By Edward W. Bailey,
Soon after the end of fiscal year 2019, the Department of Labor (“DOL”) reported that its Wage and Hour Division (“WHD”) had made record breaking recoveries against employers. In its year-end report, the DOL revealed that it collected a remarkable $322 million in back-wages owed to workers. WHD’s new administrator, Cheryl Stanton, stated the following in response to the news:
We are delivering more back wages for workers than ever before, and we are steadfastly eliminating any unfair economic advantage employers may try to gain by skirting the rules. We are protecting those who do the right thing, pay their employees what they have legally earned, and operate in compliance.
True to Ms. Stanton’s comment, the DOL’s report did not only tout its enforcement but also the guidance the agency provides to employers to help them stay in compliance. For example, in its report, the DOL noted that it hosted over 3,700 educational events for employers in fiscal year 2019 and mentioned the educational resources it provides employers via its website.
These lectures and guidance materials provided by the DOL can be a great way to keep up with employer’s ever-evolving wage and hour obligations. This is particularly highlighted by recent changes to certain critical exemptions from the Fair Labor Standard Act’s (“FLSA”) overtime requirements. For example, as of January 1, 2020, the salary threshold that most salaried employees must earn to be exempt from overtime increased, for the first time since 2004, to $35,568 from $23,660. Likewise, the threshold for “highly compensated employees” rose from $100,000 to $107,000.
However, while government resources can provide basic guidance on what the state of the law is, the best thing employers can do to protect themselves from the DOL’s ever-increasing enforcement activity is to conduct a self-audit. Key items to include in any such audit are:
- Verifying whether your workers are independent contractors or employees by closely examining how much control you have over their day-to-day tasks, where they are performing their work, and whether they are responsible for providing their own work-materials
- Reviewing time-keeping systems and procedures to ensure that non-exempt employees are being properly compensated. For example, a common pitfall is to automatically withhold compensation to employees for scheduled meals and breaks without confirming that that those breaks were actually taken
- Closely examining the roles of employees who you have found to be exempt by reviewing their job descriptions to ensure that it actually reflects the work the employee is performing. Likewise, as discussed above, ensure that the relevant salary amounts are met before exempting an employee.
Finally, whenever possible, an audit should be overseen by either in-house or outside counsel in order to protect the audit’s findings under attorney-client privilege.
Should you have any concerns regarding your organization’s wage and hour obligations, be sure to contact us at https://centrelawg.wpengine.com/contact/.
About the Author:
Ed Bailey is an associate attorney whose practice focuses on government contracts law, employment law, and litigation. Ed recently graduated cum laude from George Mason University’s Antonin Scalia Law School where he was a member of the Law Review.