7 Common Questions About Pay Practices Answered

7 common questions about pay practices answeredIf every employee clocks in and out and every manager submits the correct information, payroll can be a breeze. Unfortunately, employees forget to clock out, managers get overwhelmed with work and payroll slips their mind, or an employee leaves and suddenly you have a host of questions about how exactly you are required to pay your employees. Wonder no more about whether you're following the law, because here are the answers to your seven common question about pay practices!

My employee forgot to record their hours. Am I obligated to pay them based on the hours they claim they worked?

Under the Fair Labor Standards Act (FLSA), it is the responsibility of the employer to pay their employee for all hours worked, even if they didn't follow company timekeeping procedures. One way to mitigate this issue is using time and attendance software that allows managers to continually check on employee's time cards and by implementing a policy that outlines the ramifications for failing to follow that policy.

How often am I required to pay employees?

Federally, there is no law that states how often employers must pay their employees, but employers should investigate whether their state or industry regulates how often payday needs to occur. Regardless, it's on the onus of the employer to clearly state when payroll will be distributed.

Payday falls on a holiday, when do I pay employees?

Holidays can make life tricky for employers. On the federal level, there is no requirement for employers regarding holidays. Some states do have laws that supersede that directive, so it's always best to check with the state labor board. Whatever the answer, employers need to annually publish any changes to the payday schedule. 

I would prefer direct deposit for employee paychecks. Am I allowed to require employees use direct deposit?

This answer is dependent entirely on the state. Some states have strict laws that prohibit employers from requiring employees to receive anything other than a paycheck. Other states have no such mandate. If you are able to require direct deposit, always obtain written authorization from the employee before initiating it. 

When an employee resigns, what am I obligated to include in their final paycheck?

The first and most obvious answer is any time they worked, including overtime. When it comes to vacation time, there is no federal law, but many states have chosen one of three routes: employers must pay vacation time in the final paycheck, employers must pay for vacation time unless their policy states vacation time will not be paid, or employers must pay for vacation time if the company policy states it will. It's best for any company to clearly state how they will handle termination and accrued vacation time. 

An employee who is resigning wants their paycheck immediately. Am I required to provide it on their final day of work?

It depends on the state. While the federal law requires that former employees receive their last paycheck on the next scheduled payday, some states have shortened that timeframe. It's best to contact your state's labor department to ask about state-specific requirements. 

A former employee has not returned company equipment. Can I withhold their final paycheck?

The short answer is no. Employers cannot withhold a paycheck from departing employees. The cost of the equipment may be deducted if the employee was non-exempt, as long as the deducted cost does not drop the paycheck to below the highest applicable (federal, state, or local) minimum wage without reducing overtime pay, and the employee signs a written acknowledgement of the deduction. 


Ultimate Guide to Reducing Labour Costs