Every staffing firm knows how important it is to abide by the U.S. Department of Labor’s employment laws. Unfortunately, many temp agencies fail to comply with the rules established by the Wage and Hour Division. As a result, several employees may not receive the pay or benefits they deserve.
Fortunately, the DOL provides all sorts of compliance assistance online to employers. Whether your staffing firm prefers to take advantage of training, publications or interactive tools on the DOL website, you can rest assured that you and your colleagues will gain the knowledge necessary to protect the rights of your employees. In addition, it will help your firm avoid potentially costly penalties resulting from common DOL violations – for example, having to pay overtime back wages, damages or civil penalties.
Here are the top eight DOL compliance issues currently impacting U.S. staffing firms, according to the American Staffing Association.
- Labeling employees as independent contractors – When it comes to employment status, many workers often receive the wrong classification. If an employee is viewed as an independent contractor, he or she may only be paid minimum wage. This can also lead to violations in overtime pay. Meanwhile, employees eligible for family and medical leave may lose out on these benefits.
- Omitting work hours from different job sites – Sometimes temporary workers are required to work at several different locations within the same week. But staffing agencies can easily forget to combine those hours when deciding if an employee qualifies for overtime pay.
- Compensating employees incorrectly for overtime – Staffing firms frequently miscalculate overtime pay for their employees. According to the DOL, nonexempt employees who work more than 40 hours per week are required to receive overtime pay. For every extra hour of labor, workers are entitled to 1.5 times their normal pay rate.
- Mistaking employees as exempt from overtime – The DOL has strict regulations in place for classifying exemptions from overtime An employee’s job title is not the only factor to consider when determining exempt status. Staffing companies must also examine the specific job duties and salary of each worker.
- Issuing incorrect travel payments to workers – Nonexempt employees should only be paid for travel time that is directly related to their work assignments. The Fair Labor Standards Act (FLSA) states that an employee can’t be compensated for regular commuting time from home to the workplace, though the temp agency can reimburse travel that takes place between various work sites throughout the same day.
- Falsifying portions of earnings as per diem payments – Tampering with any portion of a worker’s regular earnings is also prohibited by the DOL. Nevertheless, some staffing firms have attempted to falsely report some of their employees’ wages as per diem payments (money used on a daily basis for work-related travel expenses). The intent of this illegal action is to omit these wages when determining premiums for overtime.
- Recording employees’ work hours inaccurately – Employers within the United States should always maintain accurate records of all hours worked by their employees. This is especially true for temp agencies. Regardless, record-keeping violations are still common among staffing companies. Even simple errors on a timesheet can result in inadequate compensation for your employee.
- Reducing pay below minimum wage with deductions – Although the current federal minimum wage is set at $7.25 per hour, several states have created their own minimum wage laws. No matter where your staffing agency is located, you must comply with both state, federal and local regulations. With that in mind, it is also important to keep tabs on the deductions you make from each employee’s paycheck. Oftentimes, staffing firms end up taking out too much money from their workers’ earnings in order to compensate for uniforms, damaged equipment and other business-related expenses.