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A Little Wage Mistake Goes a Costly Long Way


Let's say your company fails to pay an employee $36 in wages. What's the worst that can happen? In September 2008, the North Carolina Court of Appeals affirmed a decision in Williams vs New Hope Foundation, Inc., awarding the employee $36 in unpaid wages, an additional $36 as a penalty known as "liquidated damages," and costs and attorney's fees of $27,534.14. Business owners, members of management and human resource professionals involved in wage decisions can be held individually liable along with the company. That means their personal assets are at risk. If you want to reduce the likelihood of adding such excitement to your life, follow the 10 steps below.

  1. Ensure your employee handbook and company policies inform employees of their timekeeping requirements.
  2. Employers must keep accurate records of daily and weekly hours for employees who are eligible for overtime.
  3. Ensure supervisors are trained in the company's wage payment and time-keeping requirements.
  4. Don't just pay your employees a salary and believe it excuses you from paying overtime.
  5. If an employee works overtime without authorization, the employer is still generally required to pay for it.
  6. Learn exactly what duties performed by your employees must be compensated.
  7. Institute internal auditing procedures to ensure problems are caught before they lead to huge cumulative liability.
  8. Do not ask or allow employees to "volunteer" their time. Similarly, private employers may not provide "compensatory time off" in lieu of paying overtime.
  9. Do not make deductions from employee pay unless you are sure you are legally entitled to do so.
  10. Unless you have a written "use it or lose it" vacation policy, you must pay employees for accrued but unused vacation when they leave your employment.

  This article appeared in the March 10, 2009 issue of The Mecklenburg Times.


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