Recently the California Chamber of Commerce noted in an article (Jan 27. 2011) that The U.S. Department of Labor (DOL) recently hired hundreds of new employees, including a significant number of enforcement agents. The DOL also is promoting the “We Can Help Campaign,” which encourages employees to “audit” their employers and report violations of wage-hour laws.
This prompts me to encourage employers to review all issues that relate to employee wages and hours practices and policies to ensure that they are complying with labor laws. In my coaching work with nonprofits and for profit businesses I see very little differences when it comes to human resources matters. I impress on my clients that: “I did not know” Is not an acceptable answer when you are facing a judge in a labor law case.
While there are many areas of concern the 3 areas where I frequently see problems are:
- Classifying employees as exempt,
- Classifying employees as independent contractors
- Making up time in lieu of overtime pay.
Wage and hour issues are always of interest to the DOL because compensation errors affect employees negatively and can cause lost tax revenues. Incorrect employee classifications and incorrect calculation of overtime pay can present very costly penalties.
California law requires all non-exempt employees be paid overtime after eight hours per day OR 40 hours per week. Many employers think that there is only a 40 hour rule. I suggest that you update your knowledge on the following web sites: www.Dol.gov and www.dir.ca.gov/NoticeAboutOvertimePay.htm. Actually you can do a search using the words overtime pay rules in California..
Take time to address these issues and satisfy yourself that indeed you are in compliance and that you have documentation that supports your practices.
It is in your best interest to perform an internal audit. There are many companies that specialize in human resource services. If you outsource your payroll function your provider may offer an audit service. If you use an attorney be sure the attorney is an HR specialist.