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Don’t let do-it-yourself pay audit trip you up

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in Office Management,Payroll Management

Allowing wage-and-hour problems to fester can land you in hot water, which puts a premium on being proactive and performing a self-audit of your company’s pay policies.

But if you do, and an employee sues you for wage-and-hour violations, be aware that a court may compel you to provide your findings to the employees’ attorneys.

However, there are steps you can take to minimize this possibility. The confidential bond between you and your attorneys is your best protection. To minimize the likelihood of having to disclose the findings of an internal pay audit, retain outside legal counsel to conduct it. That way, your company can claim the attorney-client privilege or the work-product privilege. A court can’t force you to turn over audit records.

Before turning the audit over to your lawyers:

Analyze job descriptions. The duties outlined in job descriptions should be the same duties performed by employees. Develop a job description survey for employees to complete.

Test employees’ status. Employees who are classified as exempt must meet the criteria for their exemption—administrative, executive, professional, computer or outside sales.

Review overtime calculations. Certain items must be included in employees’ regular rates (e.g., incentive bonuses); other items may be excluded from employees’ regular rates (e.g., vacation pay).

If you uncover wage-and-hour irregularities, correct them ASAP. Courts will look favorably on your efforts to identify and fix errors.

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