The economy is improving, or so we hear, but the news seems to change daily.
For small businesses that have squeaked through the recession, the good news comes with a price. You have a little more business, but you can't hire more help right away, so you do more with fewer people.
Like most small employers, you're on a thin margin, so you may be tempted to cut corners by bending a rule here or there. Employees are happy to put in a little extra time to keep you happy without looking for overtime pay. They come in a little early, work through lunch, take some work home.
If they're salaried, and properly classified, then there's no problem. Exempt salaried employees are not entitled to overtime, even after 12 hours a day.
But if you've classified them wrong, you're looking for trouble. One day, an employee will be unhappy, and he or she will find comfort in the office of the Labor Commissioner, the agency charged with enforcing hundreds of wage-hour regulations.
You may think the state of California is broke and these agencies don't have time to go after a small business, but they have help. Since 2004, the Labor Code's Private Attorney General Act rewards employees and their attorneys for acting like little Labor Commissioners.
One employee can sue your business on behalf of “all aggrieved employees” and recover penalties that used to be for the state agency only. The penalty for violating many code sections is $100 per employee per pay period for every rule violated.
If you pay employees twice a month, that is $2,400 per employee per violation in a year. If you pay every week, that number goes to $5,200. If you pay employees daily, you're thoroughly cooked.
Say 10 employees work during lunch. The penalty alone is $24,000 or more.
If you misclassify 10 employees as exempt when they're not (it's easy to do) there is another $24,000 in penalties, and it only takes one employee to sue. That could top $100,000 per case with attorney fees.
I'm seeing more and more of these cases in my practice, and the liability threatens some of those clients with bankruptcy.
Seem abusive? I've heard comments ranging from overkill to blackmail. Will the law change? I doubt it.
The employee who sues you only gets to keep 25 percent of the penalties, with the rest going to Sacramento. So don't expect the legislature to change this law any time soon.
For now, your best bet is to comply with wage-hour rules as much as you can. You can call a reliable HR consultant or your attorney, but don't put this off, it can only get worse.
For more information, call (760) 929-9141 or visit www.hrlawyer.com.
For small businesses that have squeaked through the recession, the good news comes with a price. You have a little more business, but you can't hire more help right away, so you do more with fewer people.
Like most small employers, you're on a thin margin, so you may be tempted to cut corners by bending a rule here or there. Employees are happy to put in a little extra time to keep you happy without looking for overtime pay. They come in a little early, work through lunch, take some work home.
If they're salaried, and properly classified, then there's no problem. Exempt salaried employees are not entitled to overtime, even after 12 hours a day.
But if you've classified them wrong, you're looking for trouble. One day, an employee will be unhappy, and he or she will find comfort in the office of the Labor Commissioner, the agency charged with enforcing hundreds of wage-hour regulations.
You may think the state of California is broke and these agencies don't have time to go after a small business, but they have help. Since 2004, the Labor Code's Private Attorney General Act rewards employees and their attorneys for acting like little Labor Commissioners.
One employee can sue your business on behalf of “all aggrieved employees” and recover penalties that used to be for the state agency only. The penalty for violating many code sections is $100 per employee per pay period for every rule violated.
If you pay employees twice a month, that is $2,400 per employee per violation in a year. If you pay every week, that number goes to $5,200. If you pay employees daily, you're thoroughly cooked.
Say 10 employees work during lunch. The penalty alone is $24,000 or more.
If you misclassify 10 employees as exempt when they're not (it's easy to do) there is another $24,000 in penalties, and it only takes one employee to sue. That could top $100,000 per case with attorney fees.
I'm seeing more and more of these cases in my practice, and the liability threatens some of those clients with bankruptcy.
Seem abusive? I've heard comments ranging from overkill to blackmail. Will the law change? I doubt it.
The employee who sues you only gets to keep 25 percent of the penalties, with the rest going to Sacramento. So don't expect the legislature to change this law any time soon.
For now, your best bet is to comply with wage-hour rules as much as you can. You can call a reliable HR consultant or your attorney, but don't put this off, it can only get worse.
For more information, call (760) 929-9141 or visit www.hrlawyer.com.