Over two in three businesses are ignoring wage and hour compliance. Are you one of them?

Wage hour issues

Compliance is like insurance – for many businesses, being compliant with evolving regulations is not top of mind until you realize that you don’t have the right processes in place.

More and more business leaders and HR executives are realizing that being vigilant with wage and hour regulations is critical, particularly as the way we work continues to evolve at breakneck speed. In many cases, these reforms are playing catch up to support the myriad of exempt, non-exempt, full-time, part-time and independent contractor workers within an organization.

Today, it’s common for one company to take into account various city, state, province or federal rules that could include minimum wage, overtime pay, meal breaks, shift premiums, mandated paid leave (including sick leave and parental leave), union contracts and many other specific regulations. What’s clear is that companies have a lot of labor regulations to be cognizant of to be truly compliant. And 2015 shone a bright light on the wage and hour compliance issue, with on-demand companies such as Uber, DoorDash and many others serving as the face of the changing nature of work, thanks to multi-million dollar misclassification lawsuits questioning the definition of independent contractors versus full-time employees.

At the Human Resources Technology Conference in Las Vegas last month, Replicon surveyed 124 attendees in various HR manager, director, and support roles for insights into their attitudes and behaviors towards wage and hour compliance.

The key findings from the survey included:

  • Thirty-seven percent of respondents are either not sure how compliant their organization is, or believe that their company’s compliance policies need improvement
  • Seventeen percent of respondents have worked at a company that has failed to meet its wage and hour obligations in the last 12 months
  • Sixty-seven percent of respondents say their company has not conducted a compliance audit in the last 12 months or are not sure if this has taken place. This is particularly worrying as 47 percent of total respondents are also involved in compliance decisions at their organization.

Despite these significant numbers showing the lack of compliance processes within a company, only 20 percent of people feel uncertain or unprepared to handle changes with wage and hour legislation.

What was the most interesting was the clear discrepancy between the responses about how an organization is dealing with and preparing for changes in wage and hour reforms, versus the attitudes by the same respondents on the topic. Conducting a compliance audit on a regular basis – at least every 12 months – is important to ensure that your company is vigilant against wage and hour regulations. Similarly, awareness of compliance policies is paramount particularly as reforms continue to evolve. For example, the United States faces a flood of changes in minimum wages, “unlimited” vacation policies are the work benefits du jour, and Europe continues to mitigate various union requirements.

Replicon supports businesses looking to achieve labor compliance, with a Compliance subscription-based service that includes a global pay rules library maintained with additional consultation with leading law firms and other third party services.

How do you compare with our survey respondents? Are you ready to tackle meet your wage and hour obligations?

Survey methodology: Replicon surveyed 124 executives in HR director, manager or supporting roles at the HR Technology Conference at Las Vegas in October 2015. Respondents who work in companies with 1-100 employees was 20 percent, 101-500 employees was 16 percent, 501-5000 employees was 21 percent, and over 5,000 employees was 43 percent. The survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated.

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Jose Gaona
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