FLSA Wage and Hour Audit Done, No problems … April Fools!

Yesterday, we started a discussion led by attorney Tom Makris on why so many FLSA wage and hour audits are done these days. In a word, the reason is money. Uncle Sam, plaintiff attorneys, and others all can score big on your mistakes. That’s why it’s vital that you find wage and hour errors first, by doing an FLSA self-audit.

The typical outcome of an FLSA audit is employees classified as exempt who should be nonexempt, says Makris. (If it’s the other way around, your problem is not really a legal one, because you haven’t failed to pay something that was owed under the FLSA, he notes.)

When that happens, Makris says that employers typically do one of the following:

Go back and pay

Change going forward

Cross your fingers and do nothing

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Avoid wage and hour violations with BLR’s easy-to-use FLSA Wage & Hour Self-Audit Guide. Try it for 30 days … on us! Click here

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Go Back and Pay

The legally correct response is to figure out what employees are owed and write them a check. This is a challenge as a practical matter, however, because employers often don’t keep hours worked records for people they thought were exempt. That usually means you have go to the employees to get this figure. Fortunately, most of Makris’s clients have gotten reasonable numbers when they asked their employees about how many overtime hours were worked.

Change Going Forward

A majority of employers choose instead to make changes going forward. “We’re changing you to nonexempt,” you announce. “In the future, you will be paid overtime.” If you can, says Makris, try to tie the change to something else happening in the company or the department, such as a reorganization or periodic compensation review.

Cross Your Fingers

The third approach is to do nothing. For example, in the computer field, there are many possible misclassifications, but often clients say, “We can’t make this change, because people in the profession look at themselves as exempt professional employees.” If it’s a borderline case, Makris holds that it may be a business reality to take the risk of taking no action. Other experts counter, though, that in the long run, this can cost a company a lot of money. Better to deal with morale issues now than pay a huge sum later.

Best to Audit Before THEY Do

As we learned in yesterday’s Advisor, “they” might be the feds, lawyers, or even the bankers deciding if you get that needed loan. In any case, we at Advisor feel it’s always better to do your own audit first, and then fix what needs it while there’s still time. Many employers agree with this concept, but then get bogged down in how to start, and in the end, do nothing. But there are aids to making FLSA self-auditing relatively easy.

One our editors recommend BLR’s FLSA Wage & Hour Self-Audit Guide. It is both effective and easy to use. It even won a publishing award in that regard. Here’s what customers like about it:

Plain English. Drawing on 30 years of experience in creating plain-English compliance guides, our editors have translated the FLSA’s endless legalese into understandable terms.

Step-by-Step Checklists. The book opens with a clear narrative of what FLSA is all about. That’s followed by a series of checklists that utilize a simple question/answer pattern about employee duties to find the appropriate classification.

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All the checklists you need to avoid overtime payment errors. They’re in BLR’s award-winning FLSA Wage & Hour Self-Audit Guide. Try it for 30 days. Click here

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Complete. Many self-audit programs focus on determining exempt/nonexempt status. BLR’s also adds checklists on your policies and procedures, and includes questioning practices such as whether your break time and travel time are properly accounted for. Nothing falls through the cracks because the cracks are covered.

Convenient. Our personal favorite feature: A list of common job titles marked “E” or “NE” for exempt/nonexempt status. It’s a huge work-saver.

Up to Date. If you are using an old self-auditing program, you could be in for trouble. Substantial revisions in the FLSA went into effect in 2004. Anything written before that date is hopelessly—and expensively—obsolete. BLR’s FLSA Wage & Hour Self-Audit Guide includes all the changes.

You can examine the BLR FLSA Wage & Hour Self-Audit Guide for up to 30 days at no cost or obligation. Click here and we’ll be glad to arrange it.