HR Administration | 

HR Compliance Mistakes You May Not Know You're Making

Employers must comply with a myriad of complex and constantly changing federal, state, and local laws. Here are several employment practices that remain all too common despite recent developments in the law.


  • Seeking an applicant's salary history. More than a dozen states and several cities have enacted laws that generally prohibit employers from asking applicants about their pay history. These laws are intended to prevent widening the wage gap since discriminatory pay practices of a previous employer could result in lower wages in a new job. Make sure you understand what, if any, restrictions apply to you.
  • Asking about criminal history too soon. In several jurisdictions, employers are prohibited from asking about criminal history on application forms. In many cases, these laws require employers to wait until later in the pre-employment process, such as after making a conditional job offer, before asking about criminal history. While there is no federal law specifically prohibiting employers from asking applicants if they've ever been convicted of a crime, the Equal Employment Opportunity Commission (EEOC) recommends employers avoid asking for this information on an application form. If employers do ask about convictions later in the selection process, the inquiries should be job-related and consistent with business necessity.
  • Asking off-limit questions. During interviews, employers should avoid not only questions that are expressly prohibited by law but also those that may directly or indirectly reveal an applicant is a member of a protected group. For example, asking an applicant what year they graduated high school could be used to estimate their age. The fact that you know this information could be used to challenge your hiring decisions. Interviewers often ask these types of questions not because they intend to discriminate against candidates, but because they're engaging in small talk to get an interview going. Still, there are other times when these questions may represent biases that the interviewer may not know that they even have, which might impact their hiring decisions.

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Pay & Overtime:

  • Failing to pay employees for rest breaks, training, and travel. Under the FLSA and many state laws, employers must pay employees not only for time actually spent working, but also for certain nonproductive time, such as time spent on rest breaks, in training, or traveling. Make sure you understand and comply with federal and state rules on compensable time.
  • Classifying employees as exempt from overtime based on job title. An employee's job title doesn't determine whether they may be classified as exempt from overtime. And just because an employee receives a salary doesn't mean they aren't entitled to overtime. Under the FLSA, to be classified as exempt from overtime, an employee must generally:
    • Meet the minimum salary requirement (currently $455 per week for the professional, administrative, and executive exemptions);
    • Receive their full salary in any week they perform work, regardless of the quality or quantity of the work; and
    • Meet certain primary duties criteria.

    Some states have their own tests for overtime exemption. Before classifying an employee as exempt from overtime, apply all applicable federal and state tests.

  • Prohibiting employees from discussing their pay. Section 7 of the National Labor Relations Act (NLRA) gives employees the right to act together, with or without a union, to improve wages and working conditions. Most employers are covered by the NLRA, regardless of whether their employees are unionized. The National Labor Relations Board (NLRB), which enforces the NLRA, and many courts have found that rules that prohibit employees from discussing their pay (or other terms and conditions of employment) violate the NLRA. Some states also have enacted laws protecting employees who discuss their pay with co-workers.
  • Averaging hours over two workweeks when determining whether overtime is due. Under the FLSA, non-exempt employees must receive 1.5 times their regular rate of pay for all hours worked over 40 in a workweek (some states require overtime in additional circumstances and at a different rate). The FLSA does not allow employers to average an employee's work hours over two or more workweeks. Therefore, if an employee works 50 hours in one workweek, the employee is entitled to overtime for that workweek even if the employee works 30 or fewer hours in the following/preceding workweek.
  • Incorrectly calculating an employee's regular rate of pay. Under the FLSA, an employee's regular rate includes not only their hourly rate but also the value of nondiscretionary bonuses, shift differentials, and certain other forms of compensation. Failing to include these other types of compensation can result in inaccurate overtime pay calculations.
  • Failing to pay 'unauthorized' overtime. If a non-exempt employee has worked overtime, they must be paid an overtime premium, regardless of whether the overtime was pre-authorized. A policy that no overtime work is permitted unless authorized in advance doesn't relieve the employer of this requirement. Employers may subject the employee to disciplinary measures for working unauthorized overtime, but in no case may the employer withhold overtime pay.

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  • Assuming leave laws don't apply to small employers. States and local jurisdictions are increasingly requiring employers of all sizes to provide leave to employees, including paid sick leave and paid family and medical leave. Make sure you understand which leave laws apply to you.
  • Counting job-protected leave against an employee. Many federal, state, and local laws give employees the right to job-protected leave and prohibit retaliation against employees who exercise their rights to take leave. If an employee takes protected leave under one of these laws, the employer may not count this time against the employee when assessing their attendance or performance. Review your attendance and performance practices to ensure they aren't violating these laws.
  • Requiring a doctor's note for every sick day. Most leave laws allow employers to ask employees for reasonable documentation of the need for leave. However, certain laws do have restrictions. For example, some paid sick leave laws prohibit employers from requesting documentation unless the employee has taken sick leave for more than three consecutive days. Even in the absence of a restriction, consider what, if any, documentation would be reasonable, and apply your policy consistently.

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  • Keeping all records in an employee's personnel file. Some laws specifically call for certain records to be kept in a separate confidential file. It's also a best practice to keep certain documents separate from personnel files. This includes:
    • Any information reflecting an employee's membership in a protected group, such as their voluntary self-identification of gender, ethnicity, race, veteran's status, or as an individual with a disability.
    • Any document relating to an employee's health or medical condition or history (and in some cases a family member's medical information), including any doctor's notes and medical certification forms, drug test results, and leave of absence requests based on an employee's injury or disability, or benefits information that contains protected health information.
    • I-9 forms and supporting identity and work authorization documents. It's a best practice to store all I-9 forms together in one file, since they must be produced promptly following an official request.
    • Records concerning workplace investigations (written statements from all relevant parties, interview notes, final investigation report, etc.) should be kept in a separate workplace investigation file.
    • Other protected information, including child support or wage garnishment information, background and credit reports, grievances and litigation documents.
  • Asking for a specific document for the I-9 Form. All employers must complete and retain a Form I-9 for each employee at the time of hire to verify their identity and work authorization. The employee has the right to choose which document(s) to present, provided they are on the I-9's List of Acceptable Documents (see the last page of the form). The employer can't dictate which specific documents the employee needs to show to verify employment eligibility.

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  • Withholding final pay until company property is returned. Federal law requires employees to receive their final pay by the next scheduled payday. Many states have shorter timeframes, such as at the time of termination. Employers must meet final pay deadlines, regardless of whether the employee has returned company property.
  • Failing to pay out unused vacation when required. Depending on your state, you may be required to include accrued, unused vacation and paid time off in the employee's final pay. States generally handle unused vacation in one of three ways:
    • Expressly prohibit use-it-or-lose-it policies. These states require carryover from year to year and payout at separation;
    • Permit use-it-or-lose-it policies but only if the employer has a written policy that explicitly states it will not carry over accrued, unused vacation to the following year and won't pay employees for accrued, unused time at separation; or
    • Don't require employers to carry over accrued, unused vacation to the following year or pay employees for unused time at separation unless they have a policy that says otherwise.

    Know which rule applies to you and ensure your final pay practices align with it.

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These are just some of the areas in which employers may run afoul of the law. Make sure you understand all the laws that apply to your business and ensure that your policies and practices comply.


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