Common Illegal Mistakes Made By Employers

I can’t tell you how many employers I’ve watched knowingly or unknowingly break the law. Seriously, every business owner should take at least specific classes at a community college (or an equivalent class online or at least read a book!) and employment law is probably at the top of the list.


There are lots of laws for payroll, but let’s at least cover the most common mistakes.


We all know about overtime, but one common mistake is for employers to not pay it for one week because the total for the two-week pay period is less than 80 hours. If an employee works 37 hours one week and 42 hours the other week, that’s only 79 hours. But since the employee worked 42 hours one of those weeks, they are entitled to 2 hours of overtime pay.

Comp Time

Some employers try to give their employees additional paid time off instead of paying out the overtime, but this is also illegal. Just pay them what they’re entitled to, give them their overtime, not comp time. If they’ve earned more vacation time, give it to them as a separate issue.

Prohibiting Discussion of Pay

Yes, it is illegal for an employer to prohibit employees from discussing pay. This is a common policy but is illegal. If you are that worried about pay differences between employees that may upset them, maybe you should give the lower paid employees a raise. They will appreciate and be much more likely to stick with you.

NLRB – Your Right to Discuss Wages


Exactly how long and how often breaks are can vary by location, but the important part is that you cannot require them to do ANYTHING on their break. They don’t have to stay on the premises, they don’t have to buy their meal there, they don’t have to do anything in particular. When they aren’t clocked in, they are not under your control.

Clocking In and Out

Some employers want their employees clocked in before the work actually begins (“be clocked in by 8:50 so you’re ready to start working at 9:00 when you start getting paid”). NO! If they are clocked in, they’re getting paid. If you aren’t paying them yet, then they aren’t clocked in yet. Likewise, the same is true at the end of the day. You pay when they’re working and clocked in. They don’t clean up after clocking out. You don’t stop their pay when they haven’t gotten back to the office yet.

Unpaid But Required Attendance

If you want them there, you have to pay them. It doesn’t matter if it’s a meeting or after-hours party, if attendance is required, you have to pay them. Just because they aren’t doing their typical work tasks doesn’t mean it’s unpaid.

Required to be On-Site but Not Working Yet

Again, if you’re controlling where they are and when, they’re on the clock. If they can’t work yet, then you shouldn’t have required them to get there at that time. Whether something’s not working or whatever other reason it might be in your business, if they’re where you told them to be when you told them to be there, you have to pay them whether they’re doing actual work or not. If you’re not paying them, they have the right to be where they want to be doing whatever they want to be doing.

Deductions from Payroll

This is another time where employers think they have the right to do certain things that they don’t. You cannot deduct anything from pay unless it was explicitly stated so in writing in advance. One example would be a policy that if an employee fails to return a uniform provided by the employer, the employer will deduct the cost of the uniform from the employee’s last paycheck. This has to be in writing in advance.

You don’t get to withhold their last paycheck because they didn’t give you two weeks’ notice. You don’t get to deduct because they broke something. You don’t get to deduct pay because they were late.

If you feel so strongly about needing to take their pay away, talk to an attorney first. Unless they were truly negligent or willfully damaged things, you probably can’t get any money out of them. If you have such a strong case that you can sue them and win, then talk to your attorney about taking that route. But you can’t deduct from their pay because you’re unhappy about something.

If it’s that bad then you need to look at what you did wrong. Did you hire the wrong person? Did you not train them properly? Did you not supervise them properly? We all get bad employees from time to time, it’s our job to recognize them when that happens and let them go as needed.

Interview Questions

Questions that aren’t directly related to the DUTIES of the job should be avoided. For example, it doesn’t matter how far away an employee lives unless they will need to be on-call with limited time allowed to report for duty. Yes, an employee who lives 5 minutes away seems better than one who lives 2 hours away, but that’s not directly related to a duty of the job. The person who lives 5 minutes away can still be late every single day (believe me, I’ve seen it happen over and over) while the person who lives 2 hours away will be early every day.

Even more obvious things should be avoided as well such as their age, whether they have kids, whether they’re married, their religious or ethnic background, their sexual orientation, and many more. When in doubt, unless you can point to a job duty and say “I need to ask about X because of that job duty” don’t ask it! You can ask about skills, you can ask about work experience, but it all needs to be related to the job duties. Even open-ended questions such as “Tell me about yourself” can be an issue, so don’t use them to push for anything they don’t willingly give up that’s not related to the job duties.

Health Issues

This one can be tricky because sometimes the health issues impact their work, but even then, it needs to be limited. Someone having sick days is expected and even longer breaks are reasonable. But directly asking “What do you have?” is out of line. Be respectful and reasonable in what you ask.

Whether you agree with it or not, the world is becoming more and more friendly to the employees, not the employers. That’s the world you have to lead in. Fortunately, we also have unlimited resources at our fingertips. There are forums out there for business owners, HR people, etc., just go out and ask your questions there and find out how you can properly address them. One example is


Remember, at the end of the day, the better employer you are, the better employees you will attract and retain. Not paying properly, being disrespectful in your leadership, not treating them like real people, etc. will all encourage employees to look and see what else might be out there. Don’t be the reason you lose the good ones and are left with only the ones who can’t do any better than you.