On Wednesday, November 14, 2012, Department of Labor (DOL) Investigator Diana Smargie spoke to the North Central WV Society for Human Resource Management (SHRM) chapter. Smargie made a number of points during her talk, one of which she was careful to highlight. As part of its 2013 enforcement initiative, the DOL will be targeting small energy producers and oil and gas service providers. As Smargie put it, a lot of people in the industry have come up through the ranks being paid wrong, so when they are in a position to pay employees themselves, they really do not know how to pay properly and they violate the wage and hour law.
So what are the chief issues she sees? Her top three problems:
- Failure to pay overtime due to payment of daily flat rates;
- Deducting time for paid lunch breaks when the employee is not COMPLETELY relieved of duty; and
- Failure to keep accurate and sufficiently detailed payroll records.
Did you know that, if your employees work a 40 hour week, and you should be paying their lunch break of 30 minutes, that is 2 ½ hours of overtime liability a week you could be incurring?
Did you know that if you do not have adequate records to support the number of hours you believe your employees are working and they dispute your numbers, the DOL will very likely take their word over yours about how many hours they worked (and how much they’re owed)?
One final note Smargie emphasized: you cannot make agreements with employees that violate the law, no matter how willing the employee might seem. Case in point: one employee talked her employer into giving her extra hours each week because she needed the additional income by agreeing to be paid at straight time rather than overtime rates. This went on for some time, until the employee left for another job and then decided she was entitled to the overtime after all – and filed a complaint with the DOL. And yes, the employer had to pay it and will every time, regardless of motive.
If you are concerned about these issues, you may want to give some thought to ensuring that your pay policies are compliant before the DOL comes-a-knocking. It is a rare audit that does not reveal some problem with resulting back pay liability. Some lessons are just more expensive than others.