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FLSA Audits: Be Prepared

No matter the size of your company, all managers/business owners must be familiar and accountable to the standards outlined in the Fair Labor Standards Act (FLSA).  Most managers know the basic standards related to child employment and minimum wage requirements, however, when was the last time you reviewed your standards regarding the other critical items associated with an FLSA audit?

Understand, there are reports that indicate as much as 70% of employers are not compliant with the standards, thus it is critical to review your process and outline a strategy to ensure your company is compliant going forward.

The critical elements of a thorough audit will include the review of:

  • Non-exempt pay practices – The audit process will review your policies and practices related to record retention, written policies, timecard procedures, how you pay overtime, and your pay policy for travel time.  Were you aware there are “rounding rules”?  Do you have the proper posters and regulations available for employee review?
  • Exempt pay practices – A skilled auditor will review your records to investigate whether your company meets the minimum salary rule.  Also, the audit must include a review of job descriptions and duties to confirm each exempt employee is truly exempt.  Does your company use the job title as evidence the employee is exempt? Has there been a review of the job responsibilities to confirm the employee is still exempt by definition?

There are additional items that are reviewed through the process including the treatment of child workers as well as government contracts.  Be prepared and implement an annual review of these items to ensure compliance.

It may seem far-fetched your company is audited by the Department of Labor, however, it only takes one disgruntled employee to make an allegation.  Next thing you know, you are in the middle of an unplanned and potentially disruptive FLSA audit.  The process may seem complicated and daunting, thus the help of an unbiased expert is critical.  Investment HR, Inc. specializes in just this sort of audit.  For information, give us a call.


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