Perhaps nothing in work is more fundamental except pay. Employees expect to be paid properly – and employers face significant risk and consequences if correct payment does not occur. The Department of Labor’s recent proposed rule change relating to overtime has many implications for employers seeking to award overtime pay in a compliant manner. While the proposed rule is still pending (i.e., not final), it serves as a reminder that employers should regularly revisit their pay practices to minimize liability. I recommend that employers keep the following in mind:

1. Employees must be paid at least twice a month. Most jurisdictions in the United States have requirements on how often to pay employees. In DC, MD, and VA – payment must occur at least twice a month. Paying employees less than twice a month (even inadvertently) may result in significant damages for employers (i.e., twice the amount due to be paid per employee). I recommend revising “unique” pay schedules if they run afoul of the twice-monthly requirement.

2. Withholding pay at separation is prohibited. The end of an employment relationship is rarely “clean.” Many times, employees leave without providing two weeks’ notice – or employers need to terminate, effective immediately. Absent written agreement to the contrary, employers cannot withhold final pay – even if company equipment such as computers or tool kits remain outstanding. Employers should refine their current policies to clarify the process for the end of the employment relationship (including consequences/costs for taking company equipment). Without a proper agreement, employers should always lean towards paying employees their final pay – or risk consequences (i.e., at least twice the amount of payment due and attorney’s fees).

3. Overtime can be earned even if not expressly authorized. Many employers operate under the assumption that they make the final decision on awarding overtime. However, this is far from the case. Any time worked in a 7-day period that is more than forty (40) hours must be paid at one and a half a non-exempt employee’s hourly rate. While policies can be implemented that require that management authorize any overtime work (appropriate for a variety of workplaces), employers should always review their employees’ time to confirm that they are properly paying for any work over forty (40) hours. A failure to pay for additional time can result in significant penalties (i.e., three times the amount due, lawsuits from other employees in the same “class,” and attorney’s fees, among other things).

Be sure to tune in for additional analysis on the Department of Labor’s rule change process and the implications of the final rule for employers. In addition, feel free to reach out to me for any questions on your current pay practices.