Publication Proactive Portection Against Wage Hour Audits
T he U.S. Department of Labor (DOL) recently announced the launch of its first iPhone application — a time-tracking appto help employees independently trackthe hours they work and calculate thewages they’re owed. The application is thelatest offering in the DOL’s “We can help”initiative, a campaign to foster opennessand transparency to workers about theircompensation rights. With the overwhelming majority ofhuman resources-related legal actionsnow related to wage and hour complaints,this new app heightens the burden ofproof for employers to show that they areaccurately capturing time worked andcompensating workers in accordance withthe Fair Labor Standards Act (FLSA).ProactiVe ProtectionAgAinST WAge & HOUr AUDiTSViolations of federal wage and hour provisions are arguablythe single largest liability exposure for employers today.Here are some steps to help limit that exposure.
Non-compliant? You’ve got a misclassified employee gains in theplenty of company event of a lawsuit, thanks to tools like theDOL statistics show that more than 80% DOL smartphone app. in the absence ofof employers are out of compliance with company records, the court is likely to relyfederal and state wage and hour laws. And on the employee’s self-kept timesheets in] ]penalties can be costly, to say the least. calculating back wages owed. Current penalties for FLSA violations include payment of The burden is attorneys’ fees and court costs, plus double back wages — now on employers extending as far back as to demonstrate three years in the event of a willful violation. compliance, not on Making the fight against “wage the DOL to catch theft” a departmental priority, the DOL has stepped up its them in a violation. investigation of complaints. U.S. Secretary of Labor Hilda Solis puts For example, consider an employee it in plain terms: “Make no mistake, thewho has been misclassified as exempt DOL is back in the enforcement business.”from overtime. Under the FLSA, tracking The DOL increased its total number ofthe hours worked by exempt employees is investigators by 30% in 2010, with plans tonot required. But imagine the advantage add 90 more this year. DiD yOU • Wage and hour class actions now outnumber all other discrimination class actions combined, with knOW… settlements averaging $23.5 million at the federal level and $24.4 million at the state level. • 83% of the class/collective action lawsuits filed in federal or state courts in 2009 were wage and hour-related complaints. • non-government wage and hour settlements in 2009 grew 44% over 2008. • Settlements for the top 10 federal wage and hour lawsuits increased from $253 million in 2008 to $364 million in 2009. Source: The Compliance Wire (blog.workforcelogic.com)
The DOL also unveiled a new • examining job descriptions to determine“Plan/Prevent/Protect” enforcement whether they remain accurate and reflectstrategy that will require employers to the skills necessary to perform the job.be proactive in finding and remedying • Assessing actual job duties to ensureviolations before an investigator arrives at that various roles fall within the statedthe work site. employers will have to create exemptions for overtime pay.a plan for identifying and remediating • Checking your process for calculationrisks of legal violations and other risks to of overtime, including bonuses andworkers; implement the plan in a manner shift differentials.that prevents legal violations; and ensurethat the plan’s objectives are met on a Pay any past overtime uncoveredregular basis. 2 by your internal audit. Paying your workers what they’re owed nowPreparing for a DOL audit will be far less expensive than paying a DOLThe number of audits conducted by the settlement later.federal DOL and state-equivalent agencieson employers’ wage and hour practices is Analyze your state’s wage and hourincreasing by the day. Audits are generallytriggered when a current or former 3 laws to determine if they conflict with federal law. in the eventemployee files a complaint with the DOL, of a conflict, follow the law that is mostor when the DOL targets a specific industry beneficial to your employees.for investigation. Before the DOL demands to see your During your internal audit, assignrecords, you should take the time toconduct an internal examination of your 4 a point person who is fluent in the language and regulations of thetimekeeping and recordkeeping practices. FLSA. if you are ever audited by the DOL,When managed effectively, an advance this person — an internal Hr expert, legalinternal examination of your recordkeeping counsel or other trusted advisor — shouldprocesses gives you the opportunity to serve as the main contact between yourreview, analyze and make improvements to organization and the auditors.ensure compliance. There are several steps your Violations of the FLSA’s wage and hourorganization can take to emerge from an provisions are perhaps the single largestinternal review stronger than ever, and liability faced by today’s employers. Byconfident should the DOL ever audit your following approved procedures, maintainingorganization: detailed records, and making compliance your top goal, you can limit your exposure Conduct an advance internal audit and protect your organization against future 1 in alignment with the DOL’s “Plan/ Prevent/Protect” strategy. Discover wage and hour claims. nany misclassifications by: