Businesses require the labor of employees to provide services or goods for their customers. Hiring workers means taking a degree of risk. Employers are subject to numerous state and federal statutes. All it takes is a simple mistake regarding record-keeping or wages for workers to bring a costly lawsuit. Sometimes, workers may threaten to sue or file lawsuits against businesses by claiming they did not receive pay as they should.
Frequently, hourly workers are the ones who try to demand additional wages for their labor. A crucial federal rule helps limit employer liability in scenarios where workers may not have received pay for certain, minor job functions.
The de minimus rule affects wage claims
Technically, hourly workers should receive wages for all time worked. Employers have an obligation to track when an employee starts and ends their shifts and pay them accordingly. That includes overtime wages when a non-exempt employee puts in more than 40 hours per workweek.
However, there is a reasonableness element to these requirements and the record keeping responsibilities. Companies can pay their workers in specific increments of time, such as five or 10-minute increments. There are also some limited scenarios where an employee will not be entitled to payment if the employee performs tasks while technically not on the clock. This is known as the de minimus rule.
The de minimus rule allows employers to avoid exposure if an employee performs a task when they are not on the clock, where those activities only involve an insignificant period of time. So long as the amount of time committed to the task is insignificant, the company is generally not liable for this time.
An example might be having a worker clock out after performing most closing tasks at a store and then arming the security system and locking the front door on their way out of the building. The amount of time committed to those two tasks is so minor that it does not warrant any alteration to the time clock records. Other, more involved tasks, such as cleaning or prep work, might lead to justifiable wage claims.
While there is limited liability exposure if an employee performs work off the clock, the best practice is to discourage any work before or after an employee clocks in or out. Defending an FLSA lawsuit is a loss for an employer even if the company is confident in the outcome. Companies should avoid giving an employee any room to state a claim in the first place.
Businesses often need to be very careful about how they train their employees and calculate payroll to minimize the risk of wage claims brought by frustrated workers. Ensuring proactive compliance with employment regulations is important for protecting a company’s finances and reputation.