This is a guest post from Diane Aull. Diane is the Website Manager for Acroprint Time Recorder Company and editor of their Time for Business blog.
For several years now, various agencies have been on alert for employees who have been misclassified as “independent contractors.” All indications are this will continue to be a big issue in 2014.
There are powerful incentives for employers to classify workers as contractors, including savings on taxes, paperwork reduction and more. But strict criteria must be met for that classification to be valid. A significant number of so-called “contractor” positions don’t meet the standard.
Since 2011, the IRS and 15 states have signed on to the Department of Labor’s Misclassification Initiative, agreeing to share information, leads and referrals with each other to help catch employers who misclassify their workers. New York was the most recent addition, signing on to the Initiative in November 2013. The DOL continues to promote the initiative, and more states are expected to sign up in the future.
Action item: If you have any workers you currently classify as contractors, carefully review their situation to make sure that classification is correct.
Several lawsuits were filed in 2013 on behalf of unpaid interns, claiming they were actually performing compensable labor and should have been paid. In most cases, the courts ruled the interns were right — they were actually serving as unpaid employees and should have been compensated.
Because of the publicity these cases received, we can expect more such cases to emerge in 2014.
Just as with worker classification, there are strict criteria that must be met in order for someone to be classified as an unpaid intern. If the “internship” doesn’t meet those criteria, the workers must be paid at least minimum wage.
Action item: Don’t count on unpaid interns as a source of free labor. Your best bet to avoid potential liability is to pay interns at least minimum wage.
Off the Clock Work
Mobile devices — such as smartphones and tablets — are incredibly convenient but open employers to potential liability. If employees use their mobile device to check email or do a bit of work outside the office, they must report their hours and you must pay them for that time.
Whether employees neglect to report time because they mistakenly believe they’re doing the business a “favor,” or they fail to report time because it’s simply too inconvenient — either way they’re opening your business up to potential liability. All it takes is one disgruntled worker complaining to the state or federal labor department, and you could find yourself on the hook for thousands of dollars in unpaid overtime.
Expect this to become a bigger issue in 2014, as mobile devices become less expensive and their usage more widespread.
Action items: Prohibit off the clock work. If you allow employees to work outside the office, provide an easy method for them to record their hours. Be sure to pay them for all their work time.
We’ve heard a lot of good news (and a bit of bad news) in the area of class actions over the past few years.
Good news: it’s become harder to certify large class action lawsuits. One quarter of these suits now involve classes of fewer than 1,000 plaintiffs.
More good news: according to a study compiled by NERA Economic Consulting, the total dollar amounts of class action settlements have declined from their high in 2007, actually stabilizing over the past several years.
Bad news: the average settlement amount is still nearly $5 million each.
Action items: About 39% of class action suits involve overtime, while missed lunch breaks, misclassification and off-the-clock work comprise 16% to 18% each. Focus on these areas to get the biggest bang for your buck.
You may also wish to include an arbitration clause in your employee handbook or employee agreements. Properly worded, an arbitration agreement can forestall most class action cases. Don’t try to “do it yourself” here. Consult your employment law attorney to ensure the clause is valid and enforceable.
When in doubt, consult your employment law attorney to ensure your policies and procedures are up to date with the latest developments.
Class action suits continue to pose a threat to businesses in 2014 and beyond. Unpaid overtime represents a huge risk. Having an accurate and reliable time tracking system has become imperative to protect your business against overtime claims. Make it as convenient as possible for workers to report their time, no matter where the work is performed.
Finally, make sure your employees understand the importance of reporting all the time they work, and pay them properly for all reported time. With vigilance, strong procedures and effective enforcement, you can minimize your risk.
Acroprint offers a full range of workforce management products including the timeQplus Product Suite, Pendulum workforce management software and AcroTime, their flexible and powerful cloud-based solution.
Workplace Insights is taking a break during the holidays. Check out a new post on Thursday, January 2, 2014. Enjoy the holidays and have a Happy New Year!
Photo Source: danielmoyle