I work in the back office at a high end industrial design staffing firm. If some company needs a specialized designer for a couple of months, we will fly our staff to their location to do a job and then its onto the next assignment. I primarily book and plan employees' travel although I have been branching out over the past year to help with HR and miscellaneous tasks. I have been with the company since we were a small startup and I feel committed to the success of the company.
Recently a client required an audit before we signed a large contract and our auditor privately raised some red flags and declined to provide a determination to the client. The auditor pointed out that we neglect a number of employment laws, including:
- Not paying time-and-a-half overtime, only straight time. The boss and owner always maintained our employees were exempt but after reading the rules myself I agree with the auditor that they are non-exempt.
- Long pay periods. Our state's laws clearly say that employees must be paid at minimum every two weeks. We only pay monthly, sometimes bi-monthly depending on the frequency the client pays.
- Only pay employee if client pays. Its been policy that we will only pay our employees for jobs that the client pays out. In the event the client doesn't pay, the employee would not get paid for that project. This has only happened once and there was substance abuse involved so everyone involved thought it best if we quietly parted ways immediately. The boss maintains this is legal because its written into the employment contract.
- Tax deductions. Usually any of the employees can just expense business items (like a new BYOD laptop) to the company and we take the cost out of their paycheck. The company gets a deduction and the employee effectively gets the equipment with their pre-tax pay. We don't rigorously check these items and the auditor found some "bold" claims, such as iPads and the like.
I laid all of the issues out for my boss and the owner as well as some reasonable solutions to move us into a more compliant state. The owner stated the current business model is the key to the company's success and it cannot be changed. He feels everyone is very highly compensated, we are very transparent, all the employees know up front what the terms are, and they agreed to them. He also stated that if the Department of Labor gets involved we will just plead ignorance. My boss is firmly on the owner's side and does not want the topic brought up again.
I feel the owner is putting his head in the sand and creating his own reality. This has really been bothering me because I am enabling a wayward business model, yet I doubt any of the employees would want to see anything changed because it works for them and they get paid an exorbitant amount. I have few questions:
- Am I legally culpable for working at this company?
- Is there a better way to approach this situation with my boss? Should I just give it more time for him to come around or drop it forever?
- Is it ethical to continue to work here given that everyone is consenting to the situation?
Additional details: This audit was a prerequisite to working with the potential client. They required us to get a letter from an audit firm stating our financial soundness as a company and provide a report upon request. We had to pay for it, I guess just a third party opinion from a reputable auditing firm was good enough for the the client's needs. Only the auditor, boss, owner, our accountant, and myself know about the audit. Since we paid for it, it is the property of our company. After the audit firm said they could not provide a letter, we simply told the client we weren't interested in pursuing the work at this time. I am involved because I helped organize the meetings and I was initially asked to go find out what the auditors concerns were when they left a vague voicemail and to report back. Like I said, I have been branching out to do a lot of miscellaneous tasks, like collating proposals, proofreading, faxing, running errands, and all the other random tasks that others don't have time for. My boss has been referring to me as his right hand man lately. The owner prides himself on keeping overhead costs as low as possible so he can pay staff a rate superior to any competitors, which is why we do have a reputation of having the best staff in a certain niche market.