A recent NYS law allows for employees to sue their employers for lost wages and unpaid overtime.
In fact, not only can the employee sue, but if the employer should pay as little as $1 to the employee in settlement, the employer is responsible for the employee’s lawyer fees.
I would think most employers would be outraged by what I just wrote. And they should be. Yet this does not change the law, challenge the law or stop what has happened due to this law.
I have several restaurant clients and each restaurant has been hit with a law suit at least 1 time. I want to emphasize this so that every employer will protect themselves from this law and frivolous suits filed by former employee’s and their lawyers.
The law is designed to protect employees. Employees generally do not have the funds to hire lawyers to sue employers. This law, creates a new business for attorneys. Attorneys are now approaching past restaurant employees willing to argue on their behalf for lost overtime and regular wages.
You see, if you are not management with the authority to hire and fire staff, you are required to be paid by the hour. Which means if you work more than 40 hours in a week, or more than 10 hours in a day, you are entitled to overtime rates [which starts at 150% of regular wages].
An employer’s only recourse against a suit about lost wages or lost overtime wages are TIME CARDS or time records [as many time clocks are now digital]. The number of cases are mounting and the IRS has admitted that 50% of all employer/employee cases come from restaurants, and so the IRS targets restaurants as do suing lawyers. But this law of pay and overtime pay affects ALL BUSINESSES.
Just this week we have a client who is considering closing his business and we have come to find out he never used a time clock. So even after the business is closed and gone, for up to six years, his secretary could sue for overtime and he would have no records to defend the fact that overtime never happened. Such is the case with a martial arts gym that raised someone’s salary.
I happen to mention we inserted the new pay rate and an overtime rate. The owner was thinking, I never have overtime for my employees. Great! How can you prove it? Do you have a time clock and retain the time clock records for at least 6 years?
Harlan S. Kahn CPA
Paris Accounting Corp
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