When you start a business, you must decide

Employer's Legal Handbook:

Wages & Hours

(top of page)
A slew of statutes—federal and state—regulate workplace wages and hours, imposing strict requirements on employers. These laws require, for example, that you:

• pay an employee at least the minimum hourly wage unless he or she is exempt from wage-and-hour statutes

• pay a premium rate for overtime work

• pay for all the time an employee works

• pay men and women equally for the same work

• follow special rules if you employ young workers, and

• observe legal limits on payroll deductions.

For the most part, complying with wage-and-hour laws is simple and routine: You calculate wages using easy to understand formulas and you retain time and payment records for employees. There are, however, some legal subtleties that can affect your ability to carry out your aims. So in addition to discussing the wage-and-hour basics, this chapter covers potential problem areas.

Check State Laws, Too: This chapter focuses primarily on the federal wage-and-hour laws. Always keep in mind that you may be covered by a state law as well, and that the state law may be more stringent than the federal law. In that case, you must comply with the more stringent state law requirements. For details consult your state labor department.

(top of page)

A. The Fair Labor Standards Act: Coverage

The main law affecting workers’ pay is the federal Fair Labor Standards Act or FLSA (29 U.S.C. §§201 and following) which Congress passed in 1938.

1. Covered Businesses

Your business is covered by the FLSA if you have $500,000 or more in total annual sales. If your business earns less than $500,000 in sales, individual employees may come under the FLSA if their work involves interstate commerce. This includes almost every employee, because courts have interpreted the term “interstate commerce” broadly. An employee of a smaller business is covered by the FLSA if, for example, he or she:

• sends mail to or receives mail from other states

• makes phone calls to or receives them from other states

• keeps records of interstate transactions

• handles goods moving in interstate commerce

• crosses state lines as part of the job, or

• does clerical, custodial or maintenance work for a business engaged in interstate commerce or that makes goods in interstate commerce.

It’s possible—but highly unlikely—that your business will fall within a handful of specific exemptions to the FLSA. For example, most small farms are exempt. For specific details on what businesses are exempt, check with the nearest office of the U.S. Labor Department’s Wage and Hour Division.

If you want to research the exemptions to FLSA coverage, you’ll find most of them in 29 U.S.C. §213. Look in an annotated edition of the United States Code, which is what your local library is most likely to have. The annotated edition contains summaries of court decisions that will help you understand the courts’ rulings about this complex law. In addition, see Title 29 of the Code of Federal Regulations, which goes into great detail on virtually every aspect of the FLSA—but be forewarned that the details can be mind-numbing to the point of incomprehensibility. Fortunately, the Department of Labor operates an excellent, user-friendly website at http://www.dol.gov. There, you can find easy-to-understand articles and guidelines about various federal labor laws that you must follow, including wage-and-hour laws.

Independent Contractors Aren’t Covered:

The FLSA covers only employees—not independent contractors. Whether a worker is an employee for purposes of the FLSA generally depends on the economic realities and not on the IRS definition of an independent contractor.

To determine whether a worker has sufficient economic independence to qualify as an independent contractor under the FLSA, concentrate on:

• the degree to which you control the work

• the worker’s opportunity for profit or loss

• the extent of the worker’s investment in equipment and facilities

• whether the services require a special skill

• the permanency of the work relationship between you and the worker, and

• whether the worker’s service is an integral part of your business.

2. Exempt Employees

Even though your business is covered by the FLSA, some employees may be exempt from that law’s minimum wage and overtime pay requirements. This is a complex area of law and a source of many misunderstandings.

Most employees who are exempt from the minimum wage and overtime pay requirements fall into one of five categories:

• executive employees

• administrative employees

• professional employees

• outside salespeople, and

• people in certain computer-related occupations.

There are a few miscellaneous categories of workers who are exempt as well.

a. Executive, administrative and professional employees

Generally, these are employees who are paid a minimum weekly salary as specified by law and who spend at least 80% of the workday performing duties that require a measure of discretion and independent judgment. Beyond that, each category of worker has special qualifiers.

An executive, for example, is someone who manages two or more employees within a business or a department, and who can hire, fire and promote employees. An administrative employee performs specialized or technical work related to management or general business operations. A professional employee performs original and creative work or work requiring advanced knowledge normally acquired through specialized study.

