Wage and Hour Compliance: 80% of Employers Likely Out of Compliance

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The U.S. Department of Labor recently settled a lawsuit filed by the American Federation of Government Employees Local 12 for $7 million. The lawsuit, filed a decade ago, claimed that Labor Department employees had not been properly paid for hours worked and overtime, and that exempt employees had been misclassified in violation of the Fair Labor Standards Act (FLSA).

The settlement is a shot across the bow for all employers. If the Department of Labor, the primary enforcer of the FLSA, can run afoul of that law, no one is immune. The Department of Labor has estimated that nearly 80% of employers are likely out of compliance with the law. And the complexity of state law only adds to the uncertainty for most employers.

On December 1, new FLSA rules change the game for all exempt employees and managers of those employees. Many of these employees may be treated as exempt on November 30th, 2016, only to find themselves non-exempt on December 1. The pending changes put greater pressures on employers to fully understand and comply with the new regulations impacting exempt/non-exempt determinations.

Upcoming Webinar: Three Focus Areas for Compliance with the New FLSA Requirements

What Does This Mean?

Once difficult to find, information about labor law violations will be much more readily available. Starting in October, any business that applies for federal contracts will be required to disclose violations of 14 federal workplace-protection laws, including wage-and-hour rules, going back three years. And violations can result in a contract bar. These developments make it even more important than ever to demonstrate a commitment to labor law compliance.

With a rising number of class actions, new regulations and disclosure requirements, organizations can no longer afford to ignore training. Despite the positive benefits of training on this critical compliance topic, especially in terms of risk mitigation, only 29% of organizations say they plan to train on wage-and-hour rules in the next 2-3 years – putting wage-and-hour dead last on the list of planned compliance training topics.



When managers and employees understand the law, violations are much less likely to occur. Training can be a game changer when faced with potential litigation or enforcement agencies question your organization’s commitment to compliance. Proper training can help your organization effectively educate your workforce and align your teams with applicable laws; and also serve as evidence of your commitment to getting pay right. Finally, best practice is to supplement your training with clear and easy to understand policies that are applied fairly and consistently.

It has never been more vital to build high-quality, effective wage and hour training into your compliance program.


Our new Wage & Hour course helps your managers and employees understand how to properly record work hours, overtime, breaks and meal periods, and is the only 50-state configurable training course on the market. If you’d like to see a preview, connect with a NAVEX Global solutions expert.


What do you have to say? Share your thoughts in the comments below or join a discussion group on Compliance Next.


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