Wage and Hour issues have been prevalent in the compliance arena for many years now. According to The Network’s 2013 benchmarking report, 46 percent of all reports that came through the hotline were classified as “Personnel Management,” which includes concerns over wages, hours, benefits, promotions, etc. This number has not fluctuated much year-over-year since 2008, in which “Personnel Management” reports made up 50 percent of all reports. Many employers are having trouble keeping up with specific provisions in the Fair Labor Standards Act (FLSA), which establishes minimum wage, overtime pay, recordkeeping and youth employment standards.
By industry, there are an especially high number of reports in Retail Trade (5.80 reports per 1000 employees) and Wholesale Trade (5.91 reports per 1000 employees), resulting from the high number of blue-collar hourly workers. Again, these rates have not moved greatly since 2008 for these two industries, proving that this is a fundamental issue with these workers and not just a recent trend in reporting. Common examples of issues raised by employees include not receiving appropriate wages for all hours worked (including overtime), not being able to take a full meal break because of manager requests, and not receiving written notice of wage rate, pay period, and fringe benefits.
Other past examples of FLSA violations? In 2011, a large sporting goods retailer settled a class action lawsuit by awarding $15 million in back pay to current and former workers. According to the suit, these workers were not provided with an uninterrupted meal period, and were not compensated for work during what should have been their meal time. A couple of years before that, a large restaurant group settled a wage and hour class action filed by a former restaurant employee in California. The employee alleged that their employer had failed to pay minimum wage, provide itemized wage statements and pay employees such wages upon termination in a timely manner.
The aforementioned settlements were some of the more press worthy cases in recent years. However, it is important to note that according to Seyfarth Shaw partner Noah Finkel, one of the editors of the book Wage & Hour Collective and Class Litigation, 90 percent of the filings he sees are against small- and medium-sized businesses. In fact, there are more litigation filings on wage and hour than in any other area of workplace class action. The DOL has even increased the number of field investigators to enforce these laws. These cases may not always result in multi-million dollar settlements, but for smaller companies the resulting reputational exposure and litigation costs can be detrimental.
Since wage and hour claims seem to be one of the greatest employment law risks for companies of all sizes, these employers need to prioritize employment law training courses that educate the workforce about the basics of state and federal law as well as their policies. Supervisors need to understand their responsibilities in regards to classifying employees, calculating hours worked, and applying minimum wage and overtime. Supervisors also need to be made aware that they can seek assistance from the company’s legal department whenever there is a complex or unclear situation.
Employee compliance training should put wage and hour lessons into a real-world context to resonate with the day-to-day duties of supervisors of hourly workers. Interactive exercises and quizzes can further enhance their problem-solving abilities when faced with common situations. Further, employment law training courses can be supplemented with regular refreshers to keep policies and procedures top of mind for supervisors when making decisions on how to pay their workers.
Employees need to be made aware of the rights they are entitled to under the law, as well as what issues they should not report, if any. A high number of unsubstantiated reports can be costly to a company resulting in a wasteful use of resources and interrupted operations due to investigations. Resources such as the intranet, posters, signs, and employee handbooks are commonly used to spread compliance messages to employees. According to The Network’s benchmarking data, posters are by far the most commonly cited by retail trade and wholesale trade employees when reporting incidents. Companies that reach out to employees to educate them on their rights and stand by their promises can develop an excellent reputation that will help to attract and keep their talent in the field.
Employment Law Training Courses
This course underscores the importance of following the company’s recordkeeping practices to ensure full documentation of – and compensation for – hours worked. Managers and employees who comply with good timekeeping practices not only promote important workplace values, but also ensure compliance with federal and state laws.
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More Information on Employee Compliance Training
- On-Demand Webinar: Navigating the Complexities of Global Harassment Laws and a Global Workforce
- Compliance Week Report: Hotline Incidents on the Rise
- Blog: On the Case for Investigations & Incident Management