Be aware, however, that not all of the legal nuances appear in the chart. Unless an employee fits squarely into the simplified guidelines, your best bet is to dig further. Your state labor department can be helpful, as can the nearest office of the U.S. Department of Labor’s Wage and Hour Division. (See the Department of Labor’s website at http://www.dol.gov.)

Note that there’s a long test and a short test for each category. If an employee meets the short test, he or she is exempt and need not meet the long test.

The fine points of these exemptions are explained in a free booklet titled Regulations Part 541: Defining the Terms—Executive, Administrative, Professional and Outside Sales. It’s available from the nearest office of the Wage and Hour Division of the U.S. Department of Labor.

For a list of Wage and Hour Division offices by state, consult the Department of Labor’s website at http://www.dol.gov/dol/esa/public/contacts/whd/america2.htm. You can also contact the Department of Labor by phone at 202-693-6450.

The long test requirement that executives and administrators spend at least 80% of the workday in certain activities is reduced to 60% for employees of retail and service establishments. Further, the percentage test doesn’t apply at all to an executive who’s in charge of an independent business establishment or branch or who owns at least a 20% interest in the business.

Job titles alone don’t determine whether someone is an exempt executive, administrative or professional employee. The actual work relationship is what counts. Still, it’s possible to make some generalizations about who’s exempt and who isn’t.

Typical Exempt Jobs

Department Head Personnel Director

Financial Expert Executive Assistant

Physician Lawyer

Credit Manager Safety Director

Account Executive Tax Specialist

Typical Nonexempt Jobs

Clerk Bank Teller

Errand Runner Newspaper Reporter

Secretary Bookkeeper

Inspector Trainee

Mislabeling Can Be Dangerous - Some employers try to avoid the minimum wage and overtime requirements by labeling all entry level employees Assistant Managers—and then requiring them to work well past the 40 hour workweek with no further compensation. The Department of Labor is well aware of such abuses. Employers who mislabel employees to circumvent the law are playing a dangerous game and may wind up paying stiff penalties.

Salary Traps:

One requirement for an executive, administrative or professional exemption is that the employee be salaried. The FLSA treats an employee as salaried only if his or her pay isn’t reduced because of variations in the quality or quantity of work performed.

If you dock an employee’s salary for personal absences of less than a day at a time, the employee may legally be deemed to be an hourly employee—and no longer exempt from the minimum wage and premium overtime requirements. For example, if a salaried employee misses a few hours of work to take care of personal business, don’t reduce his or her salary to make up for that time. If you reduce the employee’s salary on an hourly basis, the Department of Labor may conclude that employee is really an hourly worker and not eligible for the overtime exemption.

The reasoning is that salaried workers often put in many hours of overtime without getting paid for it, so it’s unfair to reduce their pay if they miss a few hours now or then.

Also, don’t deduct for absences caused by jury duty, appearances in court as a witness or temporary military leave. If an exempt employee misses two or three days for jury duty but works the rest of the week, pay the full salary for that week.

b. Outside salespeople

An outside salesperson is exempt from FLSA coverage if he or she:

• regularly works away from your place of business while making sales or taking orders, and

• spends no more than 20% of worktime doing work other than selling for your business.

Typically, an exempt salesperson will be paid primarily through commissions and will require little or no direct supervision in doing the job.

c. Computer specialists

This exemption applies to computer system analysts, programmers and software engineers who are paid at least $27.63 an hour.

An employee will likely be exempt from the wage-and-hour laws if his or her primary duties consist of such things as determining functional specifications for hardware and software, designing computer systems to meet user specs and creating or modifying computer programs.

d. Miscellaneous workers

Several other types of workers are exempt from the minimum wage and overtime pay provisions of the FLSA. The most common include:

• employees of seasonal amusement or recreational businesses

• employees of local newspapers having a circulation of less than 4,000

• newspaper delivery workers

• switchboard operators employed by phone companies that have no more than 750 stations, and

• workers on small farms.

e. Apprentices

An apprentice is a worker who’s at least 16 years old and who has signed an agreement with you to learn a skilled trade. Apprentices are exempt from the requirements of the FLSA. But beware that your state may have a law limiting the number of hours you can hire someone to work as an apprentice. State law may also require you to pay the apprentice a certain percentage of the minimum wage. Check with your state labor department for more information.

Under the FLSA, you must pay an apprentice a progressively increasing wage that averages at least 50% of the journeyman’s rate over the period of the apprenticeship.

