Compliance Tips for Employers

Compliance TipsEmployers in New York are subject to numerous federal, state and local laws and regulations that mandate compliance. These include wage and hour laws, anti-discrimination laws, leave requirements under the Family Medical Leave Act and obligations under the Americans with Disabilities Act, among a host of others. Businesses are sometimes unaware of their obligations and as a result, can unknowingly violate the rights of their workers. Unfortunately, the consequences can include government enforcement actions as well as lawsuits by employees that can be expensive to defend. Here are some common, costly mistakes to avoid:

1.  Misclassifying Employees as Independent Contractors

For tax and other compliance reasons, businesses must properly distinguish between employees and independent contractors. Key to this analysis is a determination of the degree of control over how the work is performed and the independence of the worker. Facts that tend to support one classification over the other fall into three categories, including behavioral (does the company control or have the authority to control how the worker performs his or her job); financial (does the worker have the potential to earn a profit); and the type of relationship (how does the written contract, if any, characterize the relationship; does the worker receive employee type benefits). Important factors businesses should weigh in classifying workers include how the worker is compensated, whether the worker’s business expenses are reimbursed, whether the worker has set hours and is required to comply with company instructions about when, where, and how their work will be performed, and whether the worker receives benefits typically provided to employees such as sick leave, vacation and insurance.


2.  Misclassifying Non-Exempt Workers as Exempt

Employers are required to pay “non-exempt” workers the minimum wage and to pay time and a half for all hours worked over 40 hours in a given work week. Certain types of employees fall under the category of “exempt” and as such, are not legally entitled to overtime wages and minimum wage requirements. To classify an employee as exempt, employers must meet certain tests regarding the job’s duties (as opposed to the job title) and be paid on a salary basis at a rate of not less than $455 per week. Check the duties and characteristics of each employee’s job against the various categories of exempt employees to be sure your business is in compliance.

3.  Failing to Comply with Wage Notification Requirements

New York employers must provide written notice of pay periods and wage rates to each new hire. The notice must include the rate of pay (and overtime rate, if applicable), how the employee is paid (by the day, hour, commission, etc.), the regular payday, the official name of the employer and any other names used by the business (DBAs), the address and phone number of the main office or principal location of the business, and any allowances taken as part of the minimum wage (such as tips, meal and lodging deductions). The notice must be given both in English and in the employee’s primary language, if other than English, if the Labor Department offers a translation.


4.  Failing to Train Supervisors on Employment and Labor Laws

Employment laws prohibit employers from taking adverse actions against employees for certain reasons, including discrimination on the basis of a protected characteristic such as race, religion, age, gender or sexual orientation. Employees are also protected from retaliation for complaints of discrimination or illegal activity. It is vital that supervisors be trained to be sensitive to these issues and manage the company’s staff in accordance with all applicable laws.

5.  Not Implementing an Employee Handbook

An employee handbook informs employees about the employer’s values and policies, and facilitates compliance with employment and labor laws. Employee handbooks can held reduce the risk of employee lawsuits, but this strategy is only effective if the company’s management actively and consistently applies the policies in the handbook.

6.  Failing to Properly Document Employee Job Performance

Proper documentation clearly establishes the employer’s expectations and where the employee failed to reach them. Written job descriptions and employee evaluations serve as training tools, performance measures and critical evidence in the event that you are required to terminate an employee.

7.  Failing to Accommodate Workers with Disabilities

The law not only prohibits employers from discriminating against employees with disabilities, it also imposes a duty on most employers to “reasonably accommodate” employees who have a disability to enable them to perform the essential functions of their job. Accommodations may include assistive devices, working from home, a modified work schedule or a restructuring of job duties. Businesses should discuss a reasonable accommodation with the employee once he or she requests a reasonable accommodation or if they become aware of a disability. Unless the business can prove an “undue hardship”, it must agree to a reasonable accommodation to allow the employee to continue to perform the essential functions of his or her job.

8.  Failing to Obtain Releases from Terminated Employees

When firing an employee, companies should try to obtain a signed release from the employee, waiving the employee’s right to pursue a legal claim against the employer. Often, this release is signed in exchange for a severance payment.


© Claudia Pollak Law