Is Your Payroll in Compliance?

October 17, 2023
The WHD is committed to protecting the welfare of the nation’s workforce

According to the Department of Labor’s Wage and Hour Division (DOL’s WHD), they are “committed to protecting the welfare of the nation’s workforce while prioritizing low wages, underserved workers, and essential workers, advancing equity, and strengthening strategic partnerships to safeguard the workplace rights afforded by the federal labor laws. In keeping with this mission, the WHD is aggressively pursuing back wages by various industry sectors.

WHD’s Back Wages Collections in 2022

The figures for 2022 speak for themselves demonstrating this vital service the WHD is providing in collecting back wages for workers within various industry sectors. For example:

  • Healthcare – Over $32.5 Million
  • Construction – Over $32.9 Million
  • Agriculture – Over $5.8 Million
  • Retail – Over $7.4 Million
  • Food Service – Over $27.1 Million
  • Building Services – Over $9.9 Million

Its efforts in driving vital protections for essential workers were evident in the 4,000 plus outreach events held with over 289,000 participants, and the more than 913,000 calls the WHD answered from employees regarding potential workplace violations.

In 2022, the WHD’s investigations found, on average, $1,393 in owed back wages for each employee. This amount of money represents 3.4 weekly paychecks for a maid or housekeeper, 2.8 weekly paychecks for a janitor, 2.6 weekly paychecks for a security guard, 3.5 weekly paychecks for a retail cashier, and 2.2 weekly paychecks for a landscaper.

Clearly, some employers are not deploying best practices when it comes to their payroll and consequently could find themselves facing a DOL audit and potentially having to pay substantial back wages and penalties. To avoid this outcome, it is important to understand and remain compliant with wage and hour laws by implementing sound payroll processing and audit practices.

Best Practices in Payroll Auditing

Whether payroll processing is performed in-house or with a third-party such as a third-party administrator (TPA) of employee benefits or payroll processing firm, certain practices are essential. These include:

  • Obtain and review copies of collective bargaining agreements, if applicable, and the plan’s government documents to ascertain the method of contributions;
    • Obtain all payroll records from contributing employers in cases of multiemployer/Taft Hartley plans;
    • Perform a payroll audit, either in-house or using a TPA, which reviews each year’s records and each member for which contributions were made;
    • Determine if a plan is receiving the proper employer contribution and has complete and accurate data for each participant; and
    • Help management and/or plan trustees, if applicable, demonstrate their due diligence in seeking an independent, third-party review of employer contributions, recording and recovery of findings, and improving the accuracy of contributions.

Payroll compliance requires that employers adhere to all federal, state, and local regulations that govern how employees are paid. Failure to comply could lead to hefty fines.