The Consequences of Bending the Rules:

The Wage and Hour Division of the U.S. Department of Labor enforces the wage-and-hour requirements of the FLSA. Almost always, it is tipped off to investigate a business by an unhappy employee who has complained. Be aware that it’s illegal to fire or discriminate against an employee for filing a complaint or participating in a legal proceeding under the FLSA. And many states have similar laws prohibiting such retaliation.

In theory, you can be fined up to $10,000 for violating the FLSA—and even spend time in jail for a second offense if it’s willful. But fines and jail time are used in only the most blatant cases.

More typically, you’ll be required to pay the employee all unpaid wages including overtime pay, and you may be slapped with a modest fine or penalty. The real cost comes in the time and expense of being involved in enforcement proceedings—not to mention the damage to workers’ morale and the animosity that can be created in the workplace, particularly if several employees claim their rights were violated.

(top of page)

B. Pay Requirements

The FLSA and many state laws set a minimum wage and require premium pay for overtime work. In addition, the FLSA requires that men and women receive equal pay for equal work.

1. Minimum Wage

If your business is covered by the FLSA, you must pay all covered employees at least the minimum wage—$5.15 an hour. Federal law allows you to pay a training wage of $4.25 an hour to employees under 20 years of age during their first 90 days on the job. You’re not allowed to displace employees just so you can hire young workers and pay them the training wage.

The law in your state may set a minimum wage higher than the federal rate. In Alaska, for example, the minimum wage must remain 50 cents higher than the federal minimum. In the few states that have a lower minimum, the federal rate controls. Check with your state department of labor for increases that may not be reflected in the chart below. You can check the Updates section on Nolo’s website at http://www.nolo.com.

POSTER REQUIREMENTS:

Federal law requires you to display the Federal Minimum Wage poster prominently in the workplace. It’s available at the nearest office of the U.S. Department of Labor’s Wage and Hour Divison. Your state labor department may also be able to provide this poster as well as any poster that may be required by state law.

2. Equal Pay for Equal Work

You must provide equal pay and benefits to men and women who do either the same job or jobs that require equal skill, effort and responsibility. This is required by the Equal Pay Act—an amendment to the FLSA (29 U.S.C. §206). Job titles aren’t decisive in assessing whether two jobs are equal; it’s the work duties that count. The Act makes it unlawful, for example, for the owner of a hotel to pay its janitors (primarily men) at a different pay rate than its housekeepers (primarily women) if both are doing essentially the same work.

The Equal Pay Act is enforced by the U.S. Equal Employment Opportunities Commission or EEOC.

a. Employees covered

The Equal Pay Act applies to the same employees as those covered by the minimum wage and overtime pay provisions of the FLSA. In addition, the Equal Pay Act applies to executive, administrative and professional employees even though these employees are exempt from the minimum wage and overtime provisions.

The Equal Pay Act doesn’t prohibit pay differences based on:

• a seniority system

• a merit system

• a system that pays a worker based on the quantity or quality of what he or she produces, or

• any factor other than the worker’s gender—starting salaries, for example, that are based on a worker’s experience level.

Example: The Ace Tool and Die Company was founded in 1960. The company initially hired 50 male tool and die makers. Many of those men are still working there. Since 1980, the company has expanded and hired 50 more tool and die makers, half of them male and half female. All of the tool and die makers at Ace are doing equal work, but because the company awards raises systematically based on the length of a worker’s employment there, many of the older male workers earn substantially more per hour than their female co-workers who are doing equal work. The pay system at Ace Tool and Die doesn’t violate the Equal Pay Act because the pay differences between genders are based on a bona fide seniority system.

It’s legal to round off records of an employee’s starting time and stopping time—for example, to the nearest five minutes or to the nearest one-tenth or quarter of an hour. But if you follow this procedure, make sure it all averages out so that each employee is fully paid for the time actually worked.

b. Determining job equality

Jobs don’t have to be identical for the courts to consider them equal. In general, two jobs are equal for the purposes of the Equal Pay Act when both require the same levels of skill, effort and responsibility—and are performed under similar conditions.

There’s room for interpretation, but if there are only small differences in the jobs, they should be regarded as equal.

Example: At a ceramics company, the major difference between the jobs being done by women and men is a weightlifting restriction placed on the women. The women and men are performing equal work because heavy lifting is only a small part of the job. (Schultz v. Saxonburg Ceramics Inc., 314 F. Supp. 1139 (W.D. Pa., 1970).)

