Don't underpay your employees

When the number of wage options is first listed to a crooked business owner, he may see many opportunities to take advantage of his workforce. Does he have a job which often exceeds forty hours per week? Make it a salaried position and cap the pay no matter the hours! Does he regularly need to pay overtime hours on Fridays to a subset of his business? Change the payday to Thursday and cut their hours short on Wednesday so they don’t exceed forty hours! While these may seem effective ways to get around the fair labor system, his crooked ways are certain to land him in legal trouble.

Salaried positions are an available option to any employee, but there are restrictions on the type of work that can be payed on a salary basis. If the employee doesn’t qualify as an executive, an administrator, or a professional who requires advanced knowledge or creativity, then they cannot qualify for salary (with a few exceptions)((Fleischer, pg. 79-80)). If the crooked business owner manages to cover himself in this arena, he cannot ever treat his employee in an hourly fashion. For example, if his employee works a half-day and the owner docks his pay to cover the hours lost, he forfeits the hourly pay exemption.

Hourly wages are also subject to restrictions. If the crooked manager thinks he can arbitrarily change a payday to land right before overtime, he should think again! He does have the right to set his own payday, but this must be at a bi-weekly pace and cannot be regularly changed ((Fleischer, pg. 73)). If he does keep the pay schedule consistent, he cannot modify the hours by giving comp time on a week other than the week earned ((Fleischer, pg. 76)). For example, he cannot give his employees more time off on a subsequent week in exchange for overtime pay. The one exception is if he gives comp time at the one and one half overtime margin ((Fleischer, pg. 77)).

What happens to this crooked business owner if he ignores U.S. federal regulations and manipulates his employee’s wages to his own gain? Ultimately, he opens himself to litigation which he will never win. A salary employee who loses his exemption because the crooked owner reduces his pay based on hours worked may be forcibly switched to an hourly basis. If this employee was placed on salary because she routinely worked sixty hours a week, the crooked owner will be paying time and a half for 50% of her pay and may be required to back-pay her for hours worked in excess of forty! Again, if the crooked business owner continues to avoid overtime pay by offering alternatives - even if the employees are agreeable - he opens himself to a breach of federal law and the possibility of litigation, including a failure to accurately calculate income tax due to incorrect pay.

Since unions first gave employees power over their employers, the U.S. climate towards employers is decidedly in favor of the employee. THis is certainly true when it comes to wage earning. For the most part, I should caution any business owner who wants to modify their wage rules to their own advantage to proceed with great caution, because the move has likely been deemed illegal at a state or federal level. Instead, I will recommend that business owners set a fair wage and follow industry-standard payment methods because not only will this protect them from future litigation, it will keep their businesses attractive to new hires.

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