Alexandria, VA (July 30, 2007) — It’s never good news when a wage-and-hour division investigator turns up at your business on a worker’s complaint. You can wind up tangled in red tape and on the hook for thousands of dollars in fines – even if you’re doing your best to follow the regulations.
The Labor Department launched 32,000 enforcement actions last year, forcing businesses to disgorge more than $170 million in back wages. That’s almost a third more money than the department collected five years ago. Almost a quarter of a million workers got back pay last year, up 14 percent over five years ago.
And the investigations continue apace this year. Consider KFC: Eighteen current and former assistant managers at the fried-chicken chain are suing the Colonel for what they say is unpaid overtime in its Oklahoma stores. The company contends they’re management and not eligible for overtime. The Department of Labor just made an oil exploration company in Houston cough up almost $1.2 million over underpaying more than 200 workers.
Then there are the lawsuits: Sales people have been suing the big drug companies over overtime. Sony settled a class action by agreeing to pay $8.5 million.
Think it’s just the big boys? Two workers for a Florida builder, police in the southern California city of Oceanside and a deputy prosecutor in Washington State have all sued their employers over overtime. And these are just a sampling of cases filed in the last few months.
“With everything small business people already have piled on their plates, trying to figure out who’s exempt from being paid overtime and who’s not is just one more headache a proprietor doesn’t need,” says Milan P. Yager, executive vice president of the National Association of Professional Employer Organizations, or NAPEO. “Yet as we’ve seen, the cost of making a mistake could be substantial.”
The Fair Labor Standards Act, passed by Congress in 1938, sets a minimum wage, requires time-and-a-half for overtime and prohibits child labor.
For small businesses, taking a regular look at what you’re paying whom is extremely important. Few small business owners are expert in the law, obviously. That’s why having a professional employer organization, or PEO, on your side can be a big help to many small businesses.
Companies with payrolls totaling more than $50 billion use PEOs to do time-consuming and expensive chores like payroll and remitting employment taxes so they can focus on the important stuff: Growing and making a profit. But PEOs also help companies hold down their workplace injuries – and their insurance. And they can help keep their clients out of trouble over overtime.
It’s easy to know how much the minimum wage is; it’s a lot harder figuring out whether your sales guy should get overtime. Then there are state labor laws to worry about, too.
“Labor laws do lots of good things, like ensuring a safe workplace and making sure workers can take time off to look after a sick child,” says Yager. “But the price is that the laws are getting more complex all the time. If you don’t have an expert you can rely on, you could end up in hot water over anything from overtime to workers comp to sexual harassment.”
For more information: Michael Flagg, NAPEO, 703 739-8174, mike[at]napeo.org
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