Call us on

Top 10 Mistakes You Can Get Sued For

  Sanjiv Gupta CPA  Published 
Top 10 Mistakes You Can Get Sued For

Employers with good intentions might be breaking employment laws without realizing it. The California Chamber of Commerce cataloged the top mistakes that a company can get sued for. Some of the mistakes are federal and other mistakes apply to some states. The report finds that many employers don’t realize the mistakes they are making when they are trying to be nice, save a little money or trying to be flexible for employees.

 Top Ten Mistakes

 #1  – Allowing employees to work during lunch in order for them to leave early.

 Non-exempt employees have required a thirty-minute break for a meal in addition to a ten-minute break for every 4 hours worked. Denying either requires an extra hour of pay. If you deny both breaks during the same day, you will be required to pay two hours' pay. An employee does not have the right to waive breaks. The extra pay hours are required to be paid during the same period that the breaks were denied.

 #2  – Classifying all of the employees as exempt regardless of whether they are exempt or not

Employers could be subject to lawsuits or huge penalties if they pay everyone's salary instead of calculating meal breaks and overtime.

 #3 – Categorizing all employees as independent contractors because it is easier.

Employers need to determine who is an employee and who is an independent contractor to avoid many legal spider webs.

 #4 – Not training supervisors and managers about discrimination and harassment.

 Do not assume that your employees know all of the information or that they will not need it. Providing basic training will help you avoid lawsuits.

 #5Allowing employees to decide when they are going to work and the number of hours.

 The majority of employees are restricted under the law about the number of hours each day that can be worked before overtime needs to be paid. Letting employees work fewer days per week for more hours each day, might require you to pay overtime for the week. Specific rules must be followed. Make sure to check your state laws.

 # 6 – Withholding final paycheck because the employee never returned the property of the company.

Some state laws require you give a fired employee their check the moment you say “you are fired”. You can not withhold the final paycheck because they have not returned property belonging to the company like a cell phone or computer. There are penalties that start accruing for the time the check should have been paid. Often times, the penalty is 1 day’s pay for each day the paycheck is delayed.

 # 7Terminating an employee that took a leave of absence.

There is a legal protection that is provided to employees that have to take a leave of absences for a variety of reasons including disability, worker’s compensation, family leave, medical leave, pregnancy, jury duty, military leave as well as many other reasons.

# 8 – Making employees sign non-compete agreements in order to protect the company’s confidential information

You can not force an employee to stay under your employment or prevent a previous employee from making a living with another company.

 #9 – Giving employee loans and deducting money each pay period from their paycheck

 Most states have labor codes that only allow paycheck deductions that are authorized by the law or for benefits. If you give an employee a loan, you need to have the employee sign a promissory note that was reviewed by a lawyer.

 #10 – Vacation policies that force employees to “use it or lose it” so money does not have to be paid out at termination.

 The vacation that has accrued is a form of wages and is not allowed to be denied. The only thing you can do is stop the amount of vacation that can be accrued over a reasonable amount. Generally, the reasonable amount is 1.5 to 2 times the annual vacation that is accrued.