Those running a business probably understand that each new hire is a source of liability. They might do some standard work that leads to a defective run of products at a factory or a complaint from a customer at a restaurant. They could harass their coworkers.
They might also try to take the business to court because they are upset about something the company has done. For example, workers may decide to pursue a wage claim against the company that employs them. Wage and hour claims can cost a company quite a bit of money and can also do damage to the organization’s reputation.
How can businesses prevent potentially expensive wage claims brought by staff members?
Provide clear information about wages
Wage claims sometimes arise because workers have unrealistic expectations. They believe they should receive a bonus or certain forms of incentive pay based on what they have heard from others or the recruiter who gets them the position. Therefore, it is of the utmost importance that organizations have very clear clauses outlining compensation and benefits in every employment contract. Handbooks may also need to include details about company policies related to cost-of-living raises and any sort of incentive pay, like performance-based bonuses.
Carefully comply with the law
Some organizations make the mistake of believing that company policy can protect them from wage claims. For example, they might establish a no-overtime rule to prevent workers from intentionally working more than 40 hours to receive overtime pay. However, overtime violations are a leading cause of wage claims. Companies need to make sure that they prevent workers from putting in more than 40 hours if they are not exempt.
They also need to be careful about mistakes like refusing to pay overtime to daily workers or to those with low salaries that make them non-exempt. Additionally, companies will need to maintain payroll records as required by federal law so that they can appropriately respond to any wage claims brought by their staff members.
Drafting custom employment contracts and carefully complying with federal wage standards is of the utmost importance for organizations seeking to prevent wage and hour claims brought by employees.