Complex Labor Regulations Raise the Stakes
By John Anderson, Senior Director of Product Marketing, Kronos Inc.
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Regulatory compliance weighs heavily on U.S. organizations. With the Department of Labor's proposed changes to overtime rules, wage and hour lawsuits on the rise, campaigns to raise the minimum wage, the challenges of the Affordable Care Act, and a variety of new labor regulations being introduced, the road ahead will be full of compliance-related issues for employers.
Tracking employee wages and overtime isn't always clear-cut. With added complexity and an increased focus on enforcement, employers -- regardless of their size -- need to protect themselves from making costly errors, even if they're unintentional.
Under the new rules, employers will need to more carefully schedule, track and manage the hours that their employees are working, closely monitor their duties and manage their exemption status under the Fair Labor Standards Act.
A quick look at the numbers illustrates just how important it is for employers to pay close attention to wage and hour compliance:
* The DOL has proposed changes to overtime regulations that would extend overtime protections to nearly five million white-collar workers in the first year of implementation.
* In 2014, the top 10 wage and hour class-action settlements totaled $215 million.
* In fiscal year 2014, the Wage and Hour Division found more than $240 million in back wages for more than 270,000 workers whose employers improperly denied them pay they had earned.
As employers and employees increasingly become pulled into the overtime eligibility debate, the trend of individual, class or collective wage and hour claims is not likely to slow.
"We've found that wage and hour compliance is one of the most difficult and persistent problems for employers," says attorney Paul DeCamp, national chair of the wage and hour practice group at Jackson Lewis. "And it's going to become more challenging with the Affordable Care Act now rolled out. Now is the time for employers to conduct workplace-law compliance reviews, including checks of their wage and hour policies and practices, before a government compliance officer arrives on the premises."
Four Steps You Can Take to Increase Compliance
1. Create a culture of compliance. Employers need to be aware of wage and hour laws and adopt a culture of compliance. "You need to comply with these laws -- they're serious," says DeCamp. "Many companies tend to think that as long as they've acted ethically and treated people fairly, they've done enough. But this doesn't work, and it can lead you in the wrong direction. Companies are often shocked to learn that they can be on the hook for many millions of dollars for unintentional errors."
2. Know what you need to know. Next, take the time to find out what's really going on in your organization, both at headquarters and in the field. Are policies being carried out fully and accurately throughout your organization? Examine all policies and applicable laws, and review annually.
3. Train, train, train. Train people, over and over and over again. With annual turnover in many workplaces exceeding 100 percent, it's critically important that both employees and managers are up to speed with policies. And don't train people just when they're hired, but throughout their employment, so they come to see compliance as part of their job performance.
4. Automate. Having automated systems in place to manage wage and hour issues significantly enhances compliance. Organizations need to automate all policies for timekeeping, scheduling, tracking overtime, and other employee time and pay information. The alternative is having information managed by hand or entered into a computer by hand -- a method that's prone to error.
Using Modern Technology to Minimize Compliance Risk and Better Manage the Workforce
Organizations seeking to minimize compliance risk should look for a workforce-management solution that centralizes wage and hour policy administration, establishes local policy enforcement, and creates detailed audit records. Manual, non-automated or disparate, outdated systems can't provide the accuracy and responsiveness employers need to maintain wage and hour compliance.
Kronos solutions provide tools that can simplify compliance with FLSA and other labor regulations. We help employers automate the entire workforce management process -- from the creation of employee schedules to the collection of hours and activities worked and calculation of payroll. Decisions are made at the corporate level on how to comply with federal, state and local laws that govern things such as minimum wage, overtime, and meal and rest breaks, so local managers don't have to spend their time working to get payroll right. Organizations can have confidence that policies are being applied correctly.
Learn more about how Kronos can help your organization manage wage and hour compliance at www.kronos.com or (800) 225-1561.