Major Department of Labor Push on Wage-Hour Enforcement

Major Department of Labor Push on Wage-Hour Enforcement

*Reprinted with permission from Bookkeeping Tips published by AIPB. All rights reserved.

The US Department of Labor is back in the enforcement business,” according to Secretary of Labor, Hilda Solis.

Major Department of Labor Push on Wage-Hour Enforcement

The problem: Everyday practices of 70% of employers result in unpaid “work” hours that the employer has no idea are unlawful, but that do, in fact, violate the Fair Labor Standards Act (FLSA).

The focus: Hourly employees and first level managers-typically “supervisors,” such as a customer service supervisor, stocking or maintenance supervisor.

The DOL solution: A huge jump in wage-hour audits. Another 350 investigators are being added-an increase of more than on third-and DOL has proposed $241 million to pay for the expanded enforcement.

Here are some typical examples:

Punching in early (or punching out late). Tony punches in 15 minutes before starting time.

Problem: If you were audited, you would have to prove that Tony was not working, because DOL assumes that an employee who has punched in is working.

“Downtime.” Marina’s workday starts at 9, but she has a long drive and must drop off two children in different places, so she ends up getting in a little after 7:30, has breakfast at her desk and reads celebrity magazines.

Problem: If a customer happens to call, or Marina suddenly remembers something she must attend to and pulls a file so she won’t forget, she is working and must be paid for the hour or portion of the hour when the client called and she pulled the file.

Chatting during breaks. Bill gets in half an hour early to have a cup of coffee while he talks sports with coworkers.

Problem: If, while chatting with coworkers, any business matters happen to creep into Bill’s chats, that is paid work time and all of the workers involved in the conversation must be paid for that time. How does DOL know about this? It doesn’t-unless you are audited, at which time DOL staffers will conduct lengthy interviews with hourly workers.

Checking e-mails from home. Before leaving for work, James, who lives over an hour away, checks his Blackberry (or other device) for business e-mails.

Problem: DOL considers this unpaid work time.

Supervisors “pitching in” to help. Customer Service Supervisor, Harley, is an exempt employee. She sometimes puts on the headphones and takes orders for a few hours. Maintenance Supervisor, Charles, sometimes ends up cleaning restrooms himself to make sure the work gets done.

Problem: If your firm is audited, DOL may decide that answering the phone is hourly work and reclassify Harley as a nonexempt employee. Once it does this, if DOL finds out that she worked more than 40 hours in the workweek-which most supervisors regularly do these days-you will be hit with overtime, back pay, penalties and interest, possible several years’ worth. The same goes for Maintenance Supervisor, Charles, who, because he is a “manager” and therefore exempt, should be supervising restroom cleaners rather than doing the work. The same would apply to a stocking supervisor who sometimes boxes and puts products on the shelves. Bottom line: Employees who are exempt because they do managerial work (regardless of whether their title is “manager” or “supervisor”), should be supervising those who do the work-not doing the work their nonexempt employees do.

  • Require employees to accurately record all work hours and to submit a timesheet or comparable record that they certify as accurate (and submit in a timely manner).
  • Require managers to review these records promptly to identify any inaccuracies.
  • Prohibit employees from reporting to stations before start time.
  • Discipline employees for improperly clocking in or out.
  • If you pay Jo for working Wednesday from 9-5 but have a series of business e-mails from her between 7-9 a.m. or 6-8 p.m., DOL considers this unpaid work time.
  • Require managers to report any and all suspected off-the-clock work so that it is paid-and steps can be taken to prevent off-the-clock work in the future.
  • If there is a wage-hour audit, have ready, accurate, indisputable records of hours worked.

Helpful Hint: An automated time and attendance system is an easy-to-use tool for staying in compliance with wage-hour regulations. Many such systems are programmed to alert you to potentially costly issues. Some can prevent early punch-ins or more than a few minutes.

  • Make sure that managers rarely do nonexempt work, and then only for a brief time (i.e., not all morning or half of the afternoon).
  • Make sure that a nonexempt manager supervises at least two full-time employees, or DOL may conclude that the person is exempt simply to avoid overtime pay.
  • Give exempt managers the discretion to hire and discipline employees-two key functions of this exempt classification.
  • Give exempt managers the authority to make decisions that affect the company to a certain level.

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