It would be impossible to list all the reasons employers get sued for wage and hours violations in a few short paragraphs. My intention is to summarize the main reasons employers get sued for wage and hours violations and provide general advice to employers on how to avoid costly suits. In my experience, there are three main reasons employers fail to follow the wage and hours laws: 1) lack of knowledge of the law; 2) lack of understanding of the law; and 3) financial motives.
Some employers simply do not know the rules. It is the American dream to start up your own business and hopefully one day you will be successful enough that you can have employees who do the work for you. My experience with small businesses is that small business owners sometimes have no idea what the Labor Code requires of them. For instance, the owner of an apartment complex who has a live in property manager might think that s/he can lawfully credit the value of the property manager’s apartment from the manager’s paychecks. However, this is only true if the property manager signs a written authorization for the credit, and even then, there are limits to the amount of free rent that can be credited. Most business people hire employees without consulting an employment attorney first. Learning about the wage and hours laws the hard way can be very costly. I would advise every small business owner to consult an attorney before a claim gets filed.
The second category of employers, those that do not understand the law, are exposed to just as much, if not more, liability than employers who do not know the law. The difference between an employer who does not know the law and an employer who does not understand the law is that the latter thinks it knows the law, but is wrong. The most common mistake is to believe that if you pay your employee a salary and give that person a title such as “manager,” you do not have to pay overtime. Job title and how the employee is paid (i.e. hourly vs. salary) are legally irrelevant in determining whether the employer must pay overtime. The determination is based, instead, only upon the employee’s specific job duties. Thus, even if you think you know the law, you should still consult an attorney regarding wage and hours issues before a claim is filed and you have to hire an attorney.
The last category of employers who get sued for wage and hours violations are those that do not comply for financial reasons. These employers generally know and understand the law, but deliberately do not comply because they believe none of their employees would ever sue them. In other words, some employers make a calculated cost-benefit analysis and decide it is more profitable for them not to follow the rules. Such employers are likely to be exposed to the greatest amount of liability. Some wage and hours law violations are considered crimes, and an employer such as this faces criminal fines and jail time. In addition, employees like money just as much as employers do. When employees find out they may be entitled to compensation for wage and hours law violations, employers are in serious trouble. If you fall into this category of employers, you should immediately consult an attorney to receive advice on how to limit your liability.
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