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Avoid Wage, Workers Comp Issues for Your Small Business

Adam Groff

July 02, 2015

It's unfortunate but true, millions of workers across the country experience wage theft.

From the construction industry to the retail and hospitality industries, more and more employers are neglecting to pay their workers; that goes against many workers compensation initiatives.

In order to avoid payment issues, here are a number of ways your small business can avoid wage theft:

Wage Theft and Workers Compensation

Most businesses provide employees with workers comp as a form of insurance.

If one of your employees is hurt on the job, workers comp provides wage replacement and medical assistance for the duration of the injury.

In return, the injured employee gives up their right to sue your small business.

Although the two aren't directly related, workers comp has paved the way for the Wage Theft Protection Act, which went into effect in 2011. Thanks to the protection act, many workers are able to take a direct course of action when they aren't paid for their time.

With that said, having a basic understanding of wage theft will help your small business avoid the wage issue altogether.

Wage Theft and Your Business

As the article, “What is wage theft and what can be done to stop it?” looks at, well, in a nutshell, wage theft is the non-payment or withholding of payment to employees. Withholding of funds is illegal in the United States, but sometimes employers don't even know they're doing it.

More often than not, businesses neglect to pay their employees for overtime due to system errors.

Likewise, not keeping up with current minimum wage laws is another way employers unknowingly commit wage theft.

Smaller businesses usually don't have an issue with accidental wage theft because fewer staff members are easier to keep track of.

With that said, your small business should still do all it can to avoid committing wage theft.

Keep Track of Payment Cycles

Accidently withholding employee funds is easier than you might think, especially when payment cycles fall on the holidays and weekends. By tracking payment cycles and being proactive about getting checks out early, you can avoid wage theft.

If there is a long holiday coming up or payday falls on a weekend, make sure you get checks out ahead of time.

Although many employees are fine with getting paid a few days after the regular payday, it's never safe to assume this.

Withholding wages, even if it's only for a few days, is still considered wage theft, especially to those employees who live from one paycheck to the next.

Monitor Overtime Amounts

Running a small business usually comes with its share of overtime.

By closely monitoring overtime hours, you can ensure each employee is paid in full for his or her overtime work.

Likewise, it's important to clearly separate overtime hours from regular hours on each paycheck in case there are any disputes.

Regularly Conduct Audits

Auditing your small business on a regular basis is one of the best ways to avoid wage theft.

Wage and hour audits can ensure your business complies with all overtime and minimum wage laws. Auditors can also help you find solutions to common wage issues.

If wage theft is a concern for your small business, consider the advice above and make sure your employees get paid.

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