The Most Common Wage Mistakes that Employers Make

Many federal employment laws apply only to larger employers, but the Fair Labor Standards Act governs pay practices at even the smallest shops. Additionally, state wage payment acts in Missouri and Kansas further regulate small employers’ pay practices. The following are some of the most common missteps small employers experience in the wage and hour arena.

Automatic deductions for meal periods // There is nothing wrong with a timekeeping or payroll system that automatically subtracts from an hourly employee’s recorded time for scheduled lunches or other meals, provided a recognized and publicized mechanism for crediting back the time exists for when an employee works through part or all of a meal period. Problems—and employee claims—arise when systems lack flexibility and employees lose properly compensable time.

Early arrivers // Compensable time must be paid regardless of whether the employer ordered the time to be worked. Conscientious employees often arrive early to get their work areas ready for the day. Such employees, without prompting from the employer, like to hit the ground running at “start time.” Unfortunately, 15 minutes per day of preparation time adds up to more than an hour each week and more than 60 hours per year of uncompensated work time.

Employers should ensure that employees understand they must record all hours worked, including preparation time. Usually, clear communication of timekeeping rules and standards is sufficient, but in rare cases, employees who refuse to record all compensable time should be disciplined to safeguard the integrity of the process.

Remote or “smart” work // Smartphones, iPads and laptop computers have changed concepts of the workplace. Hourly employees who have after-hours remote access to emails or other systems can experience compensable work time virtually without limitation.

Picture the secretary who receives, reads and responds to an email from her boss at home in the evening. Even if the boss did not intend
or expect the secretary to view the email until the next day during work hours, the time spent is compensable.

Again, tech-savvy employers recognize the risk and communicate clearly with hourly employees about the alternate options of either avoiding after-hours remote access or accurately reporting all time worked.

Regular rate // Hourly employees who have the opportunity to receive commissions or bonuses should have such additional compensation factored into their “regular rate” for purposes of properly calculating overtime compensation.

For instance, an employee who earns $10 per hour and receives commissions or bonuses as well must be paid overtime compensation not at a rate of $15 per hour, but at a rate equal to 1.5 times the employee’s “regular rate,” which is determined by adding the hourly compensation earned plus any bonuses or commissions, divided by the hours worked in the work week. Employers cannot simply pay time-and-a-half based on an hourly rate with bonuses or commissions paid on top.

Internships // Well-meaning employers desiring to provide inexperienced or out-of-work job seekers with real-world experience have to be very careful about unpaid internship opportunities. At its core, an unpaid internship must be for the educational benefit of the intern and not for the benefit of the employer.

The most clearly appropriate internships are those vetted through a high school or college program providing educational credits for the experience. In the absence of college or high school credit, the Department of Labor will look skeptically at any “internship” program that appears to provide value to the employer.