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Wage and Hour Compliance

Use these five tips to minimize wage and hour litigation at your company.

October 22, 2009
by Sukanya Mitra

If you think that sexual harassment, discrimination and equal opportunity class-action suits are high on the litigation charts, you would have been correct … about 10 years ago. The litigation landscape has changed drastically and since 2001 wage-and-hour disputes have topped the charts. In fact, according to law firm Jackson Lewis LLP, 10 of the largest wage and hour settlements in 2008 totaled more than $252 million!

And there’s more. According to data from the Department of Labor (DOL), nearly three out of four (70%) of employers nationwide are not compliant with the Fair Labor Standards Act (FLSA).

Are you?

Strategies to Minimize Litigation

As an HR/recruiting manager at a financial or CPA firm, here are five strategies you can use to minimize wage and hour litigation:

  1. Implement compliance. Wage and hour concerns must be placed on your daily radar and management needs to treat it as an essential part of your firm’s overall risk management process;
  2. Identify your policies and procedures. Make sure your firm’s corporate-level policies include non-compliant elements such as “making improper salary deductions,” said Paul DeCamp, partner at Jackson Lewis LLP and former administrator of the wage and hour division at DOL. If you have multiple locations, your HQ must know what is going on in other locations as far as differences in practice based on local and state laws;
  3. Scrutinize incentives that create work after-hours. Look out for inappropriate behavior by those supervisors whose staff has shrunk, but the same amount of work needs to be completed. You also need to look into bonus or other compensation incentives that are tied to these supervisors in handling efficiencies in their labor. Same applies to those managers whose merit increases are directly affected by the number of workers whose over-time they cut; “In such cases managers may try to maximize their income to the detriment of the company,” said DeCamp.
  4. Train employees regularly. And this includes top management. DeCamp advises training all your managers and supervisors at least once a year, if not more frequently, so they understand the wage and hour regulations. Just as workers need to know that they have rights and that no one has the authority to ask them to work off of the clock, managers need to also understand that their authority does not allow them to bend the rules and violate wage and hour rules;
  5. Automate, automate, automate. CPA firms know this well. The more information, such as time, you enter manually, the larger the errors. A number of HR management software are available through which your company can track overtime records, meal and rest periods, minor employment, etc.
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Sukanya Mitra is Managing Editor of the Insider™ e-newsletter group.