How do you make sure your organization stays out of hot water on wage and hour issues? Here are some practical compliance tips for you to follow:

• Look at industry practice with a grain of salt. “Everyone else does it that way” is not a valid defense to alleged FLSA violations. While it’s certainly not a bad idea to survey prevailing pay practices in your industry, keep in mind that your competitors may just have been lucky in getting away with illegal pay practices up until now.
• Conduct self-audits.Review your current compensation practices. First, audit the exempt classifications of your workforce. Have you put nonexempt folks in the exempt category? Conduct such audits periodically, and remember that the job duties attached to a particular position may change over time, and a position that was exempt years ago may not be exempt today. Next, audit payroll practices for your nonexempt employees, periodically checking to ensure that you are tracking time and paying correctly. Here are some areas to troubleshoot:
  • Make sure bonuses and commissions are being factored into overtime pay if required;
  • Make sure all deductions from pay (for both exempt and nonexempt employees) are appropriate;
  • Pay attention to areas or departments where overtime suddenly drops off — look for situations where employees are working off the clock or underreporting their time; and
  • Make sure no illegal “comp time” arrangements are being used.
• Err on the side of caution. Remember, you can always do MORE than the law requires. Just because you could treat a position as exempt, for instance, doesn’t mean you are required to do so. Paying an employee overtime is always the least risky approach. The same goes for work time — if you are unsure whether a certain type of activity counts as work time, the safest course is to pay.
• Don’t panic if you find errors. If you think you have a violation of the FLSA, don't panic. Maybe you're right about your conclusion, but you could be wrong. If the issue falls into a gray area it’s best to get expert advice before proceeding. The last thing you want to do is admit a violation to your employees when your practice is actually (or at least arguably) valid. Even if you are clearly in violation — such as in a case where you have discovered inappropriate exclusion of commission payments from overtime rate calculations — you may want to get advice to make sure you are calculating back pay correctly and handling the situation in such a way to minimize litigation surrounding the issue.
• Use job descriptions and performance evaluations to your advantage. A job description is not determinative — it’s what the employee actually does that matters. However, job descriptions can be persuasive to a DOL investigator or a court, if effectively written. If an employee is carrying out exempt duties (such as exercising discretion regarding matters of importance, assisting a customer with business operations, supervising two or more personnel, hiring and firing, using advanced knowledge, etc.) be sure to put all of this in an employee’s job description. To the extent that you can, use language taken from federal regulations to describe the employee’s duties. And be sure to list duties of a job description in order of importance. Start by listing the exempt work, and clearly state that the exempt work is the primary duty of the position.
• Think about the job titles you are using. A job title won’t transform a nonexempt position into an exempt position. But, still, perception is important, so you should give exempt employees exempt sounding titles, like “manager,” “coordinator,” and so forth.
• Don’t unilaterally alter time records. If you ever have a situation where you need to alter an employee time record to reduce the time, get the employee to sign off on the change.
• Implement a safe harbor policy. Issue a written policy that communicates your intention to avoid improper deductions and requires employees to notify the employer of improper deductions with assurances that improper deductions will be reimbursed.
• Spread the word. Train management-level and supervisory employees regarding compensable off-the-clock activities, proper deductions for disciplinary violations, and enforcement of overtime policies, and how to handle complaints from employees about their pay. Remind them that in some instances there is individual liability under the FLSA!
• When firing, think FLSA. Your highest risk of getting pulled into costly FLSA litigation is a disgruntled former employee. Therefore, when terminating an employee, make sure you have paid him properly for all time worked. Do not withhold final paychecks or take deductions that reduce the pay below minimum wage. If you are considering a severance agreement, think about ways of reducing your risk for a post-termination FLSA lawsuit by the employee. You cannot obtain an enforceable release of an FLSA claim from the employee, but there is language you can include in the agreement that would create a significant obstacle to the employee bringing such a claim. Again, consult with an experienced employment attorney regarding this issue.
• Use the DOL as a resource. The DOL Wage and Hour Division website has tons of helpful (and free) information regarding FLSA compliance. Also, keep in mind that an employer has a complete defense to lawsuits for back wages if it can show that it relied in good faith on an official DOL opinion letter issued by the WHD Administrator. Thus, if you are uncertain whether an employment classification or pay practice is valid, you could choose to submit a request for such an opinion letter. Sometimes, when you have discovered a clear violation, your best strategy is to “turn yourself in” to the DOL, in order to obtain enforceable releases from your employees and hopefully avoid costly litigation. But remember, once you involve the DOL, you forfeit control over the situation, and your records may become an open book and a catalyst for further investigations. Thus, it’s a good idea to get advice from an experienced employment attorney before contacting the DOL about possible violations.
• Get expert advice. There is no question that these laws are confusing. If you are uncertain whether your wage payment practices are in compliance with the FLSA — or if you want to proactively design FLSA-compliant compensation structures — it’s a good idea to consult with an experienced employment attorney who has specific expertise in the area of wage and hour law. This approach will almost certainly save you money in the long run. Your communications with your attorney will be confidential. Also, relying on advice of counsel is an additional defense if you get sued and may save you from double damages if the court finds you made a good faith attempt to comply with the law.