3. Paying Overtime

The FLSA requires you to pay nonexempt workers at least one and one-half times their regular rates of pay for all hours worked in excess of 40 in one week. In 1938, when the FLSA was enacted, the nation was just recovering from the Depression. Congress believed that imposing an overtime penalty on employers would induce shorter working hours and help the nation solve its economic problems by spreading work around. The premium overtime rule may have outlived its original purpose—but the law is still on the books, creating headaches for employers.

The FLSA doesn’t require you to pay an employee at an overtime rate simply because he or she worked more than eight hours in one day. Generally, you calculate and pay overtime by the week. The workweek may begin on any day of the week and any hour that you, the employer, establish. Generally, in applying the minimum wage and overtime pay rules, each workweek stands alone; you can’t average two or more workweeks. And you can’t manipulate the start of the workweek merely to avoid paying overtime.

State Law May Be More Stringent - Your state may have a different rule on overtime pay than the FLSA. Remember, when there is a conflict between state and federal law, you must comply with the more stringent requirement. To find out the details of your state law, consult your state labor department.

a. Exempt employees

The employees described in Section A2 as being exempt from some FLSA provisions are also exempt from the overtime pay requirements of the Act. In addition, a number of other employees are exempt.

Transportation workers. Taxicab drivers are exempt from the overtime pay requirements of the FLSA. Drivers and other employees of trucking companies are not covered by the FLSA but are subject to the Interstate Commerce Act, which is administered by the Department of Transportation.

Certain commissioned employees of retail or service establishments. An employee of a retail or service establishment will be exempt from the overtime pay requirements of the FLSA if:

• the employee’s regular rate of pay is more than one and one-half times the minimum wage, and

• more than half the employee’s pay comes from commissions.

Vehicle salespeople and mechanics. The FLSA exempts from its overtime pay requirements employees who sell cars, trucks, trailers, farm implements, boats or aircraft. Also exempt are parts clerks and mechanics who service cars, trucks or farm implements if they’re working for a nonmanufacturing business that sells these items.

Newspeople. Announcers, news editors and chief engineers of certain small radio and TV stations are exempt from the overtime pay requirements.

Employees of motion picture theaters. Employees of movie theaters need not be paid for overtime work at the premium rate.

Farmworkers. Farmworkers need not be paid for overtime work at the premium rate.

b. Partially exempt employees

Special overtime rules apply to some employees.

Employees of hospitals and residential care facilities. Those who have agreements for a 14-day work period must receive overtime premium pay for all hours over eight hours a day or 80 hours in the 14-day work period—whichever amounts to more.

Training time. Employees who lack a high school diploma or who haven’t finished eighth grade can be required to spend up to 10 hours a week in reading and basic skills programs. These employees must receive their regular wages for time spent in training, but needn’t be paid overtime pay for those hours.

c. Computing overtime pay

The U.S. Department of Labor’s Wage and Hours Division offers guidelines on how to compute overtime pay.

Hourly rate. If an employee works more than 40 hours during a week, you must pay at least one and one-half times the regular rate for each hour over 40.

Example: An employee whose regular rate is $6 an hour works 44 hours in a workweek. You must pay the employee at least $9 for each hour over 40. Pay for the week would be $240 for the first 40 hours, plus $36 for the four hours of overtime—a total of $276.

Piece rate. To obtain the regular pay rate for an employee who is paid on a piecework basis, divide the total weekly earnings by the total number of hours worked that week. You must pay the employee the full piecework earnings, plus an additional one-half times this regular rate for each hour over 40 that he or she works.

Example: An employee paid on a piecework basis works 45 hours in a week and earns $315. The regular rate of pay for that week is $315 divided by 45, or $7 an hour. In addition to the straight time pay, you must pay the employee $3.50 (half the regular rate) for each hour over 40.

Another way to pay pieceworkers for overtime is to pay one and one-half times the piece rate for each piece produced during the overtime hours. However, you and the employee must agree to this payment arrangement in advance. The piece rate must be the one actually paid during regular work hours and must be enough to yield at least the minimum wage per hour.

