A quick checklist to help you avoid common wage-and-hour and payroll pitfalls.
In recognition of National Small Business Week, here are four payroll “gotchas” I see come up again and again—along with a few practical reminders to help you stay on track.
- Overtime. Overtime issues usually start with a simple assumption: “We can work it out later.” If an employee is non-exempt (more on that below), you must pay at least minimum wage and overtime. As a rule of thumb, time worked over 40 hours in a seven-day workweek is paid at time-and-a-half. And a few things that don’t fix overtime: swapping in “comp time” next week, averaging hours across pay periods, or agreeing with an employee to ignore the 40-hour rule.
- Misclassification. Classification is another frequent trouble spot. W-2 employees are generally either exempt or non-exempt. Exempt employees are not entitled to overtime, but the label has to be earned. A quick two-step check: (1) Is the employee paid on a salary basis of at least $684 per week? If no, the employee is not exempt. (2) If yes, do the job duties fit a recognized exempt category (professional, executive, administrative, computer, or outside sales)? This is where the nuance lives, so it’s worth reviewing Department of Labor guidance and getting advice if you’re unsure.
- Break time. Breaks surprise a lot of employers. In many situations, the law generally does not require you to provide breaks—but if you choose to offer them, the details matter. Breaks of 20 minutes or less are typically paid time. For longer, unpaid breaks (over 20 minutes), make sure the employee is fully relieved of duties during the break.
- Payroll taxes and withholdings. Finally, remember: payroll isn’t just issuing paychecks—it’s also making sure taxes and withholdings are calculated correctly and deposited on time. Missed deadlines, outdated rates, or overlooked state and local requirements can trigger avoidable penalties. A simple habit that helps: set reminders to update tax tables, confirm withholding forms are on file, and periodically reconcile payroll reports.
A few small adjustments now can help you avoid bigger payroll issues later, and our team is always here to help. Contact us today at 248.477.6300.
