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War of the Wages

“Wage theft” was coined by the Interfaith Worker Justice, a network of people advocating for improved wages, benefits and conditions of workers. It is an epidemic sweeping across industries, regions and firms of all sizes. Wages should warrant the work put in on the job, and yet many employees are finding out that their pay is not so fair after all.

Crime against wage discrimination has perplexed employers for years, but recently, thanks to the testimony of a few individuals, the topic is being brought to the forefront. Cases involving wage theft – whether intentional or unintentional – are knocking down government doors, as Fair Labor Standards Act (FLSA) claims have increased by nearly 600 percent in the last 25 years.

Who is affected?

Wage theft isn’t discriminatory and although pay violations most often affect low-income individuals, no one is immune. In recent years, large employers especially in the fast-food industry have been targets to wage theft settlements. Violations of wage and hour laws don’t just affect the fast-food industry; in fact, a survey by the Department of Labor reported that violations were committed in 50 percent of restaurants in Pittsburgh, 74 percent of day cares in Georgia, 50 percent of nursing homes in St. Louis, 38 percent of hotels and motels in Reno and 42 percent of adult family homes in Seattle.

What does an offense look like?

According to the federal FLSA, state wage and hour violations include

  • Paying insufficient overtime – this is often due to misclassifying exempt and nonexempt positions),
  • Violating minimum wage rules,
  • Off-the-clock claims,
  • Misclassifying workers as exempt instead of nonexempt,
  • Retaliation and
  • Misclassifying workers as independent contractors rather than as employees.

Where do we go from here?

Wage theft is a crime and we need advocates in businesses across multiple industries to bring it to a halt. According to Ken Pinnock, a member of the Society for Human Resources Management’s Ethics/Corporate Social Responsibility and Sustainability Special Expertise Panel, HR can be that advocate. HR professionals tend to wear many hats, but when it comes down to it, the most important role we play is being an advocate for the people, the employees. In instances like these, where employees are being mistreated, HR professionals are vital in mitigating future risks involving wage discrimination. To avoid consequences, HR professionals should consider addressing the issue by:

  1. Raising Awareness – Holding annual training for management and employees alike regarding organizational wage and hour policies is a step in the right direction. Also consider establishing an open door policy with HR staff members and the rest of the organization so that employees can express their concerns without it turning into a potentially ugly dispute.
  2. Reviewing job descriptions and duties – Misclassification errors that result in pay violations tend to happen to a small group of employees. Exempt positions generally take more discretion in judgment than nonexempt positions. By monitoring job duties and randomly interviewing employees you can spot problems before they get out of hand. When interviewing employees find out what their daily job duties include and use caution when you find positions that contain a lot of task-based duties.
  3. Watch for position misclassifications – Wanting to keep payroll costs down is a legitimate concern, but be warned that turning to volunteers and interns can create heightened risk. You can keep payroll costs down but you still have to comply with the law. Be sure employees are not being misclassified.
  4. Throw out the flag – If you see or notice a violation address it immediately. Pride yourself on ethical practices and ensure organizational members at all levels follow the policy.
  5. Conduct an audit – Have an HR consultant or employment lawyer conduct an audit of wage and hour practices. Each audit should be catered to the organization and reflect industry-specific wage and hour risks. Be sure to then follow up on these audits to ensure practices are in line with the law and appropriate changes are addressed.

Become the advocate in your organization and help end this endemic from spreading. Remember you aren’t in this alone, for additional resources, make sure your current HR and payroll provider has the tools available to help you run better reports, keep track of employees’ time and attendance and ensure policies are reviewed and signed to keep your organization compliant.