Enforcement of Employee Classifications

The DOL has stepped up their enforcement of employee classification. The following are 10 great strategies to prevent or handle a wage and hour investigation.

  1. Avoid unfair compensation practices. Make sure employees are compensated in a consistent manner. If an employer’s pay practices are consistent, complaints are less likely to arise, and the employer will be in a better situation if the DOL does launch an investigation.
  2. Understand the regulations. It is important that employers take the time and make a concerted effort to understand and familiarize themselves with the FLSA. It is the law, and if employers fail to follow the law they may face litigation or a DOL audit.
  3. Train managers. Train managers so they are fluent in the language of the FLSA.
  4. Analyze state vs. federal law. Determine whether the state’s wage and hour laws conflict with federal law; then follow the law that is most beneficial to the employee.
  5. Pay past overtime due. If it is determined that an employee is wrongly classified as exempt, the employer should determine how many overtime hours the employee has worked in the past 2 years, then pay the employee the overtime due. The employer should also have the employee sign a release to free the employer from further liability. Paying past overtime due to employees now will be far less expensive than paying them in a DOL settlement.
  6. Respond to internal complaints expeditiously. If an employee files a wage and hour complaint internally, the employer should take it seriously. Since many investigations are prompted by an employee’s complaint, employers might be able to prevent an investigation by addressing an employee’s initial internal complaint. Desk audits are a great way to make sure employees are classified correctly.
  7. Seek compliance assistance from the DOL. Various compliance tools and information are available on DOL’s website.
  8. Conduct a self-audit. Employers can hire attorneys or consultants to audit their companies–or they can do it themselves before the DOL initiates an investigation. Conducting a self-audit helps ensure compliance with federal and state laws.
  9. Cooperate. Employers should demonstrate their willingness to cooperate with DOL investigators and to adjust their procedures and policies as necessary to avoid violations in the future.
  10. Keep accurate records. Employers are required to make, keep, and preserve employees’ records, including wages earned and hours worked, for a specified period of time. Although there is no particular form for the records, they must include certain identifying information about each employee and accurate data about the hours worked and wages earned.

LME Creative Human Resources is here to help you with all of your HR Compliance needs.