Here We Go Again...

Recently, the U.S. Supreme Court handed down a decision in the Walmart wage and hour lawsuit that businesses hailed as a great victory…(and it was…just not for what business people think). The Supreme Court ruled on a procedural question related to class-action litigation, (by the way, that was an extremely business friendly decision) but the Court has not changed in any way an employer’s absolute duty to pay its employees the employee’s earned wage.

Moreover, the federal law that applies to most employers, the Fair Labor Standards Act (“FLSA”), is still on the books, still spells out minimum pay rates, overtime and who is exempt from being paid overtime. In addition to the FLSA, there are a number of other federal and state laws and regulations governing the act of paying employees. None of these laws were affected by the Supreme Court decision in the Walmart case.

Despite all the press and publicity, more and more employers are running afoul of these wage laws. In most cases, it is due to a lack of understanding of their legally imposed duty, but in some cases, employers looking for ways to cope with cash-flow problems intentionally evade their duty and cheat their employees out of earned wages.

Adding to the mounting pressure on employers come the statement from Secretary of Labor, Hilda Solis, “We will not rest until the (FLSA) is followed by every employer, and each worker is treated and compensated fairly.” Secretary Solis supported her statement by announce a 33 % increase in the number of investigators auditing for wage and hour violations.

What we know from our experience, virtually every employer can be found to have violated the FLSA in some way. The FLSA is a complex law which literally 100s of pages of regulations and even the biggest of businesses with 100s of HR professionals and lawyer protecting it, can make mistakes. (AT&T is facing a $1 BILLION lawsuit over wage and hour mistakes) Businesses with limited HR resources available to it need help to withstand the promised scrutiny from the U.S. Department of Labor along with state agencies.

The financial impact of evading paying wages is huge. Payroll taxes, Social Security withholdings, unemployment insurance premiums are reduced when wages are shortchanged. Getting caught can be a financial catastrophe for businesses that have to pay all the unpaid taxes along with the unpaid wages and the fines and penalties. Don’t forget after all that, the attorneys’ fees of the counsel representing the business.

So, what are businesses doing wrong? The top issues seem to be:

• Employees wrongly classified as exempt from overtime.
• Hourly employees paid incorrectly (or not at all) for their travel time.
• Failing to retain payroll records for the right amount of time.
• Texting and emailing employees when they are “off the clock”.
• Violating – or being unaware of – the “rounding law”.

Now is the time for businesses to get their houses in order. Find and fix the mistakes before the mistake is found by an investigator, or worse one of the employees’ attorneys.

Glenn Brown is the Co-Founder and Principal of the Kansas City based HR consultant firm, G & J Consultants, LLC. In addition to having directed the HR Department of a health care services company, Glenn is an attorney with 15 years experience assisting businesses of all sizes and industries in complying with employment and labor legal issues. G & J Consultants specializes in providing small and medium sized businesses with traditional HR services as well as compliance with employment laws and regulations.