The number of overtime lawsuits has risen dramatically in recent years - nearly 400% in the last two decades according to a post at the Baltimore Business Journal. It’s usually the multimillion dollar companies that get the news coverage but small businesses aren’t any less vulnerable than the big guys. And for a small company with a minimal budget, an overtime lawsuit can be devastating.
How to avoid them is something every small business owner needs to know.
I have heard this question asked countless times over the years and then just again yesterday:
“Why does your system only calculate overtime by 40 hours and not by 80 hours?”
The answer is, because that is the only way over time is calculated in 99% of cases.
The California Supreme Court recently ruled to ease up on meal break laws.
As a manager, you probably know how difficult it can be to enforce meal breaks – telling your employees to take them is one thing, actually ensuring that it happens is another. Proponents of the meal break law argue that without it, employers may take advantage of their employees by making them work long hours without a break.
Now, after years of having the California meal break in place to support the employee, judges have rescinded the law in favor of the employer.
The recent Groupon overtime lawsuit is a good example of the care companies must take to follow FLSA regulations.
Groupon has quickly grown their sizable company to almost 10,000 employees. But because they were careless in their payroll practices, their future is bleak.
About 1,050 past employees are now in the process of a couple of class action overtime lawsuits. If the lawsuits prove valid, this could cost the company big. Depending on individual awards, the payouts themselves could exceed $2 million.
Some employees earn comp time as a reward for good work. Keeping track of it is easy with our online timeclock. (If you’re unsure about when comp time can legally be used, read last weeks post about overtime violations.)
You can track comp time by customizing a time off label and naming it Comp Time. Since it is not a regular accruable, i.e. employees accrue hours randomly, you will have to manually enter your employee’s time on the employee’s options page as they earn hours.
With the new time off label set up in the system, every time employees are ready to use their earned time, they can “Request Time-Off” – as though they were taking vacation or sick time – but instead of selecting vacation or sick as the time classification, they’ll select Comp Time. Once they’ve entered the hours they wish to use, an alert will go to the supervisor to allow the employee to take the comp time and deduct the total from the bank.
Timesheets.com helps employers keep accurate time records so that they don’t run into any of the common overtime violations outlined in the Q&A below.
Monitoring estimated payroll throughout the pay period is important to many small business owners. Seeing that your employees are working the hours required to get the job done is essential for peace of mind, but there are several other situations in which employers must closely monitor accumulated hours.
We get calls all the time from customers who want help setting up the overtime rules inside our software. They explain that they would like to customize the defaults to suit their company’s policies. I have heard a gamut of creative solutions for calculating overtime. While having secondary or even tertiary pay rates is great employee incentive, employers must understand that there are federal laws governing overtime pay. Overtime policies cannot be tailored from company to company.