Risk

A 3-Part Strategy for Creating a Culture of Wage and Hour Compliance

Contributor Image for Jim McGeady Jim McGeady

Image of three healthcare workers wearing scrubs talking in hospital hallway

New and evolving wage and hour laws and regulations are constantly affecting your organization's ability to comply. Follow our three best practices to help bolster your compliance efforts.

Business leaders should understand how to establish best practices and implement solutions that will help them avoid costly and disruptive wage and hour compliance issues such as:

  • Penalties and fines
  • Owing/paying back wages
  • Damage to company reputation and brand
  • Government audits and investigations
  • Legal action by employees

ADP TLM DOL Stat WHD By the Numbers 2023

The key to compliance success is creating a culture where awareness, understanding and behavior are not left to chance. By staying ahead of changes and effectively communicating these changes throughout your organization, leaders demonstrate their commitment to fair employment practices and legal compliance.

So, how can you help ensure compliance?

1. Start by improving awareness and understanding.

Stay informed about new and changing laws. Federal and state laws are constantly updated, and it's important to ensure that your organization stays up to date. To improve your organization's awareness, you can:

    • Appoint someone to be in charge – hire or develop an individual or team to help you stay abreast of changing legislation. Having one source responsible for monitoring applicable laws for all jurisdictions where you operate can create confidence that nothing is slipping through the cracks.
    • Automate updates – leverage technology and subscribe to sources and services that will keep you informed about wage and hour laws and regulations changes.
    • Seek legal advice – obtain legal advice to make sure your interpretation of the law is accurate.

2. Educate your workforce and communicate clearly.

It is important for employees to understand laws, their obligations, and how to maintain compliance with the latest regulations. To improve education and communication within your organization, consider the following steps:

  • Create an action plan – educate your workforce and implement changes. Knowing exactly who will be impacted and when, will allow you to respond to legislative changes in a timely manner.
  • Implement clear policies – establish and communicate wage and hour policies, such as FMLA or overtime exemption regulations throughout your organization ensuring everyone understands their obligations.
  • Educate management – make sure your managers and supervisors understand laws and company policies. Ensure they have the support needed to implement them correctly, fairly and consistently.
  • Conduct internal audits – audit your systems and records to ensure you are compliant. Define steps to address gaps and risks.

3. Leverage workforce management technology for governance and consistency.

Technology can improve wage and hour compliance because modern systems automate time-tracking, ensure accurate payroll processing, and improve compliance reporting. To reap the benefits that compliance technology offers, you must do your part and:

  • Implement timekeeping and payroll systems – track employee time and absences accurately, calculate and pay wages on time, and comply with overtime and minimum wage requirements.
  • Ensure your systems are up to date – incorporate and maintain current policies within your systems that reflect any recent changes in the law.
  • Classify employees correctly – accurately classify employees as exempt or non-exempt and seek legal counsel to understand the criteria for classification.
  • Ensure HR, payroll and timekeeping systems are in sync – be sure data in the HR system of record is accurate and in sync with the payroll and time systems.
  • Maintain and keep accurate records – maintain thorough records so that evidence of compliance can be easily provided, which can save significant time, money, and stress in the event of an audit or other legal challenges.

To learn more about how ADP's workforce management solutions can help you maintain compliance for your organization's needs, visit adp.com/wfm.


1US Department of Labor (DOL), 12/19/2023, WHD by the Numbers 2023, Wage and Hour Division. https://www.dol.gov/agencies/whd/data