The U.S. Department of Labor’s Wage and Hour Division (WHD) has been making news for the past six weeks. First, in late June, it proposed doubling the salary threshold that makes managerial employees eligible for overtime pay. Then in July, it issued new guidance for making the distinction between employees and independent contractors.
Both of those developments deserve employer attention. However, it’s important not to be mesmerized only by recent development.
WHD’s ongoing initiatives—it’s primarily in charge of enforcing the Fair Labor Standards Act ()—can still cause very real problems, particularly for employers in low-wage industries. They’re a target-rich environment for cracking down on minimum wage and overtime pay violations.
WHD has found it gets the biggest bang for its enforcement buck by concentrating on nine key industries: restaurants, health care, guard services, agriculture, hotels and motels, temporary help, janitorial services, garment manufacturing and day care. From those nine industries, WHD recovered $79,147,290 in back wages for 109,261 employees last year.
The best way to stay out of WHD’s cross hairs: Maintaining scrupulous pay records.
Most WHD investigations begin with reviewing time sheets, since any irregularity or missing records are automatic violations. For WHD investigators, the smoke of poor record-keeping indicates fire burning somewhere else. It could be unpaid overtime or misclassification of employees as independent contractors. Maintaining good records can shorten a WHD investigation or possibly stop it in its tracks.
Advice: Ignorance of the FLSA is no excuse. Run your pay policies and practices past your attorney. Then, at least, you have a defense that you were acting on the advice of counsel. This may alleviate or even eliminate liability as long as you immediately fix noncompliant pay practices.