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Wage-and-Hour compliance: How to win the numbers game

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in Discrimination and Harassment,HR Management,Human Resources

Have you or any of your organization’s supervisors ever given the go-ahead to hourly employees to work through lunch so they could leave work an hour early for a special occasion? Sure you have. Who hasn’t?

But know this: Every time you do it, you’re probably breaking the law. Most states have laws requiring specific meal and rest breaks. They require you to record every hour of overtime your hourly employees work. They also require you to document all hours your employees spend on the job.

The U.S. Labor Department reports fully 70% of employers don’t follow those rules to the letter, which means they are violating wage-and-hour laws.

If your organization is part of that 70%, it could land in big legal trouble before long. The number of wage-and-hour claims under the Fair Labor Standards Act (FLSA) has increased by 86% over the past 2½ years, and the number of FLSA class actions in that area has increased by 70%. In fact, every year federal class-action wage-and-hour claims outnumber all discrimination and workplace-action claims combined.

Lawyers love these cases

Why? These cases mean big paydays for plaintiffs’ attorneys, so they’re filing more of them. A recent BusinessWeek article quoted an attorney who said he could walk into any company and find a wage-and-hour violation. Any company.

How about yours?

Organizations fall out of compliance because it’s not a “super-intuitive” area of the law, especially when it comes to the nuances and state-by-state variations. If you called together a group of supervisors to watch a video of people using racial epithets, everybody would agree that’s bad. But if you showed that same audience a clip of a manager telling an employee it’s OK to skip lunch and leave work early, they’d probably ask, “What’s the big deal?”

The big deal is, somebody is waiting to sue you for it.

Count on it

Wage-and-hour liability is a numbers game. It’s about your data. And despite the nuances, it’s also fairly black and white. You either violated wage-and-hour laws or you didn’t. When a plaintiff’s lawyer comes in, it’s all about the documentation you have: “Did you properly pay people for overtime? Yes or no? Were meal and rest breaks being taken properly? Yes or no? Show me the documentation.”

Don’t have the documentation? Uh-oh. Now the benefit of the doubt goes to the employee.

Your best bet: Put a compliance program in place right now. Much like harassment laws, consistently training managers about the law and enforcing it can arm you with an affirmative defense should an employee sue your firm.

My advice:

1. Audit your time-keeping and documentation systems so you know they’re accurate and in compliance with federal and state wage-and-hour laws. Don’t under-invest in proper time-keeping and audit policies.

2. Update your HR policies so they reflect federal and state laws. Note: The U.S. Labor Department provides a state-by-state breakdown of minimum rest and meal requirements at www.dol.gov/esa/programs/whd/state/state.htm.

3. Educate managers and employees with the same fervor you use for harassment training. Explain what you mean by “overtime,” “hours worked” and “off-the-clock work.” Tell them what to do if they discover an error in their paychecks.

4. Target managers of hourly employees. Because these managers probably are exempt from overtime, the rules are different for them. As a result, they probably don’t know as much as they should about what’s legal and what’s not when dealing with hourly employees.

Shanti Atkins is president and CEO of ELT, a San Francisco-based firm specializing in workplace compliance training. Contact her at (877) 358-4621.

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