The legal system is so fraught with ambiguities arising out of the possible interpretations of the word of law that we are entirely at the mercy of the interpreters when a dispute arises; unless we have deep pockets and free time at our disposal to keep contesting our case until we reach the Supreme Court – without a having a clue to how the tide will turn! A DOL audit can deal such a financial blow that an employer had better be wary and constantly vigilant. Setting the right systems and processes and reviews and ensuring compliance is the only way an employer can adopt to avoid serious trouble. The Department of labor estimates that 70% of employers are out of compliance with FLSA – and that is an undoubted threat to 7 out 10 organizations which had better be met through proactive action!
The DOL has beefed up its efforts to ensure that the FLSA is applied in letter and in spirit and employers must remember that the FLSA does not accord a separate status to the contingent labor. The daily unrelenting pressure of performance is a real challenge that has to be met – which could blur the focus on other areas like wage and hour compliance. Even if the employee has volunteered to stay back and fulfill that particular requirement, it does not exonerate the employer from charges of violating the wage and hour compliance should the overtime pay be missing.
Noncompliance could attract compensatory damages of up to 24 months’ back pay, with willful violations attracting a 36 months’ pay as penalty. If liquidated damages were to be awarded, this amount would double. If the case turns into a class action, these charges could multiply in a most alarming manner. The legal costs involved would of course prove to be a different nightmare. The number of productive hours wasted by the company’s top honchos on the litigation could also impair the performance focus of the organization on business decisions and strategy. Such litigation could also damage the employee morale and make the regular employees also lose trust and become suspicious. Unfortunately, everyone who is not focused on being compliant is at risk here, irrespective of their status as young or old, small or big.
Non-compliance occurs because of the highly complex nature of the rules, which are governed by various regulators at the federal, state and local levels. Different states require different rules to be followed, and having manual and semi-manual systems for time and pay policies and calculations make it impossible to be zero-error compliant. It is enough to land one in trouble with the FLSA. Enforcing fully compliant policies across every department, division and location would require a whole amount of planning where the word of law is accurately interpreted and applied across the organization.
No organization should be under the assumption that treating employees ‘fairly’ is enough to keep them off the radar of the FLSA. Care must be taken to avoid instituting company policies which could incentivize or allow an individual manager to act in a non-compliant manner by showing discriminatory or favorable treatment to individuals or groups of personal choice. Setting up a regular review of processes ensuring compliance is also of crucial importance. Ensuring that people are trained on an ongoing basis to keep up with the policies and changes there to is also an integral aspect of staying compliant and ensuring that the employees make compliance a way of life .
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