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Title Versus Duties: Wage And Hour Exposures Continue To Grow

Reports find that unpaid wages are a widespread issue among U.S. corporations.

The report noted that large U.S. corporations have paid billions in recent years in fines and settlements for alleged wage and hour violations, including for failing to pay workers overtime or forcing employees to work off-the-clock.

According to the U.S. Department of Labor (DOL), the five employers that have paid the most for wage and hour violations are: Walmart at $1.4 billion; FedEx at $502 million; Bank of America at $381 million; Wells Fargo at $205 million; and JPMorgan Chase at $160 million. Valerie Bolden-Barrett "Wage theft settlements by top US companies amount to billions" hrdive.com (Jun. 07, 2018).

Commentary

Employers must be careful to follow all regulations under the Fair Labor Standards Act (FLSA) and any applicable state or local wage and hour laws.

Employers should note that state laws are often more favorable to employees and in the case of a discrepancy with federal law, the law most advantageous to the worker must be followed.

Every employee must be properly designated as exempt or non-exempt for overtime. That designation depends not only on the amount an employee is paid, but also on actual job duties.

Job titles are not determinative and have little to no impact on whether an employee is exempt or not from overtime. The same holds true for documents or contracts designating workers as independent contractors instead of as employees.

What determines eligibility is primarily direction and control as to the duties a worker performs. Sales, professional, and other niche exemptions aside, an employee who has little autonomy over what he or she does is most likely due overtime.

If an employee is eligible for overtime, overtime shortages can result when, after working a 40-hr week, that employee engages in texting or emailing his or her manager or otherwise performing work duties on the weekend. Failure of an organization to capture this time, document it, and pay the employee can lead to unpaid overtime liability.

Keep meticulous wage and hour records. Have a tracking system. Review an employee's time entries, with the employee, every week, or bi-weekly, for accuracy. Have the employee indicate the correctness of the record. If you establish this as a business practice, then, should a former employee sue two years from now for unpaid overtime, you can testify as to your standing business practice and as to the fact that the time record was reviewed and signed off on by the employee every week for the duration of the employee's employment.

Having an outdated payroll system increases the risk of a wage and hour violation. According to a recent survey, half of employers use a system that is not up-to-date. Investing in new payroll technology and keeping it updated can save you from a costly fine.

Finally, seek a legal opinion as to which employees are exempt or non-exempt. A legal analysis is often needed for employees who fall into "grey areas".

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Latest Numbers

Unemployment Rate

4.0% in Jan 2019

Payroll Employment

+304,000(p) in Jan 2019

Average Hourly Earnings

+$0.03(p) in Jan 2019

Employment Cost Index (ECI)

+0.7% in 4th Qtr of 2018

Productivity

+2.2%(r) in 3rd Qtr of 2018

Source: Department of Labor

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