Small business owners in New York are often so inundated with the day-to-day hustle of increasing revenue, marketing, and actually working, that they often overlook federal and state wage and hour laws. But be warned: failure to properly pay employees can significantly harm your business. However, a few simple pointers will go a long way towards avoiding a devastating wage and hour class action: First, pay your employees the minimum wage. Sounds easy enough. The minimum wage in New York and New Jersey is $7.25/hour. But there’s a bill in New Jersey to increase the minimum wage to $8.50/hour (see this prior blog entry). And make sure to pay the minimum wage for all hours worked (and see this entry).
Also, as we’ve previously discussed, classify your employees correctly (see this entry). In terms of classifying your employees as exempt or non-exempt from overtime pay, it is advisable to err on the side of non-exempt. And don’t think that just because you give an employee a title like “manager” it changes anything -- titles are meaningless and what matters is the nature of the work that the employee actually performs (for more detailed information, please visit http://www.dol.gov/whd/overtime_pay.htm). The same goes with respect to classifying your employees as employees or independent contractors -- err on the side of employee. To be an independent contractor, the individual must be truly “independent” (e.g., is available to work for other employers, uses his/her own materials, sets his/her own hours, etc. but for more detailed information, please see http://www.comptroller.ilstu.edu/downloads/20-factor-test-for-independent-contractors.pdf).
Keep good records. It is worth investing in an automated system which tracks employees hours worked and all compensation paid to employees. This way you can prove exactly how much a given employee worked and how much he or she was paid for their time.
The last point is probably the most obvious of all: it is better to be safe than sorry. The potential damages in wage and hour actions can be financially devastating to a small business -- you are better off treating your employees as non-exempt, paying them for all time worked, and when necessary contacting an employment lawyer, than defending a legal battle that will likely not end well.
If you are a small business owner in NY and have any employment law questions, please contact us for a free initial consultation.