2 tricky payroll areas landing companies in hot water

Overtime pay’s great … when you’re the one earning it! But for employers it’s a major expense and a major headache.

That only gets worse when employees or the Department of Labor decide that someone who should be getting time and a half isn’t. Then there’s not only back pay, but often fines and penalties adding to those totals.

It’s happening more and more frequently these days. Companies of all sizes are having their pay practices called into question.

But you’re far from defenseless. By understanding where most of your peers get tripped up, you can help your own company avoid a similar fate and be sure everyone is being paid in compliance with the law.

We’ve been watching the trends and have ID’d:

• The type of employee most likely to cause OT confusion, and
• The circumstance landing employers in legal hot water for overtime noncompliance.

Check out why these are so troublesome, and how you can be sure you’re handling them correctly.

The most troublesome employees: salespeople

Almost every company has them, and they are a major source of confusion when it comes to pay practices.

They’re your company’s sales staff. And many of your peers are under the mistaken impression that they’re not eligible for overtime because they earn both a salary and commissions.

Wrong.  According to federal law, only employees of retail or service establishments who make more than 1 1/2 times the minimum wage and who receive more than half their monthly income from commissions are OT exempt.

It’s tripping up plenty of companies. Groupon is currently facing a class action suit because some 1,000 salespeople didn’t have overtime spelled out as part of their compensation package.

No ruling yet, but experts say it doesn’t look good. And it’s a critical reminder to see how your own salespeople are being compensated.

The most troublesome circumstance: meal breaks

It’s not just certain types of people who cause compensation confusion; certain circumstances crop up during the workday where companies could be coming up short.

The hurdle-du-jour? Meal breaks. There’s a new and costly trend of employees suing their employers, claiming they were either denied on not compensated for meal breaks.

You’ll have to look to your state for its policy on this subject  – there’s no federal law mandating them.

But many states do require them and prohibit companies from discouraging their people from taking them.

That’s a particularly tricky area right about now. Businesses are running so lean and most employees have more work than ever. Many of them may be tempted to work through lunch to keep their heads above water.

It’s on your supervisors to make sure their people take every break they’re entitled to … and for Finance to verify they’re being compensated for them.