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As the economy evolves along with the world en masse, businesses become more complicated to run and with more pitfalls that can be handicaps to success. It is then vital to be aware of various labor laws and insuring that they are implemented within a company’s policy.

It is important to know all of the policies that may affect your operations. Even if state and local laws are followed closely, there may be other rules that need to be addressed. Take for example to the Seattle-Tacoma International Airport, or SeaTac. The airport implemented a SeaTac minimum wage ordinance that requires all businesses operating within the airport maintain a $15/hour wage for workers. Companies that did not follow this rule were brought up on class action lawsuits by the employees, resulting in multi-million-dollar settlements in favor of the workers. Across the country, settlements involving wage and working hours have added to $1.2 billion over the past few years, making such litigation as the largest exposure point for corporations.

In different service industry jobs, there may exist a subminimum wage policy. The idea is that with tips and different forms of wage sharing that a worker does not require minimum wage, whatever it may be. However, poor oversight and a lack of guarantees has left such procedures vulnerable to legal action. With growth around the number of claims and the service industry itself, some businesses have eliminated tipping as a function of wage and moved towards a minimum wage standard. This has not been prevalent, though, and many food-based industries are figuring out how to avoid claims and properly pay their employees.

Another issue often raised in wage-hour lawsuits is that of overtime work. Payroll has become more automated over the years but will also lack the ability to notice detail and nuance within a system. A worker may be misclassified in their exempt status and an automated system would not know to correct the error.

A hefty lawsuit can be detrimental to a business so it is as important as ever to avoid. It is good practice to review payroll policies at least annually, if not more often. Having a human review files can help avoid mistakes that a computer may not pick up. It is also advisable to research any local laws and ordinances that may affect a business’s policy. It can feel tedious at times, but a class-action lawsuit is measurably worse.