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How to Not Become a Labor Department Enforcement Target
By: Susan Solovic
Over the last couple of years the Department of Labor has become fairly aggressive in its enforcement of wage and hours laws. It has been targeting industries suspected of being the most egregious offenders and it is going at enforcement in such a public way as to create a “ripple effect” that will motivate other industries and employers to stay in line, even though they are not targets of ongoing enforcement efforts.
In an article written by Dr. David Weil, administrator DOL’s Wage and Hour Division, he lays this out clearly:
- We’re increasing the cost of non-compliance by using all enforcement tools provided by Congress where appropriate, including civil money penalties, liquidated damages, and debarments.
- We’re identifying the contracting stream, or supply chains, so those at the top of the chain will evaluate the compliance practices of those below them and consider whether it’s worth their own good name and possibly their own bottom line to utilize the services of subcontractors or suppliers who skirt the law.
- When we conclude significant cases, we publicize the results through traditional and digital media. Publicizing wage and hour violations is an effective way to educate other employers about their responsibilities and encourage compliance.
Weil also sites the case of an Arizona drywall contractor who the department found liable for $600,000 in back pay because the company said workers were independent contractors rather than company employees.
Related Article: Independent Contractor versus Employee?
You don’t want to get swamped by one of those ripples and find yourself on the radar screen of DOL enforcers, so you need to make sure you’re in compliance, have the systems and training in place to stay in compliance, and you have implemented a good system of documenting your wage and hour practices.
Peter Rich, an attorney at Spilman Thomas & Battle, has four important recommendations to help you stay out of trouble:
- Be sure your practices align with DOL policy with regards to the differences between employees and contractors.
- Use a computer-based payroll system so your records are always in order and easy to access.
- Have all the facts you need to determine if an employee is exempt or non-exempt.
- Understand the nuances of “compensable” time, which will impact the amount of overtime you are required to pay.
This compensable time point is an area where employers are frequently challenged. The Supreme Court recently ruled on a case that involved employees who were required to change into clothes and protective gear prior to working. The court “threaded the needle” in the way it defined regular clothes versus protective gear and the employer essentially won the case.
However, we all know that even if you end up winning your case, the time and expense are significant when lawyers get involved. If you have any doubts about your policies and practices or have never before reviewed them, sitting down with a good local labor law attorney will prove to be money well invested.
This article was originally published by Susan Solovic
Published: April 1, 2015
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