Payroll may be a big expense at your company, but dealing with wage and hour violations is even more costly. Despite all the disruption related to COVID-19, the Dept. of Labor (DOL) has been aggressive with enforcement action in 2020.
And, watch out: Thanks to federal recommendations and other changes, it’s likely that there’ll be more DOL investigations – and less leniency for employers – under the current administration.
Stats & key data
While the DOL didn’t break enforcement records in 2020 as it has in previous years, it still managed to conclude 26,096 cases in 2020, recovering nearly $258 million in back wages for 229,934 employees.
Most of the cases the DOL investigated had to do with minimum wage and overtime violations of the Fair Labor Standards Act (FLSA). The agency resolved 8,495 overtime violation cases and 8,211 minimum wage violation cases in 2020.
Certain low-wage industries had more FLSA violations than others. The top four offenders in 2020 were the:
1. food services industry (4,551 cases, $38.6 million in back wages)
2. retail industry (3,020 cases, $10.9 million in back wages)
3. construction industry (2,991 cases, $34.5 million in back wages), and
4. healthcare industry (1,257 cases, $13.5 million in back wages).
In 2020, the DOL received 21,531 new complaints, taking an average of 76 days to resolve each complaint. The agency had 857,429 enforcement hours total.
Trend toward increased enforcement action
Even with all that effort, the feds are pushing the DOL to go further, according to a new report from the U.S. Government Accountability Office (GAO).
The GAO wants the DOL to do more with FLSA complaints that are dropped without any enforcement action taken. Per the report, the DOL needs to start closely tracking these complaints and the reasons why they were closed without action.
Having this data could help the DOL see whether cases were closed for legitimate reasons or if they simply fell through the cracks – in which case, the agency should come up with strategies to ensure they’re addressed. The DOL agreed this should happen.
And here’s another recent development that may contribute to more DOL enforcement action: The agency has just discontinued its Payroll Audit Independent Determination (PAID) program, which was designed for employers to voluntarily report any wage and hour violations they discover through routine self-audits.
Instead of allowing these employers leniency under the PAID program, the DOL will now place more focus on investigating any complaints of minimum wage and overtime violations – and employers will be subject to penalties, damages and private legal action from workers.
All this extra scrutiny means employers need to be extra careful. Even if you’re following the law, defending yourself from a DOL complaint or lawsuit is expensive and time-consuming. Be sure your Payroll pros are storing all your company’s payroll and timekeeping records properly. That way, they can be easily retrieved as proof of compliance in case the DOL comes calling.