FindLaw KnowledgeBasePublished: 2012-05-23
By trying to provide convenience and flexibility for employees or themselves, businesses sometimes unintentionally violate employment laws and make themselves vulnerable to lawsuits. A recent report by the California Chamber of Commerce outlines several common mistakes that can put a business at an increased risk of litigation.
Misclassifying Employees as Independent Contractors
Businesses often make the mistake of treating workers as independent contractors when, in truth, they should be classified as employees. This is often a matter of convenience for the employer, since, from an administrative standpoint, it is generally simpler to work with independent contractors. It also saves money because businesses do not have to pay payroll taxes for independent contractors. However, the benefits can easily be lost if workers are not properly classified, since an independent contractor may sue in order to gain access to employee protections like workers’ compensation, unemployment insurance, disability benefits or family leave.
There is not always a simple answer as to whether a worker should be classified as an employee or an independent contractor, but in California the distinction depends largely on the extent of the company’s control over the worker.
Treating Workers as Exempt When They Are Not
As with independent contractors, it is often simpler and less expensive to classify workers as exempt than non-exempt, since it prevents the business from having to account for things like time sheets, overtime, rest breaks and meal breaks. However, the potential savings are moot if the classification is not done correctly, since employees who believe they are misclassified as exempt may sue to recover back pay for overtime, meal breaks and rest breaks.
While the difference between exempt and non-exempt employees in California can be unclear, exempt employees generally include high-level executive, administrative or professional employees.
Inadequate Harassment and Discrimination Training
Businesses should invest in training managers and supervisors on topics like sexual harassment and discrimination, since these individuals tend to be in touch with the day-to-day interactions between employees. If a supervisor becomes aware of harassment, whether by observing it firsthand or being told, the company itself is legally presumed to know about it and is required to take action to correct the problem. Therefore, if managers and supervisors are not adequately trained, this line of communication can be broken and the business may be held liable if the harassment persists.
For more information about preventing lawsuits caused by these and other common errors, contact an experienced business and employment law attorney.