Written by: Anne Swenson, HR Coordinator, MidwestHR
Wage theft lawsuits are on the rise here in the United States. In the past year, over 8,000 claims have been filed, which is up 5% from the previous year. This huge jump is making headlines and putting employers on high alert when it comes to employee wages. So, what is wage theft and how do you determine if you are guilty? Wage theft happens when employers do not pay their employees the wages that are legally due to them. Usually one thinks of a sinister employer sitting in a dark office doctoring time sheets and refusing to pay overtime to his workers. While this could be the case, most of the time there is nothing malicious or sinister about it, employers just simply make a mistake.
How is this kind of mistake possible? Unfortunately for employers, the FLSA exempt vs. non-exempt law isn’t crystal clear, so classifying employees can be a real challenge. When the classification rules were written back in 1938, it was easy to determine who was exempt from overtime and who wasn’t. Since then, the work force demographics have changed significantly, while the law, for the most part, has stayed the same.
You may be wondering, how important is all this…especially if you haven’t heard any complaints. By misclassifying an employee as exempt, that person is unable to collect overtime wages no matter the number of hours put in each week. Even if the employee asks to be exempt (for some it can be a sign of status in the workplace) or doesn’t seem to care either way, it is illegal and you can be prosecuted…so it is very important! In most cases misclassification is an accident and no harm is meant, but even so, it is still considered wage theft and you can be sued, making it one costly mistake.
To avoid trouble with the law, take a good look at the exemption regulations from the U.S. Department of Labor and how you have your employees classified. If you have questions, discuss them with a trusted HR advisor or employment attorney. Making sure you categorize your employees correctly is worth the extra conversation!
Please contact us to see if MidwestHR, a Chicago PEO, is the right partner for your growing company.
MidwestHR supports growing companies by helping them simplify their business through HR Outsourcing. MidwestHR is a Certified Professional Employer Organization (CPEO) headquartered in the Chicago land area. As a CPEO, we provide business owners, CEO and CFO leaders with relief from dozens of time-consuming HR & employment related functions, while helping protect the business from ever-increasing HR demands and liabilities. In addition, our clients have the ability to offer “Fortune 500 type” benefits, while being able to better control their premiums in the process.
MidwestHR regularly works with all types of businesses, including medical practices, surgery centers, non-profits, professional service firms, technology companies, printing companies, religious organizations, start-ups, manufacturing businesses, trucking companies and financial institutions.