In addition to all the usual laws and regulations, organizations of all kinds must also be compliant with labor regulations applicable to their jurisdiction. Compliance is a major challenge for most organizations today, and the inability to adhere to these can lead to major financial repercussions, adverse publicity and strained relationships with employees, top management and/or labor unions.
Noncompliance can result in huge fines and penalties. The US Department of Labor estimates that 7 in 10 organizations are non-compliant and don’t even realize it. In 2011, the Wage and Hour Division (WHD) collected a whopping $225 million in back wages for employees—up from 28% in 2010. There has been a 77% rise in Fair Labor Standards Act (FLSA) lawsuits tied to wage-and-hour disputes since 2004. Companies have paid over $2.7 billion in the last 6 years to settle wage and hour disputes. These are ominous signs for organizations which are already financially challenged due to an uncertain economy.
Organizations find labor compliance difficult to deal with because the laws can often be difficult to interpret. Geographic variations make enforcement and tracking quite a challenge. The lack of well-defined processes and cumbersome regulations add to the difficulties. Unfortunately, many organizations lack visibility into how they are performing against compliance targets, and may lack the documentation to prove that they are compliant.
For companies with employees spread across different states and/or countries, compliance becomes a big issue, as they need to keep track of where employees are located, and provide them benefits and pay as per region-specific laws. These variations add to the challenges companies must confront to stay compliant, while adding to the costs of managing their geographically spread workforce.
According to the recent Dimensional Research—2013 Compliance Survey of HR, Finance, Payroll and Executive professionals, accurate time tracking was an area of concern to 29% of respondents, while 31% cited absences and overtime issues, 26% mentioned time theft and tardiness, and 18% were concerned with meal and rest periods taken by employees. For companies with a contingent workforce, time tracking came up as a major pain point.
Organizations in general look for solutions that can help them with:
- Accurate time tracking
- Automation of business rules around overtime, meal breaks, rest periods, etc.
- Provision of an audit trail to demonstrate compliance in case of an investigation
According to the Dimensional Research report, 43% of respondents said that automated time tracking was a must-have for compliance purposes, while 31% of them wanted solutions to help manage breaks and overtime. 37% had absence management in their wish list, and 40% wanted solutions that managed time records and payroll data that could be submitted in case of an audit.
Many leading organizations today are adopting cloud-based technologies to streamline their compliance processes, and integrating them into routine operations, so that compliance requirements can be met with reduced effort and cost. Such solutions can help organizations streamline and automate their time tracking process, reduce any errors that may creep in, and provide crucial visibility and timely reporting to reduce the risk of non-compliance.
A best-of-breed cloud-based time and attendance management solution will feature a configurable rules engine that can easily accommodate policy variations by department or geography, without the need for custom programming. In addition, organizations can get approval policies in place and manage their time records effectively, so that they can face any audits with confidence.
Cloud-based solutions have nearly 100% adoption rates due to their ease of use and mobile applications that allow employees to enter time and attendance data on the go. According to the Dimensional Research survey, 56% of respondents believe that cloud-based solutions optimize time tracking, and 43% believe that cloud solutions improve real time visibility with reporting and analytics.
For more information on compliance, please read the Replicon white paper here.