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When you're employing more than a handful of people, it can often be tempting to try to save a few dollars per employee, per day, whatever way possible. However, there's a difference between being more efficient and cutting legal corners. A recent federal lawsuit filed against Facebook is a good example of one big legal corner to avoid cutting.
The Facebook lawsuit alleges that the social media giant misclassified several types of employees as managers, and thus paid them as exempt employees (or more aptly, didn't pay them). Per the plaintiff's class action complaint, the company did so in order to avoid paying overtime to a large number of employees across the company. And if you think that as a small business owner, you can plead ignorance and be forgiven, you probably haven't had much experience dealing with the legal system.
For small business owners, one of the most annoying, frustrating, and confusing aspects of running a business is paying employees. In addition to the benefits, withholdings and deductions, there's that pesky problem of overtime. While you may have a policy prohibiting employees from working overtime, if it happens, you probably still have to pay it. Even after an employee quits, or gets fired, they can file a claim to be paid unpaid overtime.
While not all employees will be entitled to overtime, the rules governing it all are not all that clear. And making matters worse, if you make a mistake, an employee might not only be able to file a claim against you for the unpaid overtime, but interest and penalties can also be assessed (and that's not to mention your own lawyer's bill). Additionally, as an employee's duties or position evolves over time, an employer may actually need to start paying overtime if the work being performed is no longer "exempt" work.
When it comes to classifying employees, it can be tempting to make certain employees "managers" and provide them with a salary and a 40 plus hour a week workload. However, doing so could end up putting you in hot water if that employee is misclassified for the actual job duties. In some cases, even store managers will not be considered exempt.
Classification really boils down to an employee's actual duties. Analyzing and figuring out whether you need to pay overtime can be confusing. But consulting an experienced business attorney can help you figure out what to do to avoid overtime problems and claims.