Salary. To obtain the regular rate of pay for an employee paid a salary for a regular or specified number of hours a week, divide the salary by the number of hours for which the salary is intended as compensation. You and the employee may have agreed to a salary that meets the minimum wage requirement that you pay for whatever number of hours are worked each week. Here, to obtain the regular rate, divide the salary by the number of hours worked. Both the regular rate and the overtime rate will vary, depending on how many hours are worked each week.

Example: You’ve agreed to pay an employee a salary of $300 a week. If the employee works 50 hours, the regular rate is $6 ($300 divided by 50 hours). So in addition to the salary, you must pay $3 (half the regular rate) for each of the 10 overtime hours—a total of $330 for the week. If the employee works 60 hours, the regular rate will be $5 ($300 divided by 60 hours). In that case, you’ll owe an additional $2.50 for each of the 20 overtime hours—a total of $350 for the week.

In no case can the regular rate be less than the minimum wage required by the FLSA.

If a salary isn’t paid weekly, you must determine the weekly pay to compute the regular rate and overtime. If, for example, the salary is paid twice a month, multiply by 24 and then divide by 52 weeks to get the weekly equivalent.

Attitudes on Overtime Are Changing

In the recent past, most workers loved overtime work. It represented an opportunity to get ahead financially—maybe a chance to buy a boat or start a college fund for the kids.

Many workers still feel that way, but others don’t feel driven to amass as much money as possible from their work. Those who aren’t thrilled by overtime work may have family responsibilities or may simply place a high value on their private time.

The law allows you to schedule overtime for workers, but it may be a more sound management practice to give them some choice in the matter. Otherwise, the workers who don’t relish overtime work may feel abused and will drag down morale in the workplace. If you anticipate that you’ll be requiring overtime work for certain positions, put that fact in the job description so workers are aware of that likelihood right from the start. Applicants who abhor overtime work can decide to seek work elsewhere.

4. Compensatory Time

The practice of granting hour-for-hour compensatory time—for example, giving a worker six hours time off one week as compensation for six hours of overtime worked the previous week—isn’t usually allowed for private sector employees covered by the FLSA. The rule is different for public employees. Employers and employees are often puzzled when they learn that comp time isn’t permitted in the private sector because it seems like a sensible and mutually beneficial way to handle overtime in many situations.

You do, however, have a few options for avoiding premium overtime pay by giving a worker time off instead of money. One way is to rearrange an employee’s work schedule during a workweek.

Example: Susan, a paralegal at the law firm of Smith and Jones, normally works an eight-hour day, Monday through Friday. One week, Susan and the lawyers need to meet a deadline on a brief due in the court of appeals. So that week, Susan works 10 hours a day, Monday through Thursday. The law firm gives Susan Friday off and pays her for a 40-hour week at her regular rate of pay. This is legal because Susan hasn’t worked any overtime as defined by the FLSA; only the hours over 40 hours a week count as overtime hours.

If an employee works more than 40 hours in one week, it’s sometimes possible to reduce the worker’s hours in another week so that the amount of the employee’s paycheck remains constant. This is legal if:

• the time off is given within the same pay period as the overtime work, and

• the employee is given an hour and one-half of time off for each hour of overtime worked.

Example: Frames and Things, a shop that specializes in framing paintings, employs Jared and pays him $560 at the close of each two-week pay period. Because a week-long street art fair is expected to generate a great demand for framing services, the shop’s owner wants Jared to work longer hours that week. However, the owner doesn’t want to increase Jared’s paycheck. She asks Jared to work 50 hours during art fair week and gives him 15 hours off the next week. Since Jared is paid every two weeks, Frames and Things may properly reduce Jared’s hours the second week to keep his paycheck at the $560 level.

Since state regulations may further restrict the use of comp time, check with your state’s labor department. If you allow employees to take comp time, put your policy in writing in the employee handbook so that everyone knows what to expect.

Private Deals Can Be Risky

It’s unlikely that a federal or state labor investigator will look into your comp time arrangements unless an employee files a complaint. Knowing this, you may be tempted to work out comp time deals with employees to meet your needs and theirs. This can be dangerous. You never know when a friendly, loyal employee may turn sour and look for some legal technicalities to use against you.

Relief May Be on the Way

Because employers and employees alike feel that the current rules on comp time are too rigid, Congress is working on changes. One plan being considered would allow you to offer employees a choice between receiving overtime pay or one and one-half hours of comp time for each hour of overtime worked.

