Escolar Documentos
Profissional Documentos
Cultura Documentos
“The plaintiffs’ bar has gotten very savvy about how relatively easy it is to
make a case and how big the numbers get when you’re talking about a
sizable affected class and two or three years of back pay,” says Rosemary
C. Lumpkins, an employment attorney in the Atlanta office of Constangy,
Brooks & Smith. And, she adds, if your organization has an FLSA problem
that “goes unchecked and unresolved, you could be caught unaware and
find yourself facing significant exposure.”
To avoid being caught unaware, legal experts say employers must exercise
constant vigilance over wage and hour compliance. “It’s a lifestyle,” says
Richmond, Va., attorney David F. Dabbs, a member of the labor and
employment law group in the firm of McGuire Woods LLP.
But both Dabbs and Dixon recognize that, for a variety of reasons,
employers don’t always keep up with day-to-day monitoring. In such
situations, the next best solution is to undertake a systematic review—from
time to time—of wage payment practices and job classifications for
overtime purposes. In other words, conduct a wage and hour audit.
http://www.shrm.org/Publications/hrmagazine/EditorialContent/Pages/0203clark.aspx 4/29/2011
HR Magazine: Employer, Audit Thyself Page 2 of 7
At the very least, employers should conduct audits when certain red flag
conditions occur. These might include:
And when supervisors feel overworked and underpaid, they are vulnerable
to solicitations from eager plaintiffs’ attorneys seeking to build a case for a
class action. Engineering managers, pharmacists and retail store managers
are likely targets of such solicitations, says Aboyade.
A wage and hour audit is a calculated gamble because you never know
what you’ll find. You could come back with a clean bill of health, or you
could discover significant problems that will require fundamental changes in
how employees work and how pay is calculated.
Fixing such problems, even only partially, might require a great deal of
money, so it is vital that upper-level management buy in to the audit
before it is conducted.
http://www.shrm.org/Publications/hrmagazine/EditorialContent/Pages/0203clark.aspx 4/29/2011
HR Magazine: Employer, Audit Thyself Page 3 of 7
One way to keep sensitive audit information out of the hands of plaintiffs’
attorneys is to involve legal counsel in the process. This strategy won’t
protect the facts of your audit under the cloak of attorney-client privilege or
attorney work product privilege, but it will protect the legal analysis,
recommendations and conclusions that your attorney provides.
That’s an important reason to get your attorney involved, but it’s not the
only one. Another is that even experienced HR professionals may have
trouble conducting an audit because the law is constantly being refined by
the courts. Since 1990, the judiciary has issued a checkerboard of decisions
that can be difficult to keep up with, even for legal specialists.
“Case law is what’s driving wage-and-hour right now,” Dixon says, and
“counsel is going to be a little more in touch with the case law.”
It also means that employers don’t have to pay attorneys to do the entire
audit but can, instead, rely on less-costly help—such as in-house HR
resources.
“I do not think the lawyers have to do the audit,” says Dabbs. Lumpkins
agrees that, provided certain protocols for establishing privilege have been
met, the actual field work of the audit “can be conducted by non-lawyers at
the direction of counsel.”
The one group that shouldn’t know about your audit, agree attorneys, is
the Department of Labor (DOL), which has been inviting employers to seek
compliance assistance without fear of enforcement. Dabbs, Pass and Dixon
advise HR professionals to refrain from letting the agency know of internal
company audits.
“Once you get on their radar screen, there may be more of a reason for
them to come visit you,” says Pass.
http://www.shrm.org/Publications/hrmagazine/EditorialContent/Pages/0203clark.aspx 4/29/2011
HR Magazine: Employer, Audit Thyself Page 4 of 7
advice. “At the moment, the people who have the best practical knowledge
of how these rules are being applied are still in enforcement”—and even
enforcement officers in different localities sometimes offer varying
interpretations of the law, he says.
Dixon notes that counsel can consult DOL without disclosing who the client
is: “Another good reason to have counsel involved.”
Ready, Set, Go
“Rarely will a job description tell you whether someone is exempt or not,”
says Dixon. A questionnaire will sort out some positions, but probably not
“the people in the middle ground.” Talking to managers is a good place to
start, but managers “don’t know in as much detail how the work gets done
as the people who do the work.” Employees, he says, are generally the
best source of information.
If unable to glean definitive information from HR, Pass might ask line
managers what particular employees do. “I’m not a big fan of that,” she
says. “It pulls more people into this process than need to be.”
http://www.shrm.org/Publications/hrmagazine/EditorialContent/Pages/0203clark.aspx 4/29/2011
HR Magazine: Employer, Audit Thyself Page 5 of 7
Payroll Issues
Dabbs and Pass note that employers frequently fail to calculate non-
discretionary bonuses—which might be based on attendance, number of
hours worked or production standards—into employees’ regular rate. “That
makes Department of Labor investigators’ eyes light up,” Dabbs cautions.
Pay practices also are relevant for determining whether certain employees
meet the “salary basis test” for some of the FLSA’s overtime exemptions.
With limited exceptions, docking salaried employees’ pay for partial day
absences is inconsistent with paying them a fixed salary. This practice can
change salaried employees’ status, making them eligible for overtime.
Paying extra for hours above a certain number is also inconsistent with the
salary basis test for exempt status, according to some courts, although the
DOL allows it.
Finally, an audit should review recordkeeping practices, which are vital for
defending FLSA suits. Employers that fail to keep adequate records will face
a “nearly insurmountable burden” when disputing employees’ claims
regarding the hours they have worked, Dixon writes in his book The Federal
Wage & Hour Laws, 2nd ed. (Society for Human Resource Management,
2002). (For more information on recordkeeping, see this month’s Legal
Trends column on page 109.)
Heal Thyself
If a wage and hour audit reveals problems, you’ll need to remedy any
possible violations. But the self-administered cure can be a bitter pill to
swallow.
http://www.shrm.org/Publications/hrmagazine/EditorialContent/Pages/0203clark.aspx 4/29/2011
HR Magazine: Employer, Audit Thyself Page 6 of 7
And even if a change does work, legally speaking, it may not be practical.
“If you try to make a job different so it’s exempt, it probably will create
inefficiencies that will [cause the job to] slide back,” says Dixon.
This is a great savings over the time-and-a-half overtime rate required for
employees who receive no base salary. It does not work in California, but it
can be minimally disruptive where it is allowed, Dabbs says.
“I do try to point out that the consequences of being wrong and being
called on it are typically several times the cost of dealing with the issue up
front,” Dabbs says.
But while employers assume greater potential liability down the line if they
do not make employees whole for unpaid overtime, the failure to offer back
pay itself is not a separate violation of the FLSA, experts say; this failure
also is not automatic proof of a willful violation, but it could work against
you in court, says Dixon.
http://www.shrm.org/Publications/hrmagazine/EditorialContent/Pages/0203clark.aspx 4/29/2011
HR Magazine: Employer, Audit Thyself Page 7 of 7
http://www.shrm.org/Publications/hrmagazine/EditorialContent/Pages/0203clark.aspx 4/29/2011