Thursday, June 14, 2012

US Dep't of Labor Wage/Hour crackdown looming?

My company recently had a site visit from an investigator from the Wage and Hour enforcement by the U.S. Department of Labor. The investigator was cordial, professional and efficient in his visit. But changes in the agency’s approach to handling investigation and penalties should serve as a warning that those friendly visits may become quite costly for an unprepared employer.

Writing in the June 2012 edition of HR magazine, attorney Allen Smith reports that Wage and Hour enforcement by the US DOL is becoming more aggressive, meaning employers will need to exercise additional caution on these issues.

Reporting on a May presentation at the Jackson Lewis Corporate Counsel Conference in Washington, D.C., Smith reported that investigators are now assessing civil penalties on first visits. This is a change from years past, when a first visit would result in a warning and useful guidance on how to improve compliance so as to avoid penalties.

This is just one of a number of reports of ramped-up enforcement.

According to Paul DeCamp, the former administrator of the Wage and Hour Division of the Department of Labor under President George W. Bush, where a first visit would have resulted in employers simply being required to pay back wages and correct wage scales, now penalties can be expected and that a problem found during an initial site visit can result in a company-wide investigation.

The DOL's Wage and Hour Division collected a record-high $225 million in back wages last fiscal year. Restaurants accounted for more than 10 percent (about $24 million) of that amount, according to a DOL spokesperson. The restaurant-industry violations involved more than 46,000 employees in about 5,000 restaurants, the agency spokesperson said.

During the Obama administration, the number of investigators increased by fifty percent. In it’s 2012 budget, it is requesting funding for 1,839 investigators, a hefty increase from the current level of 1,208 investigators.

Considering these new reality of the “no warning” approach now being applied, employers would be wise to be more pro-active and address potential problem areas before they become the subject of a Wage and Hour audit.


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