all hours worked under 40
in the workweek, and if you are not paying one and a half times their regular hourly rate (which
can be higher than the minimum wage) after 40 hours, you should have your wage
arrangement reviewed to make sure it is legal.
In most cases, if employees regularly work more than 40 hours per week and they are not
separately paid time-and-a-half for overtime hours, the arrangement is subject to challenge.
For an employee to be exempt from minimum wage and overtime, there are specific rules
that must be followed, and they must be followed to the letter.
If you have any employee who you believe is exempt, confirm the exemption under
Department of Labor regulations or risk later challenge. Paying a salary is not enough to trigger
an exemption.
With respect to special deals you have with employees, remember that there are no secrets in
the workplace. In fact, under the National Labor Relations Act, asking a non-supervisor not to
discuss his wage and salary arrangements with other employees is probably an unfair labor
practice. Expecting the employee to keep that secret is naive.
Sometimes those secrets involve improper payments, such as “under the table” payments to
employees to avoid taxes.
Many employees would rather have cash than have taxes withheld, and employers would love
not to have to pay matching FICA, but such deals are illegal.
Creating an illegal deal that amounts to tax fraud puts you in a position to be blackmailed by
that employee and any others with similar deals.
No matter how much you “trust” an employee, you can never trust an employee to remain
loyal once he or she is discharged. That includes relatives.
Seriously, readers, I have seen parents sue their children and vice versa. Whenever someone
is fired, it is like an ugly divorce: it is irrelevant that you used to love each other. The key now
is to “get even.” Don’t give former employees ammunition.
It costs very little to have an audit of your pay practices, but it can cost you your business if
you (1) have to pay back wages for everyone, (2) have to pay liquidated damages under the
Fair Labor Standards Act for failing to pay wages properly, (3) have to pay attorney’s fees to
your employees’ lawyers, and (4) have to face an IRS audit.
That audit (the pay practice one, not the IRS audit) should also include making sure that you
have the necessary wage and hour records.
If you are not keeping proper wage and hour records, you are opening yourself up to claims
by employees that they worked more hours than they did.
If you do not keep records, courts tend to trust personal records kept by the employees over
estimates by the employer.
Besides, failure to keep records is against the law and can subject you to a penalty. The
absence of records hurts, rather than helps, the employer defending claims of wage and hour
violations.
Almost every attempt to get around the wage and hour laws is destined to fail. The Fair Labor
Standards Act is almost 80 years old, and the Department of Labor and the courts have seen
almost every harebrained scheme you can imagine.
It is so much easier to comply with the law and seek legal advice on creative ways to insure
compliance and still attract and keep employees. Plus, you will sleep better at night knowing
that you cannot be blackmailed by those loyal employees who change their minds about that
loyalty.

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Frank Kollman is a partner in the law firm of Kollman & Saucier
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