Wage and Hour Mistakes Prove Costly for U.S. Business Owners

By Jo McClure, CPP on Mar 05, 2019
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Wage and Hour Mistakes Prove Costly for U.S. Business Owners

Most employers mean well and don’t set out to deliberately wrong their employees when it comes to accurately paying earned wages. That said, mistakes happen, and when they aren’t corrected voluntarily and in a timely manner, they can become costly for affected employers. Not to mention their negative impact on employees.

Enter the U.S. Department of Labor (DOL) Wage and Hour Division (WHD). The WHD promotes and enforces compliance with labor standards. Of course they work to recover back pay for workers, but they also assist employers. The WHD has found the vast majority of employers want to be compliant with the law and, as such, the WHD engages in a extensive outreach and education program to educate employers on the various laws.

Blog Post: FLSA Overtime Rule Changes

WHD Collects Record Back Pay in FY 2018

But even with a record-breaking 3,600 outreach programs during fiscal year (FY) 2018, including on the ground presentations and training programs, some organizations still failed to stay compliant. In fact, the DOL announced a record $304M in employee back pay was collected by the WHD in FY 2018 for minimum wage and overtime violations under the Fair Labor Standards Acts (FLSA). Put another way, this averages $835,000 in employee back wages collected per day - enough to feed more than 900 families per month! 

Find out how to accurately measure employee time and attendance in common workplace scenarios.

What Does This Mean for Employers

Employers should expect continued vigorous enforcement of the FLSA. In a DOL press release, U.S. Secretary of Labor Alexander Acosta said, “Through vigorous enforcement and compliance assistance, the Department of Labor is committed to ensuring that workers receive the wages they have earned. These record-breaking numbers confirm the Department’s strong commitment to enforcing the law and providing employers with the tools they need to comply with the law.”

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Voluntary Disclosure Under the PAID Program

Not all employers need to wait until the action is taken by the DOL. In fact, it pays to voluntarily disclose violations when possible. To aid the process, the WHD has extended its Payroll Audit Independent Determination (PAID) program. PAID gives employers the opportunity to self-audit for FLSA overtime and minimum wage non-compliance and resolve any violations without penalties and fees. The DOL will then supervise the repayment of back wages to affected workers. The program’s primary goal is to quickly resolve claims, improve employers’ FLSA compliance, and ensure employees receive the back wages they are owed. Self-reporting is a requirement to participate — the PAID program is not available to settle ongoing lawsuits. Not all employers will qualify to participate in PAID. To find out if your business is eligible and for more information, visit the PAID website here.

The Importance of Internal Payroll Audits

Under the PAID program, employers are encouraged to conduct internal payroll audits and self-report any violations discovered. Axcet HR Solutions Director of Payroll Jo McClure presented at the 16th Annual Midwest Regional Payroll Conference on how to conduct an internal payroll audit and the importance of using key audit strategies.

“The auditing process never seems to end for the payroll team. Creating internal payroll auditing procedures and putting them to work helps to identify and correct compliance issues proactively,” explained Jo.

How to Perform an Internal Payroll Audit

Why Axcet HR Solutions?

Oftentimes, small and medium-sized businesses lack the necessary resources to stay up-to-date with new and ever-changing laws, causing them to fall victim to costly penalties and fines. As if keeping up with federal laws weren’t enough, state and local laws also come into play. Axcet HR Solutions’ team of HR, payroll, compliance, risk management and workers’ compensation experts have been helping Kansas City metro business owners stay compliant since 1988. We are the only local Kansas City Professional Employer Organization (PEO) to earn the designation of Certified Professional Employer Organization (CPEO) by the Internal Revenue Service (IRS). Unsure what a CPEO is or how one can help your business? Find out here.

Further Reading: Jo McClure, Director of Payroll Administration, discusses the top eight payroll mistakes small businesses make in this blog.

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Written by Jo McClure, CPP

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Table of Contents

2019 HR Compliance Checklist

2019 HR Compliance Checklist
FLSA Overtime Rules: How To Accurately Measure Time and Attendance

FLSA Overtime Rules: How To Accurately Measure Time and Attendance

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