Director, Human Resource Services
G. R. Reid Consulting Services, LLC
Read about G.R. Reid Human Resource Management Tools
The Best Defense Is a Good Offense
The best way to avoid costly litigation is to perform regular HR audits and reviews of employee job functions and payroll processing. Laws regulating employee pay vary by state and change as new legislation is passed and case law developed. In addition, job duties and compensation structures evolve over time. Either of these scenarios can mean that policies and practices that had been acceptable (such as classifying a group of employees as exempt from overtime under the federal Fair Labor Standards Act and state wage and hour laws) may need to be revised.
It is possible that a rule or policy has a different effect than intended. A common example is the rounding of time records. Federal regulations allow rounding as long as it is used “in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked,” according to the U.S. Code of Federal Regulation at 29 CFR 785.48(b).
A review of the pay process may verify that the rounding rules are properly applied, but it’s possible that the net effect of rounding is still negative. For example, if your company’s employees tend to arrive a few minutes early and stay a few minutes late, they may be regularly hurt by the rounding rule. If that is the case, it is advisable to revise the rounding policy to avoid claims of improper rounding.
By completing regular review of job functions and pay practices, business owners can ensure that any necessary changes are made in a timely fashion and thus help protect you from lawsuits.
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