HOUSTON BUSINESS REVIEW

CYA: PAY THE PIPER AND YOUR EMPLOYEES
By Shahara Wright

Shahara D. Wright, Business Law Attorney, "Serving businesses from start-up through expansion". You can cantact her by: calling her at (281) 980-2040, sending her an e-mail or visiting her website. For more information concerning Shahara Wright click here.

One of the most common mistakes that employer’s make is not correctly paying their employees. In addition (as mentioned in a previous article) employer’s fail to properly classify and pay taxes on those employee’s as well. Once you have hired an employee, you must pay them consistently and in accordance with federal laws.

As an employer you should become familiar with the laws governing the wages of employees or at least hire someone who is. The Fair Labor Standards Act is the federal law that mandates the wages of employees and set the minimum wages and governs overtime as well. The Texas Workforce Commission (TWC) is the state government agency charged with overseeing and providing workforce development services to employers and job seekers. TWC offers recruiting, retention, training and retraining, and outplacement services, as well as valuable information on labor law and labor market statistics. In addition TWC handles employee claims for unemployment and unpaid wages.

You must ensure that as an employer you are paying your employees at least minimum wage and for the time that they have worked. You should ensure that you have a proper method of tracking your workers time to keep in a file. If the employee works more than 40 hours in a workweek (as defined by the company) then you must pay that employee overtime (with some exceptions). As a small business owner, you may face problems paying workers on time. While there is some room for an employer to delay payment for a small period of time, you must pay such employees for the time worked. Failure to pay your employees can lead to them filing a claim with the Texas Workforce Commission (TWC). The TWC will hold you liable for wages earned and not paid to your employees and can penalties and interest for failure to pay.

The worst thing an employer can do is fail to pay its payroll taxes. Business owners are required to withhold payroll taxes from employee’s wages and they have a fiduciary responsibility to pay the amounts withheld over to the IRS. The IRS takes a hard look at any business, which gets behind in paying payroll taxes or fails to pay the payroll taxes. Any business owners who find themselves behind in paying their payroll taxes should consider that the IRS may consider this a criminal act and the officer and directors of a corporation may find themselves before a Federal Grand Jury. Business owners who take action to remedy these situations before IRS agents show up at the business door will always be in better shape to save their business and their personal freedom. Often business owners faced with a payroll taxes do nothing. This is the worst thing you can do! Instead acknowledge you have a serious payroll problem and immediately start moving forward to solve it. Do not wait for an IRS agent to stick a badge in your face to wake you up.

Nothing in this article is intended as legal advice and you should consult an attorney before making any decisions.