Wage and Hour Audit

Wage issues are some of the most frequent, expensive and challenging employer compliance problems. Compliant wage practices and classifications are your first and best defense. In order to best withstand a wage and hour audit or investigation from the Department of Labor, business owners and HR professionals must understand wage concepts such as the minimum wage and overtime and should be aware of all relevant state and federal wage and hour rules.

Internal audits can be beneficial to address compliance issues at an organization in advance. However, if the findings from your investigation are not corrected it can be used against you. If an employer does not address the problems it found in the audit, it can increase the underlying liability or make the violation appear willful. Fines and penalties from willful violations tend to be much more serious and can impart personal liability for those involved. To minimize the risk of audit findings being used against the employer, make sure to correct compliance issues when you find them.

Six Quick Tips

1. Make sure all non-exempt employees receive at least the relevant minimum wage for all hours worked.
2. 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.
3. Secure and maintain signed time sheets from all non-exempt employees verifying their hours worked. Retain such time sheets for at least three (3) years or longer under relevant state laws.
4. Avoid prorating/reducing an exempt employee’s salary based on the quantity or quality of work performed, unless such a deduction is specifically permitted by law.
5. Familiarize yourself with the meal, break, and lactation break laws that pertain to the states in which you employ personnel.
6. Ensure that employees are properly classified as either W-2 employees or 1099 independent contractors in accordance with the IRS and EEOC guidelines.

For more information, contact GTM at (518) 373-4111.