Posted on August 22nd, 2019
Below is a complete transcript of this video.
What’s happening, fellow entrepreneurs? It’s John Fagerholm, again. Today, I’m coming to you from my brother’s vehicle.
Hey, guys.
There he is. We were just talking about some labor board issues, that he was asking me about. And it got me thinking about wait time penalties.
And a lot of times, clients don’t understand how a small amount of money that they haven’t paid a former employee can turn into such a large number.
So for example, “Hey, there’s really only $500 owed here, why are they saying that I owe $12,000?” Well, most of that is probably the wait time penalties. So even if you owe an employee a dollar, once they leave and you owe them money, any amount of money.
Even if it’s just a dollar, the wait time penalties start to accrue. So even if you just owe them a dollar, for example, the wait time penalties are the employee’s daily rate.
So for every day that you don’t pay that employee the dollar, their daily wage accrues. So let’s say, for example, that their daily wage is a $100.
Well, every day, it’s another $100 that’s tacked onto that dollar that you owe, to a maximum of 30 days. So now, this $1 that you didn’t pay an employee turns into $3,001 owed.
So that’s how that number gets so large when what you owe to your employee is a relatively small number.
So good piece of advice, if you fire an employee, make sure they get every cent they’re owed the day that you fire them. If they quit or resign, then make sure that you give them every cent they’re owed within 72 hours, that’s the law.
And if there’s a dispute about anything, “Hey, I’m owed this expense,” or whatever else it is, my thoughts are if it’s not a significant amount of money or worth arguing about, I think you just pay it and make it go away because a labor board claim is going to cost you much more than that.
So let’s say the employee is saying, “You owe me X amount of money for mileage,” right. And you say, “Well, you never submitted it,” or whatever. But let’s say it’s $58, right. So for $58, you could potentially have $3,000 tacked on top of that if the wait penalties go that far, if it takes that long for you to pay it, and there’s a labor board claim.
And on top of that, you’re going to have to pay some attorney thousands of dollars to defend you, plus just the pure amount of time of not focusing on your business and worrying about paying this $58.
So my advice is always just if there’s any dollar amount that they say you owe them, and it’s not a dollar amount that’s worth fighting over, then I say you just give it to them.
Also, another piece of advice. When it’s the employee’s last day, whether it’s termination or resignation, always have something that they sign that indicates, “I’ve been paid everything that I’m owed.”
That way, that doesn’t come back to you later.
All right, until next time.
