As performance and compensation specialists HRN Performance Solutions works with nearly 1000 clients annually to ensure they are paying their workforce according to current market rates for location, industry, employee position, responsibility and performance level. I know from firsthand experience how important it is to a company to manage workforce compensation cost, both from a fiduciary/competitive responsibility but also from a workforce retention standpoint. Companies don’t want to lose top performers. Why then do we continue to see that companies will invest in paying HR consultants to provide and analyze salary survey data and advise them on compensation matters but will be completely in the dark when it comes to basic payroll matters such as overtime or exempt vs. non-exempt classification.
For example, Corporate Counsel magazine recently reported that the number of wage and hour lawsuits filed against employers in federal court have increased for the fifth straight year. Claims are up 10% over a twelve month period measuring part of 2012 and three months of 2013. Typically, these are claims brought under the Fair Labor Standards Act (FLSA) involving misclassified employees seeking overtime pay, hourly workers claiming they were not paid for all hours worked, or restaurant workers claiming they were not properly paid under tip credit rules. Wage and hour claims can also result from state law issues. For example, a national coffee company recently had to pay $3 million for allegedly not providing California employees with required meal breaks and for issuing inaccurate wage statements.
I don’t mean to suggest that the ‘rules’ for payroll matters are easy to understand and apply. They vary by state and in some instances the language is difficult to understand and can be open to interpretation. However when headlines such as those made by the national coffee chain noted above become commonplace, as they are today, doesn’t it make sense to review all wage and hour pay policies for overtime, breaks, tips, position classification, etc. with an experienced legal advisor to avoid very expensive and negative litigious legal proceedings. Employees are much better informed today and jury’s are historically sympathetic to the worker vs. employer during periods of economic challenge and high unemployment. As the saying goes . . . an ounce of prevention . . .