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Shifting Landscape of Wage Rules Can Complicate Compliance

June 4, 2020, 8:50 PM

Complicating employers’ efforts to remain vigilant against wage and hour violations are federal, state, and local rules that interact and change, a payroll expert said June 4.

“We can very safely say that the landscape of wage and hour law is constantly shifting all across the country, so it is really important for employers to continuously monitor new developments that may apply,” said Sushma Tripathi, vice president of strategic services for ADP LLC.

Compliance Challenges

The value of compliance with Fair Labor Standards Act wage and hour requirements is evident in data from the Labor Department’s Wage and Hour Division, which recovered a record $322 million in wages owed to workers in 2019.

“Minimum wage violations continue to pose a high risk and concern to employers,” Tripathi said, pointing to division data that reflects the recovery of minimum-wage amounts owed increasing to $39.5 million in fiscal 2019 from $32.4 million in fiscal 2018.

Employers should be alert to changes that could affect them related to minimum wage, overtime, and scheduling laws, court decisions, and Labor Department interpretations and guidance, Tripathi said at the annual American Payroll Association Congress, which was held online for the first time because of coronavirus social-distancing requirements.

In 2019 and 2020, for example, actual and proposed regulatory changes are affecting federal white-collar overtime exemption requirements, tip-pooling and joint-employer requirements, regular rate of pay calculations, and the fluctuating workweek method, Tripathi said.

Labor Department opinion letters issued in 2020 also have affirmed that nondiscretionary lump-sum payments must be included in regular rate of pay calculations for overtime and that specified payment schemes satisfy the fee-basis requirements for administrative or professional exemptions are met when paying employees on a per-project basis, Triparthi said.

Additionally, without an increase to the federal $7.25 hourly minimum wage that has been in effect since 2009, some states and local municipalities are raising minimum wages, Triparthi said. Other states are passing laws to prohibit increases in the minimum wage. Employees are to be paid the higher applicable hourly minimum wage rate, whether federal, state, or local, she said.

Differences between state and federal requirements may extend to overtime and meal and rest break rules, as well as to white-collar overtime-exemption tests and regular-rate determinations, Tripathi said. The FLSA does not require fringe benefits, but state law may require paid sick leave as a benefit.

Focus on Basics

The bottom line is that employers have to keep up with federal and state compliance requirements and ensure consistent processes to help mitigate risk, Tripathi said.

Most importantly, employers need to ensure they are following complex federal, state, and local compliance requirements and know how they interact, Triparthi said.

Establishing consistent best practices for payroll processes can help employers safely navigate such requirements, Tripathi said. For example, employers should remember and attend to requirements for basic notices, timekeeping, and recordkeeping, she said.

Employers should create a written policy that requires employees to review and attest to the accuracy of their time records, including meal periods and rest breaks, and to indicate on the time record if they did not receive a proper meal or rest period, Tripathi said.

Companies should ensure that the employee handbook is up to date and available to all workers and that managers and supervisors are well trained, she said.

Employers should create and maintain documentation, including records for all hours worked.

“Documentation is everything,” Tripathi said. “It’s not enough to just do it right. You have to prove that you did it right.”

To contact the reporter on this story: Christine Pulfrey in Washington at cpulfrey@bloombergindustry.com

To contact the editor responsible for this story: Michael Trimarchi at mtrimarchi@bloombergindustry.com