One of the most troubling and expensive business problems today is complaints of unpaid wages. There were 30,000 Wage and Hour Complaints filed with the U.S. Department of Labor (DOL) Wage and Hour Division last year. This is a larger number than all other discrimination complaints combined. The number of wage and hour complaints has grown by 400 percent over the last five years and they are filed under The Fair Labor Standards Act.

Most wage and hour complaints are for failure to pay overtime because the employee was wrongly classified. Other frequent complaints are: working an employee off the clock; changing an employee time record to avoid paying overtime; failure to give required breaks and lunch periods according to state or federal law requirements; and failure to pay accurately at termination.

To assist employers, the DOL has created a list of the 10 most common wage and hour errors employers make.

1. Assuming that all employees paid a salary are not due overtime.
2. Improperly applying an exemption.

3. Failing to pay for all hours an employee is suffered or permitted to work.

4. Limiting the number of hours employees are allowed to record.

5. Failing to include all pay required to be included in calculating the regular rate for overtime.

6. Failing to add all hours worked in separate establishments for the same employer when calculating overtime due.

7. Making improper deductions from wages that cut into the required minimum wage or overtime. Examples: shortages, drive-offs, damage, tools, and uniforms.

8. Treating an employee as an independent contractor.

9. Confusing federal and state law.

10. Using Compensatory Time as pay for overtime.

Read the rest of the article in the May 15 issue of Distribution Center. Catch Part 2 in the June 15 issue.