If you are an employer of any workforce, you have a moral and legal obligation to pay them regularly and according to state regulations. If you do not – no matter what the reason – you could see yourself having to pay costly fines and jeopardising the relationship between employer and employee.
Read on to discover the repercussions of untimely pay and how you can avoid this:
- What does the law say when it comes to employment pay?
The law clearly states that employers are obligated legally to pay their employees fairly, and to do so in a timely manner that meets both state and federal laws. These are the laws that determine minimum wage, when employees must be paid and help employers to establish when overtime should be paid and who is entitled to claim it. In the case of missed or late payments, each state will have its own regulations and procedures for what happens next.
- What is your duty as an employer, to keep time records?
Keeping an accurate record of all payments made to employees, is crucial should you ever happen to be taken to court over pay issues. If you are unable to provide the court with time records, then that may be judged as reason enough for the employee to be able to make a claim against you. Inaccurate or approximate records are simply not sufficient.
- What happens if/when an employee makes an official complaint about their pay?
The law states that every legally employed worker has the right to complain about any issue related to their pay, and must take that complaint to the relevant state authority. If the complaint is deemed genuine, it will prompt an investigation by the employment agency. The consequences of this may include a lawsuit against the employer in question, the loss of that businesses license and almost certainly payments to the employee of any wages owed.
Some states will take on wage claims for free, and employees can even try to recover their wages by filing a claim in a small claims court, but larger claims will need to be handled by a labor attorney and a lawsuit filed.
- What can you do if an employee takes legal action against you?
Failing to pay your employees could result in you not only having to pay the amount owed, but paying liquidated damages too, which is usually double the amount of the unpaid wage. There may also be attorney and FLSA (Fair Labor Standards Act) costs incurred.
There would also be fines from both the state and federal government to be paid, and if the reason why the payment wasn’t made is found to be intentional or fraudulent, then the damages could likely double or even triple.
- How can you ensure that your employees are paid according to the law?
One of the first things to do if you are finding that it’s becoming a problem to either pay your employees fairly, or to do so in a timely manner, would be to check your business model and see if there may be a need for some changes to be made. It may be that you need to take steps to restructure your business or reduce the hours that your employees work.
If you know that you have an employee who has an issue over their pay and is likely to want to take further action, try to nip this in the bud by meeting with them personally, and explaining why the issue has occurred, what you will do about it (ie compensate them), and what steps you will take to ensure that it never happens again.
If you find yourself struggling to pay your employees in a timely manner, or find any part of the salary process confusing, you would be best off employing the services of a professional payroll company. They will ensure that your entire payroll system is compliant with state and federal laws, thereby eliminating any chance of disgruntled workers wanting to take legal action against you.