New presidential administrations often result in changes for federal agencies and businesses alike, and the Wage and Hour Division (WHD) under President Biden is no exception. Employers have already witnessed intense developments to existing federal programs in the past six months and face newfound pressures to achieve compliance largely on their own.
In the past, collaboration with the WHD allowed employers to bypass more severe penalties for minor wage and hour violations by identifying and correcting issues proactively. The PAID program may have excluded egregious cases, but it put employers at ease over unintentional oversights by allowing them the chance to collect records and provide back pay wherever it was owed.
This standard process of self-auditing and avoiding costly fines is no longer an option. The WHD is cracking down on wage and hour missteps without the leniency of past years. The termination of the PAID program has marked a turning point for accountability and compliance, as has the intensity of recent investigations. Let’s explore this new stance from the WHD and how to avoid negative outcomes for your business.
What Employers Can Expect
To put it simply: the WHD is no longer concentrating on providing compliance assistance. With the changes put in place by the Biden administration, old policies that reserved the consequences of liquidated damages for flagrantly egregious cases has been reversed.
Employers have reported that WHD investigators are demanding near-instantaneous documentation production, citing a regulation requiring employers to make documents available for inspection within 72 hours. In addition, investigations are said to be coming to premature conclusions due to pending documentation, often forcing employers to enter into compliance agreements drafted by the WHD. With the threat of subpoena power and imposition of civil money penalties (including double damages) backing these investigations, employers have little room for mistakes.
What does this mean for you? It means that you will be held accountable for any mistakes, with limited opportunity to correct them. As the head of your business, you need to be conscious of your record-keeping and payroll calculations. Inconsistencies of any kind are now a liability like never before.
5 Practices for Avoiding Wage and Hour Violations
1. Ensure records are correct and easily retrievable: As a baseline, all wage and hour data for your organization should be in order as if you are expecting a visit from WHD agent. Since WHD has authority over FLSA and compliance related to employee compensation, documentation must be kept up-to-date and easily retrievable. In order to avoid a run-in with the WHD, ensure you’re following all guidelines and staying informed on any changes to those requirements.
2. Don’t leave room for any surprises: Since WHD visits can happen without warning, it’s safest to ensure your HR personnel and managers know exactly what to do in the case of an unexpected in-person visit, letter, or call from the federal agency. When any WHD notification presents itself, it’s best to have a pre-determined contact for your employees to turn to. Ensure at least one person who is trained to coordinate appropriate responses and take charge of the established protocol.
3. Maintain civil interactions: Though it may be stressful to be investigated by the WHD, being respectful and reasonable throughout the process can significantly affect the outcome of the process. If the documentation requested by the WHD isn’t immediately available or accessible, consider politely asking for more time to respond. Taking a civil approach in discussing response time or the documents needed by the WHD could afford you extra time to produce the correct desired wage and hour information.
4. Retain or seek counsel: Being in contact with certified HR professionals or legal advisors familiar with WHD investigations will help shed light on new compliance requirements and the risks unique to your operation. With their added guidance, you have a better chance of identifying and correcting potential oversights. They can also help manage the flow of information and communication with the investigator to analyzing inefficiencies (which is especially helpful if contesting WHD conclusions).
5. Conduct a self-audit: Areas like exemption classification, total hours worked, and overtime (OT) pay are all areas that can be reviewed by your team. Conducting annual reviews will help you fill in missing pieces or correct wage and hour mistakes before they can escalate to federal involvement.
Track Compliance with KPIs
As an hourly workforce employer, the last thing you want to be second-guessing is your wage and hour compliance. For multi-state operations, ensuring accurate time and attendance records is even more of a challenge. Luckily, workforce management solutions can track vital data and help decrease liability risks with the WHD.
Unfortunately, using technology over punch cards or record sheets isn’t always enough. At EPAY Systems, we take employee time tracking one step further. Our platform’s analytics captures how all the members of your workforce use your time and attendance system. It even monitors potential mistakes with multiple KPIs to give you actionable insights to improve wage and hour compliance.
Whether it’s tracking where and when your employees punch-in (affecting the accuracy of compensation), changes to time cards by managers, lags in time and attendance data, or overtime concerns - our system has your back. Check out our blog, “Wage and Hour Compliance: 4 Common Pitfalls” for more guidance on avoiding the latest federal and state level penalties, or download our digital guide on the top ten payroll mistakes and how to avoid them.