The Department of Labor Is Coming After Us All

The halcyon days of a pro-business Department of Labor are truly gone. In the past year, the DOL has withdrawn many Opinion Letters favorable to business; rescinded the Trump-Era joint employer rule and terminated a program that allowed employers to self-report FLSA violations in exchange for avoiding penalties. Now, the DOL has announced that it is hiring one hundred additional wage and hour investigators who will be specifically tasked to identify overtime and classification errors by employers.

There are several steps that employers can take now to decrease the odds that an investigator will find a violation:

  1. Re-analyze employee classification – Has that exempt employee’s duties or compensation structure changed such that they are no longer exempt.  Did you properly classify workers as exempt when they were hired?
  2. Confirm that exempt employees are paid a salary – With few exceptions, a worker cannot be exempt from overtime unless they are paid on a salary basis. When you consider how complicated some compensation programs are, the salary element can be lost without an employer even knowing about it. Keep in mind that even highly compensated employees must be paid a salary.
  3. Check your pay practices – Do you use an automatic deduction for lunch or other breaks? While not specifically prohibited, these often lead to overtime violations. Do you pay an exempt employee bonus that amounts to more than her salary? If so, this could cause you to lose the salary component and the exemption.
  4. Are you maintaining the required documents and information? The new investigators are going to initiate a wave of new desk audits seeking to determine if employers are maintaining the proper documentation and if that documentation raises any red flags.

As we have been saying, the DOL has become much more aggressive and far less employer friendly. It is more important than ever that employers proactively ensure that they are compliant with the FLSA.

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