Recent News & Blog / Are Your Pay Practices Putting Your Business at Risk?
June 15, 2026
Wage and hour compliance can feel a bit overwhelming. The regulations are complex and even small mistakes can lead to costly claims. Employers with clear consistent practices greatly reduce this risk.
Both federal and state laws require employers to follow minimum wage, overtime, recordkeeping, and classification rules. The key to compliance is how you track time, pay employees, and communicate expectations.
Here are few ways to protect your business:
Start with proper employee classification
Misclassifying employees is a very common mistake. There are two employee classifications, nonexempt (overtime eligible) and exempt. Employees must meet specific salary and job duties requirements to be classified as exempt. Classification is not determined by job title.
Employers should create job descriptions and review them annually with HR for proper classification.
Ensure every minute worked is recorded
If an employee works, they must be paid. This includes time spent answering emails after hours, traveling between job sites, and working through lunch. Accurate timekeeping is essential to demonstrating compliance.
Employers should use a consistent time keeping system and communicate and enforce that all hours must be recorded, “off the clock work” is not permitted, and employees must review and confirm their time each pay period.
Understand and apply overtime rules correctly
Under federal and state laws, nonexempt employees must receive overtime pay (time-and-a-half) for hours worked over 40 in a workweek. Overtime hours worked cannot be added to subsequent weeks to avoid overtime pay.
Issues often arise when overtime is worked but not approved. Employers can discipline employees for working unauthorized overtime, but they must still pay them for all hours worked.
Reduce risk with clear written policies
Employers that clearly define work hours, overtime approval, time tracking, and breaks reduce confusion and potential wage/hour claims.
Your handbook should also include a “Safe Harbor” policy that provides employees a clear way to report payroll mistakes, prohibits improper deductions, confirms the company will promptly correct any errors, and prohibits retaliation. This will help to limit liability in certain wage disputes if used consistently.
Equip managers to support compliance
Most wage and hour issues start with front-line supervisors. Managers may unintentionally allow off-the-clock work, fail to track travel and prep time, or misunderstand break rules.
Conducting periodic training along with compliant written pay policies will ensure managers understand the rules and increase employee trust and transparency when pay issues arise.
Consistency is your best protection
Wage and hour claims usually start with small everyday decisions. Clear rules, accurate time tracking, and managers who understand expectations will prevent most issues before they start. The more consistent your pay practices are, the better protected your business will be.
Need help evaluating your pay practices?
If you would like assistance in reviewing your wage and hour practices or identifying potential risk areas, we would be glad to support you.
If you have questions about this article, contact Laura Stover, SHRM-SCP, SPHR, Director of HR Advisory Services, by emailing lstover@sek.com or completing the contact form below.
SEK provides outsourced HR solutions tailored to your business needs, including the creation of employee handbooks, job descriptions, HR policies & procedures, and more. We assist with navigating employment regulations and building a well-structured, compliant work environment. Whether you're looking to supplement your current HR department or fully outsource the function, we provide personalized solutions to help you manage your workforce efficiently. Let us handle the complexities of HR, so you can focus on growing your business.