If you cannot answer this question properly (or if you don’t know the answer to this question), you may find yourself in the same situation as Copperhead Construction Company, which has been ordered to pay $501,000 in back wages and liquidated damages to 82 employees, as well as $29,000 in civil penalties to the U.S. Department of Labor’s Wage and Hour Division (WHD). WHD investigators determined that Copperhead failed to pay employees overtime when they worked more than 40 hours in a workweek and that, in some instances, the company illegally altered time records to record and pay for fewer hours than employees actually worked. Copperhead also allegedly failed to maintain accurate records (no doubt based on the fact that the WHD found it to have altered them) and failed to display required posters in the workplace. The WHD filed a lawsuit after conciliation efforts failed. The good news for Copperhead is that the WHD brought this lawsuit as opposed to a private attorney, as it could have been facing greater exposure by having to pay attorneys’ fees on top of the back pay and liquidated damages.
So, your tip of the day is to make sure you:
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Keep accurate records. You are required by law to keep accurate records of all time worked, and, as Copperhead discovered, manipulating these records can get you in trouble. Moreover, the individuals who actually manipulate the records can find themselves individually liable; something the individuals in Copperhead were lucky to escape.
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Pay employees for all time worked, even if that means paying overtime. If overtime is an issue, consider hiring more employees (even if they are part-time), look at rotating schedules, or even look at changing your 7-day workweek period. But, whatever you do, pay employees for all time worked.
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Make sure you have properly classified your workers. While this was not a part of the above case, a common issue in the construction industry is the use of “independent contractors” or subcontractors. Make sure that these individuals are properly classified as such and are not, in fact, employees. This remains a hot button item for both the DOL and the IRS.
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Consider an internal audit. It’s never too late for an internal audit of your pay practices. An experienced attorney can assist with this and can add a layer of privilege that in-house people and/or consultants cannot.
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