Advice to Employers: Pay workers now rather than Later

August 12, 2006, 12:00AM. By Jane Mundy

"Employers would be well advised to compensate their employees before they are taken to court," says Tom Emmitt, head litigation attorney at United Employees Law Group, PC.

"Employer's biggest fears are class action and individual lawsuits. We will take the employer to court and collect not only back wages and overtime owed, but a variety of penalties and in many cases, attorney fees," he adds. As well, California law in particular is favorable to the employee and tough on the employer. Here are a few tricks employers use to get around paying employees overtime and in the case of H-1B, even terminating their employment.

H-1B
The H-1B is a nonimmigrant classification used by foreign workers who will be employed temporarily in a specialty occupation. H-1B status requires a sponsoring U.S. employer.

"In my opinion, H-1B abuse is a trend on the rise - we see it all the time in California, generally in IT corporations," says Emmitt. "And we are seeing a growing number of class action lawsuits that involve the use of overseas workers at a reduced rate of pay."

A lot of companies are increasingly hiring workers from overseas. This gives employers two advantages:

1. The opportunities in the US are greater here than in other countries and many overseas workers will settle for less remuneration.
   
   
2. Many people come here with illegal status and are afraid to assert their rights. Even though their chances of deportation are minimal, they fear that complaining will lead to trouble. A lot of overseas and internet advertising alert overseas workers to job opportunities in the US. Potential overseas employees are unaware that they have put a US citizen's job in jeopardy and possibly got them fired.

"We are hearing about this trend from current and former IT employees who see it happening," says Emmitt. "They want to know their rights and the rights of their co-workers. Usually we hear about these incidents because a US worker is angry that he or she has been replaced by an overseas worker for a lesser salary."

Overtime
There are many ways that employers think they can get avoid having to pay overtime.

Every employer has a general idea of state and federal labor law and they know that employees are entitled to overtime. They don't want the cost of giving employee status and instead hire workers as independent contractors. You can call anyone an independent contractor but there is a legal standard. For instance, if you are told to work at certain times or on the company's equipment or login to their server, you may be an employee and entitled to overtime and other benefits. Nonetheless, many employers classify employees as independent contractors and pay them accordingly.

In so doing, independent contractors lose social security deductions and possibly health and retirement benefits (the employer wouldn't have to match medical and retirement plans). As well, an independent contractor has to pay self-employment taxes which are higher than taxes they would pay as an employee.

Another way of circumventing the labor code is to make the employee a manager. If you have the power to hire and fire and more than 50 percent of your time involves management duties, you may be exempt. However, if you cash out on the register every night or carry an over-ride key but spend 80 percent of your workday performing menial tasks, such as answering phones and filing you may not be classified as a manager under California law and therefore not exempt.

For many employees, it's scary when management basically says, 'Shut up and take your medicine or we can make a change here.' But the bottom line is that the employer is obligated to pay the employee appropriately, with the right classification.

Computer Programmers and Overtime
Computer programmers in California have to be paid in excess of $99,445 per year to be exempt from overtime. If you are a computer programmer and make less than this amount, you are non-exempt and entitled to be paid overtime. This California statute allows an employee to collect overtime for the four years previous. This particular threshold of pay is particular to computer programmers.