Retailers face a host of workforce management challenges, not the least of which is compliance with a multitude of ever-changing federal, state, and local labor laws, negotiated labor agreements, and internal work rules and policies. Failure to comply with any of these whether law or rule—can carry hefty costs in the form of financial penalties, expensive and time-consuming law-suits, inefficient use of management resources, and the negative public exposure that leads to a degradation of brand reputation.

1. Retail Workforce
Compliance Challenges:
Leveraging Automation to Avoid Risk
Brought to you by: Sponsored by:

2. Introduction
Retailers face a host of workforce management chal-
lenges, not the least of which is compliance with a mul-
titude of ever-changing federal, state, and local labor
laws, negotiated labor agreements, and internal work
rules and policies. Failure to comply with any of these—
whether law or rule—can carry hefty costs in the form of
financial penalties, expensive and time-consuming law-
suits, inefficient use of management resources, and the
negative public exposure that leads to a degradation of
brand reputation.
To illustrate the aforementioned multitude of changes,
consider this sampling of federal legislation that directly
impacts both full-time and hourly retail associate sched-
uling and compensation:
• Fair Labor Standards Act (1938)1
– FLSA mandates
that retailers classify employees into exempt and
non-exempt categories, and it ascribes specific
methods to how non-exempt employees are paid
overtime.
• Family and Medical Leave Act (1993)2
– FMLA
requires retailers to offer associates anywhere from
12 weeks of unpaid leave to 26 weeks of unpaid
leave depending on the employee and their circum-
stances. The law also provides specific rules for
Military Family Leave Provisions, including Military
Caregiver Leave and Qualifying Exigency Family
Leave.
• Sarbanes-Oxley Act (2002)3
– SOX regulations
impose recordkeeping and control provisions that
directly impact workforce management processes,
and more specifically, how employees are paid.
Complying with these provisions ensures the integ-
rity of associate pay, which is typically a retailer’s
single largest controllable cost.
These are complemented by the responsibility of
retailers to comply with strict and constantly changing
state labor laws—especially in highly regulated states
like California, New York, and the District of Columbia—
and the growing number of city-specific regulations
affecting pay and scheduling. Actively enforced, state-
and city-specific regulations dictating overtime pay,
employee leave, and meal break rules, coupled with
seasonally variable work hour restrictions for minors
and safety-related restrictions for all employees, require
vigilant management oversight. This is especially true
in business environments that span multiple states.
Demonstrating compliance with state-level labor laws is
no longer a matter of simply tacking up a poster up on
the break room bulletin board.
Negotiated labor rules and the internal policies that
help define a retailer’s culture add two more thick lay-
ers to the compliance conundrum, and the challenge is
only becoming more complex.
The Affordable Care Act (ACA) also introduces volumes
of legislation that directly impact scheduling practices.
For a sampling of those volumes, see the draft forms re-
leased by the Internal Revenue Service in July 2014 that
serve as a precursor to those which employers will use
to comply with the exhaustive reporting requirements
mandated by the ACA in 2015/2016.4
Labor compliance is first and foremost about cost avoid-
ance. To mitigate that liability, it’s incumbent on retail-
ers to put compliance-enabling procedures in place.
Increasingly, the execution of those procedures is aided
by workforce management (WFM) software systems.
This paper will explore the potential cost of non-compli-
ance, the complexity of keeping up with dynamic labor
rules and laws, and the value of automating the effort.
The Ramifications Of Non-Compliance
WFM compliance—or the lack thereof—requires retailers
to take on some degree of calculated risk. The level of
risk a merchant is willing to accept is business culture
specific, but WFM software featuring tools that assist
with labor rule compliance decision-making helps mer-
chants manage their exposure. It’s important for all re-
tailers to be aware, however, that non-compliance with
labor laws and work rules can have devastating conse-
quences. Potential costs of non-compliance include le-
gal costs, fines, awards to complainants, and penalties.
While retailers certainly aren’t required to remit fees to
Retail Workforce Compliance Challenges:
Leveraging Automation to Avoid Risk
1
Fair Labor Standards Act Of 1938, U.S. Department of Labor, http://www.dol.gov/whd/regs/statutes/FairLaborStandAct.pdf
2
Family and Medical Leave Act OF 1993, U.S. Dept. of Labor, http://www.dol.gov/whd/fmla/
3
Sarbanes-Oxley Act of 2002, U.S. Securities and Exchange Commission, http://www.sec.gov/about/laws/soa2002.pdf
4
IRS Forms & Publications, http://www.irs.gov/Forms-&-Pubs
1

