7 Ways to Prevent Wage Theft in Your Small Business – While wage theft can happen in big corporations, it also occurs in small businesses across the United States. Wage theft occurs when employers do not provide employees with all of the compensation they are owed under the law, such as denying overtime pay or failing to pay required minimum wages.
Fortunately, there are several steps you can take to prevent wage theft in your small business by following federal and state labor laws, keeping track of your employee hours, and paying attention to how you communicate with your employees.
1) Get paid through direct deposit
One way to prevent wage theft is to get paid through direct deposit. This way, you can’t be denied your wages if your employer doesn’t have the money on hand. Plus, direct deposit is more convenient for you and your employer. You won’t have to worry about cashing a check or waiting for it to clear, and your employer won’t have to worry about writing and mailing a check. If you do cash a check, make sure that there are enough funds in the account to cover what you are being paid.
The following are ways that you can make sure that wage theft does not happen at your small business: Get paid through direct deposit; get an itemized paycheck; always talk with your boss before quitting; keep records of hours worked and other work-related expenses; review contracts carefully before signing them; never work off the clock without pay or don’t work overtime without extra compensation.
2) Create a detailed contract
- One way to prevent wage theft is to have a detailed contract that lays out the expectations for both the employer and the employee. This can help ensure that everyone is on the same page and that there is no confusion about what is expected.
- The contract should include things like how many hours the employee will work, what their hourly rate will be, and what type of work they will be doing.
- Include a statement saying that any time an employee works more than 40 hours per week or eight hours per day they will receive time-and-a-half pay.
- Create specific guidelines for overtime pay: For every hour over 40 worked per week, an extra one hour’s worth of wages should be paid at time-and-a-half rates (e.g., an employee who works 50 hours during the week should receive 50 + 10 = 60 total).
- Draw up paperwork and always keep track of hours:
- If you are employing people through temp agencies make sure you ask them to provide you with written records of the number of hours each person has worked, as well as copies of pay stubs showing how much they were paid for each shift.
- Put this information into your payroll system so that it’s easy to access when it comes time to do payroll calculations.
- Along these lines, make sure all employees sign off on the correct hours they put in each week and be willing to question those numbers if they seem suspicious.
- A paper trail is also important; it shows not only how many hours an employee put in but also when they came in and left, which might indicate whether or not someone had time to take care of other responsibilities outside of work.
3) Document Everything
Wage theft is a serious problem for small businesses. Not only does it cost you money, but it can also lead to legal problems. The best way to prevent wage theft is to document everything. Keep accurate records of hours worked, pay rates, and any overtime or other special payments. Make sure your employees sign these records so there is no confusion about what was agreed upon. You should also have a written policy that clearly states your expectations regarding work hours and pay rates.
4) Ask to See an Employee’s Social Security Card
When an employee starts working for your business, you should always ask to see their social security card. This is the best way to ensure that they are who they say they are and that you are withholding the correct amount of taxes from their paycheck.
5) Keep Track of Hours Worked
One way to prevent wage theft is by keeping track of the hours your employees work. This can be done through a time clock, software, or even a simple sign-in sheet. By tracking hours, you can ensure that employees are being paid for the time they’ve worked.
6) Let Employees Take Breaks
In the United States, employees are legally entitled to take breaks. However, many employers require employees to work through their breaks or do not allow them to take breaks at all. This is a form of wage theft, as employees are not being paid for the time they are working. The good news is that you can prevent this from happening by making sure your employees know when and how often they should be taking breaks. For example, provide an area where employees can go if they need to use the restroom during work hours and make sure that no one else has that duty on any given day.
7) Follow the Law
The first and most obvious way to prevent wage theft is to simply follow the law. This means paying your employees at least the minimum wage, as well as any overtime they may have earned. You should also keep accurate records of hours worked and wages paid.