Wage and Hour Compliance: a Moving Target?

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compliance-is-frustratingThe Wage and Hour Division of the United States Department of Labor (DOL) is responsible for administration and enforcement of our nation’s labor laws. Since 2000, the Wage and Hour Division (WHD) has recouped over $1.25 billion in back wages for more than two million workers.  Wage and hour compliance is something that impacts just about every employer, whether they have two or 2,000 employees, and penalties for non-compliance can be devastatingly expensive.

Wage and hour compliance involves areas such as minimum wage, overtime pay, employee classification, meal and rest time requirements, hours worked and child labor requirements, just to name a few.

One of the most comprehensive labor laws in the U.S., the Fair Labor Standards Act of 1938 (FLSA), was landmark legislation enacted by Franklin Roosevelt.  Since its inception, the FLSA has been amended more than 20 times – just one example of why keeping up with changing regulations is difficult. The DOL proposed significant changes to expand worker coverage under the FLSA just this past summer.

Knowing the laws that affect you, as well as keeping up with updates and changes, when they go into effect, and their impact on your business is critical.  Moreover, before you can ensure you are properly implementing the recent changes, you must be certain that your existing practices are in compliance.

For example, are you sure you know your employees’ “regular rate of pay” for overtime calculations?  It is not always as simple as calculating 1.5 times an hourly rate, as many people think.  If an employee is compensated with commissions or certain types of bonuses, the FLSA imposes a strict method for calculating their overtime rate.  The most recently proposed changes will require close examination of whether workers are classified as exempt or non-exempt.  It will be critical that employers are familiar with the requirements, the changes and how to implement a compliant program.  The $1.25 million that the WHD has recouped since the year 2000 doesn’t even include the associated penalties and fines imposed on the employers found in non-compliance.

Staying in compliance with ever-changing laws and regulations can be a time-consuming burden for employers. Partnering with a Professional Employer Organization (PEO) to assist with your HR and other needs will give you access to credentialed professionals who can help ensure compliance in all of your HR policies spanning the life cycle of employment, from recruiting to separation.

Contact the author directly at sue.rodzon@staffone.com. This is the sixteenth post in our 30 Days of HR Outsourcing series. Visit us each day in November for information on HR, payroll, benefits, workers’ comp and risk management topics, or subscribe to be notified instantly when a new post is published.

Photo copyright:  Anton Gvozdikov