May 8 Tip of the Week

“Traps for the Unwary”

           

One of the most difficult aspects of Human Resources is the need to keep up to date on all of the labor and employment laws that apply to employees.  These laws are imposed by federal, state and local authorities and are ever changing. Employment laws generally take effect at the beginning of a calendar year (i.e., January 1), but in states with active legislative bodies, changes can occur mid-year as well.  Labor and employment laws cover all aspects of the employment relationship from wage and hours to employment discrimination to required leave laws, just to name a few areas.  Each state and the federal government have agencies that are dedicated to enforcing the laws and there are complaint procedures and processes that are built into the law to allow states to more easily enforce their labor and employment laws. 

The trap for the unwary is laid when an employer or human resources professional thinks that they know what the law requires and misses a change in the law, leaving themselves open to an employee complaint.  A recent example of this exists in Maine.  The general rule of thumb (a dangerous statement in labor and employment law) is that an employer’s policy on the payout of accrued and unused paid time off, such as vacation leave, is payable upon an employee’s separation from service in accordance with the employer’s policy.  Most states do not require employers to pay employees for time not worked, which vacation leave is by definition.  A limited number of what would be characterized as employee friendly states have their own requirements on the payout of accrued and unused paid time off, because they have modified their definition of wages to include this fringe benefit or courts in that state have expanded the definition of wages to include these payments.  Maine, until recently, was not one of those employee friendly states and did not require the payout of accrued, unused vacation unless such a payment was dictated by the employer’s policy.  Effective January 1, 2023, however, that rule changed in Maine and employers are now required to include payment for accrued, unused vacation time in an employee’s final paycheck when they separate from service.

Why is this change in the law significant?  First, unpaid wage claims are one of the easiest claims that an employee can make against an employer.  Almost every state’s website has instructions on how to file a wage claim and the federal Department of Labor will also accept wage claims on behalf of employees.  Second, most states have an established time frame for when an employee must receive their final paycheck.  A failure to meet that time frame can result in a wage claim.  Finally, wage claims often lead to wage audits which can then lead to very expensive and difficult to defend class actions lawsuits regarding unpaid or incorrectly paid wages. 

How can an employer protect itself against these types of claims?  An employer’s best defense against wage claims is a good offense and that is where myHRcounsel can help.  At myHRcounsel, we provide up to date and comprehensive labor and employment law advice to our clients.  We also provide ongoing training and educational opportunities that make employers aware of the issues and risks faced by employers.  Our team of labor and employment attorneys is at your service to assist you with employee handbooks, difficult employment issues, and answers to questions about state and federal laws.