Prevention, Compliance Are Priorities for Wage and Hour Division

Prevention, compliance, and enforcement are the three strategies the Department of Labor’s Wage and Hour Division use to administer federal wage-hour laws, the division’s administrator said March 11.

Prevention and compliance require education and outreach, and employers should contact the division’s district offices with any wage-hour questions, said Jessica Looman, the division administrator. All calls to district offices are confidential, and the division will not audit employers for calling.

“This is a way that we can provide direct assistance to individual employers,” she said at PayrollOrg’s Capital Summit. “The number one rule with compliance is that it is never too late to get into compliance.”

Compliance also requires workers to be able to confidently speak out when they are not being paid correctly, which is why nearly all federal wage-hour laws include antiretaliation provisions, she added.

“When we talk about retaliation, we mean any adverse action that could discourage an employee from raising a concern about a possible violation or engaging in a protected activity, such as a complaint or cooperating with the Wage and Hour Division.”

Retaliation takes many forms, such as threats, firings, or a reduction in rates of pay or work hours, she said. Employers found guilty of retaliation may be liable for punitive damages, which can sometimes be higher than the amount of back wages owed.

“The good news is that we can prevent retaliation. Retaliation is a behavior that requires the action of somebody who works for the employer,” Looman said. “And so, just like other types of workplace behaviors that we do not condone in our modern economy and modern workplaces and workplaces that really care about and respect workers, we know that you can prevent retaliation by empowering workers to come forward, by taking them seriously, by training your staff.”

Failure to comply with wage-hour laws harms both employers and employees, she added. For fiscal year 2023, the division recovered over $274 million in back wages and damages for roughly 163,000 workers, $199 million of which was for 114,000 workers in low-wage, high-violation industries. The two industries with the highest amount of wage-hour violations are food service and construction.

Many wage-hour violations occur because employers misclassify employees as independent contractors, she said. Misclassification in itself is not a violation of the federal Fair Labor Standards Act, but misclassification often prevents employees from exercising their rights to minimum wage and overtime. The Labor Department also has agreements to share information with other agencies, such as the Internal Revenue Service, since misclassification affects employment taxes and other agencies as well.

“We have information sharing permissible under the [Memorandum of Understanding] we have with other agencies, and that can include information in the aggregate about what violations we’re seeing and where we’re seeing them,” she explained. “It can also include information sharing in the specific on a very limited basis, but there are really a lot of constraints on that issue.”

In addition to administering wage-hour laws, the division also enforces other labor standards, such as the child labor, meal and rest breaks, and family and medical leave, she said. The division offers guidance and information for employers on these issues to make compliance as easy and accessible as possible.

“The measure of success of the Wage and Hour Division is when workers are paid correctly on payday,” she said. “So, that’s outreach and education, making sure that the information that we have is available to help make sure that workers can be successful and get paid and that employers and businesses can be successful and be in the business of what they’re about as opposed to having to think about compliance with the wage and hour laws.”