3. state or federal governments if they forget to schedule someone for
a break or unknowingly discriminate, repeated negligence—whether
willfully or unintentionally—can result in any number of said costs.
The expenses quickly mount. In one example, a $2.5 million settle-
ment was awarded to Taco Bell employees in Colorado who filed an
unpaid overtime class action lawsuit against the fast food chain.
The lawsuit alleged that the company inaccurately categorized
assistant general managers as supervisors in order to deny them
overtime pay.5
The ACA also presents a host of new financial risks to employers of
part-time associates. When a large employer fails to offer coverage
to a sufficient number of full-time workers (30 hours of service per
week on average), it’s subject to a penalty that’s equal to the num-
ber of full-time employees (minus up to 30) multiplied by $2,000.6
As the law continues to unfold through 2015, the costs of ACA
infractions in retail will surely mount.
Non-compliance with internal and organized work rules can also
have less public, but no less significant financial implications. With-
out work rules (and the systems to monitor them) in place, labor
budgets can quickly balloon. Labor laws and mandates aside, willful
or unintentional violation of internal overtime and punch rules by
employees, for instance, can rapidly inflate a retailer’s labor budget.
The problem is exponentially exacerbated in businesses with a high
volume of associates.
These costs are to say nothing of consumer confidence lost to social
irresponsibility. Regardless of the legal ramifications of non-com-
pliance, retailers who operate in the public spotlight suffer incalcu-
lable sales losses when they’re convicted of unfair employee treat-
ment in the court of public opinion.
The task of labor compliance is daunting and the steps to avoiding
the risk are complex. To effectively protect both business and asso-
ciate interests, retailers must centralize and automate the labor law
and work rule compliance effort.
Managing Compliance Change Across
Multiple Jurisdictions
While it’s ultimately incumbent on the retailer to ensure compliance
with local, state, federal, collective bargaining, and internal work-
force management policies, without dynamic software systems
supporting the effort, the task is cumbersome and welcomes even
more risk. Modern WFM software systems help retailers manage
5
$2.5M Settlement Reached in Taco Bell Unpaid Overtime Class Action Lawsuit, BigClassAction.com, September 2013,
http://www.bigclassaction.com/settlement/2-5-taco-bell-settles-unpaid-overtime-class-action.php
6
Determining Full-Time Employees for Purposes of Shared Responsibility for Employers Regarding Health Coverage, Internal Revenue Service, http://
www.irs.gov/pub/irs-drop/n-12-58.pdf
Retail Workforce Compliance Challenges:
Leveraging Automation to Avoid Risk
2
Labor compliance is
first and foremost
about cost avoidance.
To mitigate that
liability, it’s incum-
bent on retailers to
put compliance-
enabling procedures
in place.
Increasingly, the
execution of those
procedures is aided
by workforce
management (WFM)
software systems.

4. these layers of complexity through provision of a dy-
namic library of work rules that take constantly chang-
ing laws, rules, and labor agreements into account.
With such a library in place, retailers are empowered
to exercise their own risk tolerance and make informed
scheduling decisions based on a clear and known set of
location-specific work rules.
The library should be accessible for configuration of
rules specific to the subjection of the store to state,
local, and municipality labor laws—as well as union and
internal policies—associated with parameters including
the age of associate and whether the associate is hourly
or salaried. With these rules in place, retailers are
equipped to automate labor law and work rule compli-
ance while maintaining the flexibility to make their own
provisions.
Implementation of a system to manage labor law and
work rule compliance standards is not, however, a
standalone endeavor. For best automation results, the
system must be integrated with several facets of the
WFM and HR systems environments, and corporate
must remain vigilant in both managing its risk and over-
sight of its store-level execution.
Preventing Non-Compliance Through
Automation, Integration
We’ve ascertained that layers of federal, state, and local
labor laws, as well as negotiated and internal work rules
and policies, are complex and dynamic. For a company
to effectively safeguard itself from exposure to intoler-
able risk, it must employ preventative measures in its
employee scheduling system. That requires employers
to automate the application of the rules and processes
that help it manage risk—or avoid risk altogether—and
to tie that automation into scheduling processes.
Enabling such preventative scheduling helps retailers
avoid:
• Allowing associates to cross benefit thresholds,
such as those associated with the ACA.
• Breaking internal work policies, such as:
o Working more overtime than permitted in a
given pay period.
o Allowing more than the allotted number of days
scheduled in a row.
o Subjecting associates to so-called “clopening”
scenarios, whereby they close the store late at
night and open the store early the next morning.
• Violating collective bargaining agreements, such
as those designed to allow sufficient rest periods
between shifts.
Enabling employee self-service functionality that allows
attestation of hours is another compelling approach
to preventing non-compliance, and it can also protect
retailers in the event associates dispute changes to
their time and attendance records in court. A lack of
documented associate attestation of hours worked has
recently landed some high-profile brands, including
McDonald’s7
and Walmart,8
in expensive legal trouble.
By presenting the associate’s clock punches and hours
worked during the previous shift at each clock-in and
asking the associate for confirmation, retailers can doc-
ument their associates’ agreement at the clock inter-
face. This attestation functionality can also be extended
to situations where a manager makes changes to an
associate’s time record, resulting in transparency and
documentation on behalf of both employee and employ-
er.
In retail organizations employing tens or hundreds of
thousands of associates across multiple geographies,
leaving labor law and work rule compliance to store-lev-
el discretion is a risky proposition. The challenge calls
for an automated approach to site-specific compliance,
and one that’s integrated with the retailer’s core WFM
applications including HR, scheduling, and payroll.
While systems-based workforce compliance initiatives
are designed to mitigate a retailer’s exposure to exces-
sive costs, WFM compliance isn’t just about protecting
business interests and financial statements. It’s about
protecting associates as well. That protection applies to
associates themselves and their personal information.
3
Retail Workforce Compliance Challenges:
Leveraging Automation to Avoid Risk
7
McDonald’s Franchise Allegedly Tampered With Time Sheets To Cut Worker Pay, Huffington Post, May 2013,
http://www.huffingtonpost.com/2013/05/09/mcdonalds-worker-shift-records_n_3247463.html
8
Walmart & Contractor Settle $21M Wage Theft Suit... Democracy Now, May 2104,
http://www.democracynow.org/2014/5/15/walmart_contractor_settles_21m_wage_theft

