Tsk, tsk, LinkedIn.
As a business-oriented social network site with 300 million users worldwide, LinkedIn is probably one of the last businesses you’d think would violate the Fair Labor Standards Act. But here we are.
According to CNET, a tech product review site, LinkedIn was investigated by the U.S. Department of Labor for failing to document and pay for all hours its employees worked. Many employees were working off the clock, which is straight-up illegal. In total, LinkedIn neglected to pay almost $3.3 million to its 359 current and former employees.
Fortunately, the social network company was quick to settle the case, but it wasn’t cheap. LinkedIn paid $6 million, which includes…
- Over $3.3 million in overtime back wages.
- Over $2.5 million in damages to employees in California, Illinois, Nebraska, and New York.
Though LinkedIn has stepped up to pay the arrears, the business learned a valuable and costly lesson during the ordeal, and you can, too. In short: your employees can sue the pants off your small business if you don’t pay them for the hours they’ve worked.
Pointers on Complying with the FLSA
Unfortunately, ignorance is not a defense for failing to comply with the Fair Labor Standards Act, no matter the size of your business. That means you must…
- Have the right tools to properly track and document employee hours. You are required to document employee time and pay records. Perhaps the easiest way to ensure you do this is to use time clock software.
- Pay employees for all their work. This includes overtime pay, which kicks in once your nonexempt employees work more than 40 hours in a week.
- Never allow employees to work off the clock. Whenever your employees are required to be on duty or at a prescribed workplace, you must pay them for their time.
- Compensate your employees fairly. Every employer is legally required to pay employees at least the minimum wage.
- Be careful when hiring minors. There are some things you can’t require workers under the age of 18 to do. Find your state’s child labor laws on this YouthRules! map.
You can learn more about federal employment laws in the post, “Employee Rights: What Small-Business Owners Need to Know.”
And now that you know the basics of wage and hour laws, let’s look at what your business can do if it’s sued for violating them.
EPLI: A Safety Net for Managerial Mistakes
Of course you would never purposefully neglect to pay your employees for their hard work. You’re not a monster! At the same time, there are a lot of federal laws to contend with. So what happens if you’re accused of making an oversight on payroll? Or worse, what if an employee sues you over it – even if you’ve done nothing wrong?
It’s times like these you’ll be glad your small business invested in Employment Practices Liability Insurance. This coverage can pay for your lawyer fees and settlement or judgment expenses when your business is sued for…
- Mismanaging employee benefits.
- Sexually harassing employees.
- Wrongfully firing or demoting employees.
- Discriminating against employees based on age, gender, religion, race, nationality, or genetic information.
- Breaching an employment contract.
- Invading employees’ privacy.
- Making negligent hiring or compensation decisions.
It’s worth noting that these lawsuits are among the most expensive claims a business owner can face. Even if the suit is frivolous, you can expect to pay a couple thousand dollars in legal fees alone. To learn more about these claims, be sure to read our EPLI blog series.