Is your Payroll Compliant? Are you Sure?!

Is your Payroll Compliant? Are you Sure?!

Many people reading our blog never think about payroll and compliance issues until after the Department of Labor (DOL) finds wage and hour violations.  CEOs, COOs, CFOs and Human Resource professionals alike take it for granted that their organization is payroll compliant with the law.  Why?  Well, most have never had an issue and many payroll professionals, who have occupied their position for years, may also have been taken for granted. And last, but not least, if it isn’t broken, don’t fix it.

Human services agencies, particularly delivering any kind of health care services including primary care, behavioral healthcare, senior care, or residential care, are at particular risk.  We have frequently encountered unintentional wage and hour violations as we convert our customers from legacy payroll systems.  Even the biggest payroll processing providers in the market encounter these issues.

The most frequently violated wage and hour laws include overtime (39%), improper classification of employees (18%), off-the-clock (17%), and missed meals/breaks (16%).  In 2012 the average settlement for cases in the healthcare services industry was nearly three times the average in any other industry.

Since 2007 the DOL has completed over 150,000 investigations, of which over 110,000 resulted in findings of violations.  Of those, 75% included back wage payments and 11% included some kind of penalty.  Also, over 80% of the cases found have a FLSA violation and 65% included back wage payments in relation to the FLSA violation.

So let’s ask the question again: “Are you sure your payroll is wage and hour compliant?”  Maybe it is time to revisit and validate that your policies and procedures, systems, and people are in compliance.  As the old adage goes: “An ounce of prevention is worth a pound of cure.”  A small investment now may keep you in compliance before you stand face-to-face with a million dollar settlement, fines, and attorneys’ fees.

Martin, D., Plancich, D., & McIntosh, J. (2013, March 12). Trends in Wage and Hour Settlements: 2012 Update. NERA Economic Consulting, 1-19.

Written by Erik Marsh

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