Stay on top of your greatest compliance risks.
You know that wage and hour lawsuits are skyrocketing and you will soon be facing your greatest compliance risks. But did you know that most of the litigation revolves around just two issues? Regardless of an employer's size, industry, or any other factor, most conflicts center around two everyday occurrences: overtime and meal breaks.
The Challenges of Overtime
The very definition of overtime is contingent on a number of factors. For starters, the U.S. Fair Labor Standards Act (FLSA) mandates that overtime be paid for any hours worked beyond 40 in one week.
There are, however, more stringent restrictions imposed by individual states, as well as union agreements. Ultimately, the law favors whatever requirement is most beneficial to the employee.
To make things more complicated, when employees work multiple jobs with varying pay rates, the overtime pay rate may be based on the average of those pay rates. This means the employer's time and labor management system must be able to calculate an employee's weighted average pay. (Needless to say, when pay differentials exist, employers need a system that can accurately record and calculate them during regular work hours, too.)
So when calculating overtime pay, employers need to be sure their system not only identifies overtime correctly but calculates the accurate OT pay rate.
The Problem with Meal Breaks
Obviously, an employer's time and attendance system should precisely record the actual number of hours worked. To facilitate this, some employers build standard meal breaks into the system. While this is convenient, it can be problematic.
Employees who work through breaks or don't take full break times will be shortchanged in their pay, grounds for a wage and hour lawsuit. Conversely, managers should be able to monitor employees who exceed meal break allowances so they can take corrective action.
Either way, employers should carefully review the way they handle meal breaks. To ensure compliance, make sure that actual break times taken match those factored into your system.
A Simple Fix
By ensuring your time and labor management system tracks overtime and meal breaks correctly, you'll collect accurate payroll data from the onset. This will not only allow you to avoid fixing mistakes at the critical payroll processing time (after all, payroll people shouldn't serve as compliance managers, too), but improve your day-to-day compliance. And that will significantly reduce your greatest wage and hour litigation risks.
Please read about our human capital management systems.