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Make Sure Your Payroll Practices Are Compliant

The U.S. Department of Labor (DOL) estimates that almost 70 percent of employers aren’t in compliance with the Fair Labor Standards Act (FLSA). Lawyers who represent employees are well aware that most employers aren’t compliant, as evidenced by a significant increase in FLSA claims. In fact, wage and hour claims, including collective actions, have increased 77 percent over the last five or six years. Let’s take a look at what you can do to avoid becoming part of those statistics.

Wage and Hour Compliance Manual

There’s liability in numbers
Claims based on violations of the FLSA are attractive to employees’ attorneys not only because wage and hour violations are commonplace but also because the Act allows successful employees to recover back pay, liquidated damages equal to the back pay, and attorneys’ fees. The collective action portion of the law also makes FLSA claims attractive. Individually, a misclassified employee may be entitled to only a small settlement or judgment; if several employees can make a similar claim, however, their combined recovery may be quite substantial.

Audio Conference – Creative Staffing — or Employee Misclassification? Know the Difference

In light of the risks, you must be proactive. Don’t wait for a lawsuit to point out errors in the way you classify employees or your employees’ habit working off the clock. Perform self-audits to ensure that you’re compliant. Some vulnerable areas to look for include:

  • Misclassified employees. Ensure that your exempt employees truly are exempt. Job titles and salaries shouldn’t end the inquiry — several successful lawsuits have involved claims by “managers” who were misclassified as exempt.
  • Off-the-clock work. Make sure employees clock in before they begin any type of work. Even small amounts of time, five to 15 minutes each day, can serve as the basis for a successful claim.
  • Overtime. Even if your workplace has policies prohibiting overtime or requiring approval before working overtime, make sure your employees are properly compensated for any time they spend working in excess of 40 hours per workweek.

Audit your wage and hour practices with the Employment Practices Self-Audit Workbook

Bottom line
FLSA claims now surpass discrimination claims in terms of the numbers of lawsuits filed against employers. Take the time now to identify vulnerable areas and work toward compliance. Review your payroll practices and policies and check your job descriptions to ensure that you’ve properly classified your employees and are compensating them appropriately for any work they perform.