Legal Dos and Don ts: Compensation

Do:

Require approval for overtime. If your reports work overtime even without your knowledge or permission the company will have to pay them for it. Cut down on surprises by requiring employees to get your approval in advance. And discipline employees who continue to work unauthorized overtime.

Conduct an annual job classification audit. Once a year, review the job titles, classifications, and actual responsibilities of the employees reporting to you. Make sure employees who are classified as exempt from wage and hour laws meet the legal requirements.

Keep proper records. Companies must keep certain payroll records for three years. Failing to keep required records is not only against the law; it will also hinder your company s ability to defend itself if employees sue for unpaid wages.

Don t:

Give comp time. It s illegal for private employers to use comp time, but some managers have an informal practice of allowing it anyway. Even if your employees would rather take comp time than be paid overtime, don t fall into this habit it could come back to haunt you.

Pay more attention to job titles than job duties. When it comes to eligibility for overtime and compliance with equal pay and other wage discrimination laws, job titles don t matter it s what employees actually do on the job that determines your company s obligations.

Dock an exempt employee s pay. Find another way to discipline exempt employees for poor performance or minor misconduct. If you reduce an exempt employee s salary for these reasons, you risk making that employee and all other employees who work for you in the same job classification eligible for overtime.

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