The Importance of an Employee Classification Policy

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Wage and hour complaints are not as uncommon as you might think. Many employers never consider that their employees might file wage and hour complaints against them. This year has set a new record for the amount of complaints filed, which is truly unsettling since many employees have done their job to earn their pay.

It is imperative to properly classify their workers. Classification determines what rights an employee has for civil rights protections, worker compensation, wage payments, record keeping, work hours, and unemployment insurance. It is important to understand that misclassifying or trying to misclassify one of your employees as an independent contractor may cause consequences later on. If you are an employee who has been misclassified or needs to file a claim, you can here. This is the reason why many companies have an employee classification policy.

The last few years have seen an increase in the amount of Fair Labor Standards Act actions, with this year leading the pack. Employers must maintain a record of all the hours worked each day, which should add up to the amount claimed each week. If these hours are not logged, there is no way of knowing whether or not the employee was there. This is one of the reasons that many employers use a time clock. A time clock automatically logs when the employee clocked in and when they were no longer working. Another common method is having the employee log their hours on a timesheet and sign it, which is handed over to the supervisor for their approval.

Every Job Requires a Description

Employee classification policyJob descriptions are necessary to have for any job that the employer has. This is the written account that the judge is going to use in actions that are brought under the FLSA and should mirror what the job is. A good job description should cover what functions, boundaries, and goals of the job the employee has. Most people will include the job’s wage and the benefits that the employee will receive for doing the job. It is always a good idea that the job description is as clear as possible. Any information that is not complete, inaccurate, or outdated in the job description could have consequences later. This is the reason that it is a good idea to have a decent job description policy.

Employee or Independent Contractor?

There is a difference between an employee and an independent contractor. This is the difference between a 1099 or an employee tax form that is filed with the IRS each year. An independent contractor has a relationship with their employer that will need to be agreed upon before you begin work for them. Typically, an independent contractor uses their own equipment, provided that the employer does not have them. The contractor can decide whether they work without losing their job, marketing controls the hours they work, and can determine whether the work they do is permanent. When it comes to FLSA standards, they generally look at how dependent the independent contractor is on the employer who they work for. One example was recently brought in Florida by Larraine Calway, an exotic dancer. Many companies will also try to misclassify their employees as independent contractors. This is typical because they do not want to give them the same benefits, or they do not want to pay them properly. There are many other examples of misclassification cases that are more popular than we would like to believe.

Steer Clear of FLSA Actions

It is easy to avoid having to go through an FLSA action as long as you make sure that you avoid making any of the mistakes mentioned in this post. Many companies try to cut corners, which can lead to consequences later down the road.

Make sure the employee is properly classified, the job description is correct, and it is clearly stated if you have hired an independent contractor. Additionally, keeping a proper record of the time that has been worked is the only way to avoid FLSA actions in the future. For many companies, this may mean overhauls in policy but it will be well worth it in the end.

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