5. Complying With HR Data Security Standards
In the wake of several high-profile data breaches, retailers are
often scrutinized for the security of their POS infrastructures, which
transmit extremely sensitive consumer financial data. Often, less
attention is paid to the security of highly sensitive associate data
that retailers store and transmit during an employee’s tenure. WFM
systems must maintain data security protocols that ensure compli-
ance with federal legislation including:
• The Sarbanes-Oxley Act, which ascribes a level of government
oversight to the internal processes and controls of publicly trad-
ed companies. Given that labor typically consumes anywhere
from 40% to 60% of a business’ budget, poorly performed or
undocumented WFM and labor processes can open the door to
liabilities associated with Sarbanes-Oxley non-compliance.
• HIPAA (the Health Insurance Portability and Accountability Act
of 1996), which provides privacy safeguards for employees
participating in employer-sponsored group health, dental, and
vision plans, flexible health spending accounts, and employ-
ee assistance programs. Since 2003, the U.S. Department
of Health & Human Services has actively investigated nearly
100,000 HIPAA violations.9
Retailers also have a responsibility to safeguard the sensitive HR
data collected from their associates, which can include social secu-
rity numbers, bank routing numbers, emergency contact informa-
tion, and more. Steps to securing associate data include:
• Review and documentation of existing HR security and data
protection measures, including an analysis of current user and
authorization administration protocols in the context of regula-
tions concerning associate data protection.
• Identification and correction of security weaknesses and short-
falls, which can include:
o Elimination of unnecessarily-stored HR data.
o Implementation of firewalls to protect data that must be
stored.
o Encryption of sensitive HR data while in transit.
o Imposing strict limits on those authorized to access HR
data.
o Enabling password protection of digital HR data and secur-
ing access to physical records.
4
Retail Workforce Compliance Challenges:
Leveraging Automation to Avoid Risk
9
U.S. Department of Health & Human Services, June 2014, http://www.hhs.gov/ocr/privacy/hipaa/enforcement/highlights/index.html
While systems-
based workforce
compliance initiatives
are designed to
mitigate a retailer’s
exposure to
excessive costs,
WFM compliance
isn’t just about
protecting business
interests and financial
statements.
It’s about
protecting
associates
as well.

6. Conclusion
Ensuring workforce management compliance is first
and foremost about cost avoidance. The financial
consequences of non-compliance with labor laws and
collective bargaining agreements can reach exorbitant
levels. With that said, the public relations and brand
reputational backlash caused by non-compliance with
labor laws can lead to a sales-impacting loss of con-
sumer goodwill. That’s difficult to quantify, but poten-
tially no less damaging than class-action litigation. It’s
incumbent upon the retailer to take social responsibility
beyond the minimum requirements put forth by the
federal and local governments. In an extremely com-
plex workforce management compliance environment,
software automation and integration are prerequisite to
meeting that responsibility.
About Infor
Infor is the world’s third-largest supplier of enterprise
applications and services, helping more than 70,000
large and mid-size companies improve operations and
drive growth across numerous industry sectors.
Infor Workforce Management is the most functionally
rich solution for aligning long-term workforce planning
with short-term forecasting and scheduling to optimize
budgets, control payroll costs, maintain customer ser-
vice levels, and comply with labor rules and regulations.
With features that address every aspect of effective
workforce management today—including planning,
scheduling, time and attendance, and absence man-
agement—it also includes sophisticated business intel-
ligence tools for measuring and analyzing workforce
performance.
1 800 260 2640
www.infor.com
About ISR
Integrated Solutions For Retailers is the premier source
for technology solutions in the retail industry. Our goal is
to help retail executives make informed decisions about
technology and operations solutions for every sales
channel. The magazine and website provide insight on
how retailers can achieve critical business objectives
by integrating leading-edge solutions across the entire
retail enterprise.
1 814 897 9000
www.retailsolutionsonline.com
Brought to you by: Sponsored by:
5
Retail Workforce Compliance Challenges:
Leveraging Automation to Avoid Risk