In no particular order, I’ve compiled a list of the top 10 reasons I see employers get into trouble with their employees. Surely this list isn’t comprehensive, but over the last 15 years of practice, I’ve seen more employment lawsuits and agency charges spring from these circumstances than any others.

• Incorrect exempt/nonexempt decisions – Generally, nonexempt employees are due overtime for hours worked in excess of 40 in a given week. Exempt employees are not. The proper classification depends on actual duties, not job title. Misclassification is dangerous, especially when an entire group of employees is misclassified.
• Improper deductions from pay – Under the North Carolina Wage and Hour Act, deductions from employee pay may only be made under a limited set of circumstances, usually requiring written authorization from the employee.
• Bad interview questions – I hear employers say over and over, “I knew from day one that employee was going to sue me one day.” Effective interviewing goes a long way towards weeding out the “walking lawsuit.” In addition to effective interviewing, employers must take care to engage in lawful interviewing. Some questions, like inquiring about ethnicity or age, are unwise. Others, like those inquiring about potential disabilities, are per se illegal.
• Failure to pay everything owed in the last paycheck – Under the North Carolina Wage and Hour Act, employers must pay separated employees all wages due on or before the next regular payday following separation. This means all pay due, including wages such as accrued, unused vacation or PTO. There are, however, ways to control the amount owed through effective written policies. Pay special attention to employees paid by bonus/commission. Do your written policies address how such payments are to be made (or not) upon separation? If not, they should.
• Improper classification of employees as independent contractors – Employees are employees, and independent contractors are independent contractors, regardless of what you call them. Misclassification adversely affects a wide swath of considerations, including wage payment, insurance premiums and tax liability.
• Inaccurate evaluations – One of the more challenging circumstances I encounter is when I am called on to defend an employer’s decision to terminate an employee for poor performance, yet all formal evaluations are stellar. Providing criticism can be difficult, but (almost) no one is perfect; therefore, (almost) no performance evaluations should be.
• White lies – I’ve written before about the importance of being honest when terminating employees. If you aren’t truthful, even in an attempt to spare feelings, chances are the recipient of the message will know it. In contemplating what the real reason for termination is, human nature dictates that the terminated employee will look outwardly, not inwardly, for someone to blame.
• Uninformed front-line supervisors – Educated, informed office managers, human resources professionals and executives are great, but it’s the front-line supervisors who have the most contact with employees. As such, it is imperative that they receive training on your policies as well as the laws affecting how they interact with employees.
• Running a large/growing business like a small one – As a business grows, the rules change. A business of 40 employees that uses the same employee handbook it did when it had five is asking for trouble. A business with 51 employees that uses the same handbook it did when it had 40 is almost per se breaking the law.
• Failure to follow the golden rule – I saved this one for last because it’s the most important. Almost without exception, employees who file claims against their employers feel “wronged.” Avoid that feeling and you avoid lawsuits. Note this doesn’t mean I advocate being a pushover. The paramount consideration here is fairness. Employees who feel like they were treated fairly, even when they don’t like the outcome, can often come to respect the decision (and the decision-maker).