Essential Employment Policies for Family Businesses, Part II


In this second round of “must-have” employment policies, we focus on rest breaks and meal periods. It can be devastating for any business, but especially a family-run business, to face claims of non-compliance with wage and hour laws. Wage and hour laws determine the minimum hourly wage non-exempt employees must be paid, which employees must be paid overtime, and when non-exempt employees must be provided certain rest breaks and meal periods.

The wage and hour laws applicable to your family business depend on where your business is located, as laws exist at both the federal and state level, and sometimes at the municipal level as well. Municipalities are increasingly weighing in on wages and other working conditions, as seen in the trend of employee interest groups seeking a $15 minimum wage in Seattle, SeaTac, and other cities. It is critically important for family business to know the rules where you do business and that you communicate to your employees who are not exempt from wage and hour laws what breaks and meal periods they are entitled to take during their workdays.

It is likewise important to educate your salaried exempt (e.g. overtime ineligible) employees on what it means to be paid on a salaried basis and what they should do if they believe an improper deduction has been made from their paycheck. Why? This type of policy will protect you if an improper but inadvertent deduction from their salary occurs. The US Department of Labor regulations expressly provide that if you have a policy that explains how and when exempt employees must report concerns about an inappropriate salary deduction, you can fix it without the employee’s overtime-exempt status being put in jeopardy.

Why are these protections critical? Wage and hour claims tend to be brought as class claims, rather than as individual claims. Often several employees perform in the same or similar roles, so they will all be either exempt or non-exempt. They will all be performing their work under the same employee handbook, so policies or pay practices that deviate from the wage and hour laws applicable in your jurisdiction could create class-wide liability. The costs to defend wage and hour claims can add up quickly, there is typically no insurance coverage for these claims, and any affirmative recovery by the plaintiff(s) – even an award of $1 – presents a risk of having the pay the employees’ attorneys’ fees.

For all these reasons, consider auditing your practices, and adopting compliant policies on breaks and meal periods for non-exempt staff, as well as a policy on payment of salaries to exempt employees.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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