(top of page)

C. Payroll Withholding

Federal law requires you to withhold income taxes and Social Security and Medicare contributions from employees’ paychecks. States and municipalities that have income taxes also require withholding—usually under a system that parallels the federal procedures.

You may also deduct the cost of meals, housing and transportation, loans, debts owed to you, child support and alimony, payroll savings and insurance premiums. There are exceptions to these rules, and limits on how much you can withhold or deduct.

1. Meals, Housing and Transportation

You may legally deduct from an employee’s paycheck the reasonable cost or fair value of meals, housing, fuel and transportation to and from work. But you must show that you customarily paid these expenses and that:

• they were for the employee’s benefit

• you told the employee in advance about the deductions from a paycheck, and

• the employee voluntarily accepted the meals and other accommodations against minimum wage.

2. Debts Owed to an Employer

If you loan money or extend credit to an employee, you can withhold money from his or her pay to satisfy that debt. However, it’s illegal to make such a deduction if it would drop the employee’s pay below the minimum wage.

Example: Roadmaster Auto Parts Store hires Bruce at $6.15 an hour to make deliveries. One morning, the battery in Bruce’s car dies. Roadmaster allows him to replace the battery with a new one from the store’s stock—and Bruce agrees that Roadmaster can deduct the price, $80, from his paycheck. Under the FLSA, Roadmaster can legally deduct no more than $40 per week (40 hours X $1) from Bruce’s gross pay to cover the battery. To deduct more would drop Bruce’s pay rate of $6.15 per hour to below the required minimum of $5.15.

3. Debts and Wage Garnishments

You may be sent an order from a judge requiring your business to withhold money from an employee’s paycheck to satisfy a debt the employee owes to someone else. This order is part of a legal process called wage attachment or wage garnishment. Usually, a judge will issue such an order only after a judgment has been signed stating that the employee actually owes the money—but such a judgment may not be necessary for garnishments based on an employee’s failure to pay student loans, child support, alimony or taxes.

If you receive a garnishment order, read it carefully because it will specify deadlines you must meet for processing the order. You may have to pay a penalty if you don’t comply with the terms and timetables of the garnishment. Procedures vary from state to state, but most likely you’ll be required to file a form with the court disclosing how much you owe to the employee for wages. Then you’ll be required to send a portion of those wages to the court or, perhaps, to the creditor or creditor’s lawyer.

A federal law, the Consumer Credit Protection Act (15 U.S.C. §1673), prohibits a judgment creditor from taking more than 25% of an employee’s net earnings through a wage garnishment. A few states offer greater protection to the employee. In Delaware, for example, a judgment creditor can’t take more than 15% of an employee’s wages. Usually the papers you receive as part of the garnishment order will explain how much of the employee’s wage you should deduct and where to send the money.

The Consumer Credit Protection Act also prohibits you from firing an employee because of a garnishment order to satisfy a single debt. But if two judgment creditors garnish an employee’s wages or one judgment creditor garnishes an employee’s wages to pay two different judgments, you’re free to fire that employee. Again, some state laws place stricter limits on your right to fire an employee because of garnishments. In Washington, for example, you can’t fire a worker for judgments owed unless his or her wages are garnished by three different creditors or to satisfy three different garnishments within a year. In Connecticut, you can’t fire a worker unless you’ve had to deal with more than seven creditors or judgments in a single year.

Although statutes limit your right to fire employees because of garnishments, you can still fire such employees for cause—or even without cause, if you can establish that the firing wasn’t based on the garnishments.

4. Child Support

The federal Family Support Act of 1988 (102 U.S.C. §2343) requires that new or modified child support orders include an automatic wage withholding order. If you receive a copy of such an order, you must withhold a portion of the employee’s pay and send it on to the parent who has custody of the child.

You can’t discipline, fire or refuse to hire someone just because his or her pay is subject to a child support wage withholding order.

5. Back Taxes

If an employee owes taxes to the federal government and doesn’t pay, the IRS can grab most—but not all—of the employee’s wages. The amount the employee gets to keep is determined by the number of his or her dependents and the size of the standard deduction to which the employee is entitled.

If you receive a wage levy notice from the IRS, don’t ignore it. If you go ahead and pay the employee in full, you’ll be liable to the IRS for whatever amount you wrongly pay. Most state and some municipal taxing authorities have similar power to seize a portion of an employee’s wages.

Excerpted from the “The Employer’s Legal Handbook”, by Fred S. Steingold