Avoiding Trouble: Wage and Hour Compliance Best Practices

Every employer, regardless of company size, must comply with basic employment laws that regulate wage and hour practices. Yet, according to the U.S. Department of Labor (DOL), roughly 70% of employers routinely violate wage and hour regulations without realizing it.

As an employer, DOL expects that you know and adhere to wage and hour regulations. Take a look at the following six tips to help you develop a good grasp of the fundamentals of wage and hour regulations:

• Ensure your employees are properly classified as exempt or non-exempt from overtime pay requirements to be in compliance with federal and state regulations
• Familiarize yourself with the overtime exemption criteria and remember that simply because an employee is paid on a salaried basis does not automatically disqualify the employee from entitlement to overtime compensation
• Secure and maintain signed time-sheets from all non-exempt employees verifying their hours worked. Retain such time-sheets for at least three years
• Avoid prorating/reducing an exempt employee’s salary based on the quantity or quality of work performed (e.g., less than a full day), unless such a deduction is specifically permitted under federal law
• Familiarize yourself with the wage and hour laws that pertain to the states in which you employ personnel
• Ensure that employees are properly classified as either W-2 employees or 1099 independent contractors in accordance with IRS guidelines

To put this more in perspective, Seyfarth Shaw, a law firm with a specialty in employment, reports the two-year period of 2016 and 2017 netted more than $1.2 billion in the top wage and hour settlements across the country. In addition, 2016 represented “almost a quadrupling (after two years of declining numbers in 2013 and 2014) in the value of the top wage & hour settlements as compared to 2014.” The Seyfarth Shaw report concludes that the continued growth in wage and hour settlements make this the primary litigation exposure point for companies in 2018.

With this in mind, you can mitigate your company’s risk through proactive review of your wage and hour practices.

If you need assistance with this and related HR needs, please contact us at [email protected] or 443-741-3900. www.impacthrllc.com