Labor Compliance: One Of The Biggest Challenges In 2018

Check out the top offenders that can put you in trouble

By Vivek Gopalpuria | August 21, 2018

Last year, American restaurant chain TGI Friday’s settled a $19.1 million wage theft lawsuit for failure to pay its tipped hourly food service workers the correct minimum wage, overtime pay, and tips.

While 19.1 million dollars may seem difficult to miscalculate, Friday’s is in expensive company: popular cosmetics retailer Lush recently announced that it has underpaid over 5,000 Australian employees more than 2 million dollars after discovering a significant error in their manual payroll system. Claiming that the company’s payroll systems were “just not sophisticated enough” to correctly interpret the retail and manufacturing awards, situations like the aforementioned are far from uncommon across the globe, even in 2018 – because if labor law compliance was simple, we wouldn’t hear about incidents like these with such regularity.

And in this case, success can be frustratingly paradoxical – the more locations a multinational organization establishes, the more complicated compliance gets, globally and locally. Without real visibility or proper assistance managing the evolving laws of labor compliance, numerous issues end up falling on someone high up in HR, finance, or payroll.

Several specific issues can arise here, some more common than others. Among the top offenders:

1. Minimum Wage Regulations

A notoriously complicated facet of compliance, state and local minimum wages are far from standardized. They can differ by city, county, size of employer, zip code, industry, and even whether the employer provides health benefits. What’s more, state and local minimum wages can increase at different times of the year without much warning. Without an effective system in place to monitor minimum wage increases at all levels, maintaining compliance can begin to feel hopeless.

2. Misclassifying Employees

It is surprisingly difficult to define who counts as an employee. For example, employers often improperly classify workers as exempt, and neglect paying them overtime wages. Another is the misclassification of workers as independent contractors or interns when they aren’t – this prevents those employees from receiving their entitled benefits. Employers can expose themselves to potentially expensive penalties or litigation when employees aren’t classified accurately in the system.

3. Accurate Time-Tracking

Employer or employee, we’re only human, and anyone can make mistakes. As a result, however, plain old human error can open the door to numerous compliance violations. Whether it’s paying a mix of office and mobile workers, differing overtime policies, compiling data for compliance audits, or simply keeping track of continuous changes in policy, the potential for trouble lurks in many places when it comes to maintaining compliance.

To add to the complexity, timekeeping regulations can vary by location and employee type, making it tricky to standardize systems and processes. It’s no wonder that even with a few thousand employees, we see companies with close to a dozen systems managing global time.

4. Leave of Absence

Time-off liabilities directly tie into the company’s bottom line, so employers should always make it a habit to familiarize themselves with global and local leave laws, and establish policies and procedures for handling employee leave requests. Federal laws aside, most states and localities have their own family and medical leave laws as well, and many states have other laws that allow employees to take leave in specific situations, such as leave for parents to attend school events, or helping out with a newborn – which can get complicated if companies don’t stay up-to-date. Employers should also be aware of the risk of legal claims for interference and discrimination when managing employee leaves.

In short, we know the most common pitfalls – but how do we avoid becoming the next TGI Friday’s blunder?

Original Source: HR.com
Author: Vivek Gopalpuria

Get started today.
Set up a free trial based on your business needs. Start Free Trial

Common Administrative Challenges with Timesheets and How to Solve Them

There aren’t many people who enjoy sifting through a mountain of paperwork. If you haven’t yet found a reliable time tracking software solution, dealing with the hassle and headache of…Read More

How a Shared Common Data Platform for Project Management Can Create Harmony Across Business Teams

Today, professional services firms use some combination of ERP, CRM, HRIS, PPM, or other software along with their PSA solution. These systems serve different purposes, host different and overlapping data,…Read More

6 Ways to Simplify Remote Resource Allocation and Why It Matters

When you’re an enterprise operating at a global scale with a team of employees working from home, one of your major concerns is proper resource allocation. When it goes wrong,…Read More

Employee time tracking is dead

iBeacons, Bluetooth Low Energy, Proximity sensing and the obsolescence of time tracking as we know it. Businesses have to track the time their employees work for a variety of reasons,…Read More

How Sarbanes-Oxley Impacts HR Departments

Ever since the Sarbanes-Oxley Act (SOX) was passed in 2002, following a spate of high-profile corporate scandals, companies have had to take a wide range of precautions to ensure that…Read More

Reducing Absenteeism with Effective Time Management and Absence Tracking

Workplace absenteeism is a major concern for American companies. According to the US Bureau of Labor Statistics, unplanned absences cost American businesses an average of 2.8 million workdays every year,…Read More
  • Polaris
  • Time & Project Insights
  • Time & Projects Solutions
  • Replicon Products
  • Replicon Users
  • Cloud
  • Corporate
  • Professional Services Management
  • Shared Services Management
  • Time and Attendance Management
  • Customer Feature
  • Time Intelligence
  • Industry News
  • Global Compliance Updates