Disputes with employees often stem from two concerns – their financial interests and their workplace rights. Wage and hour claims cover both of those categories. That is one of the reasons why these are some of the most common lawsuits employers face during their careers.
Employers frequently conduct wage and salary reviews, usually when they review the employee’s annual performance. But there are generally two critical reasons employers should carry out these reviews routinely.
1. Reviews can help prevent wage and hour disputes
The purpose of performance and salary reviews is not only to evaluate and reward employees. They also help employers maintain their records and proactively prevent disputes.
In these reviews, employers should work with experienced business counsel to assess:
- Job descriptions and employee classifications
- Payroll, overtime and benefits policies
- Compliance with California’s wage laws
- Timekeeping records and policies
Recent lawsuits or changes to the law can significantly impact these matters. For example, both employee classifications and timekeeping policies recently fell under the spotlight in California. Reviewing wage policies regularly can help employers stay up to date and on top of these issues.
2. They allow employers to be prepared in the event of an audit
In the business world, it pays to be prepared.
The U.S. Department of Labor can conduct audits in any workplace, in any state across the country. And reports indicate that the rate of audits is only increasing. If officials discover that employers violated wage laws during an audit, employers could:
- Be required to pay back wages
- Pay considerable civil penalties
If employers complete their own audits, they have documentation of their compliance. Regular reviews allow employers to protect their business from an audit or a complaint from an employee that could jeopardize their reputation with both employees and consumers.