Compliance Tips to Avoid USDOL Fines and Violations

Whether you own a small business or handle the books for a large corporation, it’s a safe bet that ensuring your organization is in compliance with all of the laws and regulations imposed by the U.S. Department of Labor (USDOL) has caused more than a few stressful days! This stress is justified – USDOL and FLSA violations can result in thousands of dollars in fines, fees, and legal costs. Continued violations can even lead to jail time for an employer, along with audits, lawsuits, and other severe consequences.

However, all of this can be avoided through the use of proper compliance strategies. In this guide, we’ll cover some of the basic requirements your business should meet in order to stay in compliance, as well as some effective tips for avoiding costly violations. Feel free to reach out to Horizon today with any questions!

What is Compliance for Companies?

As an employer, staying in compliance means following all of the laws and regulations that are imposed on companies operating within the United States by entities like the Department of Labor and legislation such as the Fair Labor Standards Act. These include federal standards like minimum wage, equal opportunity employment, and more. No matter the size of your company, adherence to these labor laws is essential for continued operation; mistakes can result in severe civil money penalties and fines, while willful violations can lead to jail time and other severe financial consequences! In order to avoid the maximum penalty, your business must operate in good faith and enact policies and procedures to ensure you stay on top of what the law requires. 

Common Areas of Compliance for Businesses

Depending on the size of your business, you’ll be required to adhere to different levels of regulation based on size, workforce, earnings, and other factors if you want to avoid facing a civil penalty. However, no matter what kind of organization you’re running, there are a few key compliance areas that apply to almost everyone. Before you get into the more obscure sections of the USDOL’s legal handbook, ensure you have the following common areas of compliance covered – whether through a trusted HR partner or your own in-house practices.  

Wages and Hours Worked

The FLSA has established several standards regarding how businesses must handle every aspect of an employee’s wages, including minimum wage standards, overtime pay, independent contractor payment, and more. In fact, a significant percentage of USDOL violations come from pay-related issues, like unpaid wages, wage claims, or failure to adhere to minimum wage law. Missed and unpaid wages are also one of the most common reasons for employees to sue, leading to lawsuits and legal fines on top of the civil penalties! 

Child Labor Laws

Failure to adhere to established child labor laws at both the state and federal levels can have severe consequences. The Department of Labor takes complaints against these laws extremely seriously, so staying on top of the legal requirements associated with hiring staff under 18 years of age is incredibly important. By law, children under the age of 18 have restricted working hours on both a daily and weekly basis, can only perform certain types of work, and must meet additional requirements in order to avoid legal trouble for their employers. 

Discrimination in the Workplace

Workplace discrimination laws are also heavily enforced and steeply fined. If an audit finds that an employer is guilty of making deployment decisions around non-felony criminal histories, gender, sexual orientation, or violating the other standards outlined in the Equal Employment Opportunity Commission’s Fair Employment Practices or any other associated laws and regulations, they can be forced to pay for damages relative to how many employees have been affected. On the higher end, these damages can max out at $300,000! 

Safety Regulations

Employee safety is a significant issue across the U.S., and it isn’t just limited to those in the construction or manufacturing industries. The Department of Labor has strict guidelines on how workplaces should be maintained so as to provide a safe working environment. OSHA inspections are serious and can lead to further penalties beyond the issues that were initially identified. Ensure that your workplace is adhering to all of the applicable safety regulations, no matter what your industry is, to avoid serious fines and legal consequences. 

Mandated Leave for Employees

As an employer, you are mandated by the Family and Medical Leave Act to provide a certain level of minimum essential coverage regarding unpaid leave for your eligible employees. If your employees meet the minimum requirements as described by the FMLA, you are required to provide them with unpaid time off for a specific period of time; failure to do so can result in complaints, civil money penalties, and legal troubles for your organization.  

Tax Compliance and Proper Record Keeping

Proper record keeping isn’t just a recommended practice; for some documents, like I-9’s, it’s the law. Additionally, proper tracking and storage of employee documentation like direct deposit and financial institution information, health benefits offerings, lawful money payments aside from salary, and more are all essential to keeping your business compliant with tax laws, codes, and regulations. Like some of the other core compliance areas, proper record-keeping is subject to the snowball effect; the longer you wait to develop a modern filing system, the more complicated it will be to back-track the information you need most.  

Tips for Businesses to Ensure Compliance and Avoid Violations

Now that we’ve established why compliance matters and some of the key areas your business needs to focus on, let’s explore a few tips to ensure nothing gets missed on your end. Keeping in mind that even an alleged violation can be costly for your business, here are some of the top ways to steer clear of an accidental compliance misstep.  

1) Clearly Document Company Policies

Keeping your company’s organizational policies laid out in a clear, well-documented, and easily accessible platform can have an extremely positive impact on both day-to-day operations and higher-level compliance concerns. Written policy concerning critical employee information such as standard pay periods, expected regular paydays, dress codes, sick leave, vacation scheduling, and written complaint procedures is highly effective at communicating expectations for your employees. By establishing these workplace standards, your company can build a framework that will prevent compliance issues throughout the term of your staff’s employment.   

2) Stay on Top of Federal and State Regulations

Labor laws are a constantly changing landscape within the United States. Between shifting federal and state law, an essential part of a solid compliance strategy involves staying on top of these changes! To help ensure you’re tracking the latest regulatory requirements, consider conducting regular internal audits, staying networked with other HR professionals in your industry, following publications from legislators and the Department of Labor, and consulting an employment attorney with any of your concerns.  

3) Communicate with Your Employees About Labor Laws

Sometimes, posting the legally mandated signs and posters in your office break rooms just isn’t enough. As a business, compliance starts at every level, so taking the time to communicate with your team and educate them on labor laws and their rights under programs like the Affordable Care Act is a great way to ensure top-to-bottom support. Ensure your messaging is readable by a wide audience and not filled with too much industry jargon; take this as an opportunity to improve employee education on best practices across the board! 

4) Retain and Organize Employment Records

When it comes to record-keeping, staying ahead is the name of the game. Retaining your employees’ personal information is a serious matter, so you need to know which documents need to be held for 30 days, 12 months, 3 years, or more – along with how to dispose of them once your obligation to retain them has ended. Properly maintained payroll records (including an employee’s gross wages, health coverage and health insurance contributions, accrued PTO, retirement plan contributions, and more) are, in some cases, both a legal requirement and a huge time-saver come tax season. 

5) Work with a Professional HR Provider

If you’re more interested in running your business instead of keeping your head buried in paperwork, it might be worthwhile to work with a professional HR provider to manage and maintain your company’s compliance. The key to this decision is determining the areas you’d like to automate – after that, do your research, pick a trusted provider, and get back to doing what you do best! 

Horizon is a Trusted Partner for Payroll and HR Operations

For over 20 years, Horizon has been providing top-rated payroll processing and management services to all kinds of businesses nationwide. With our industry-leading payroll and HR management solutions, we’ve helped companies of every size save countless hours and get back to running their operations, and we believe our proven track record as a payroll service provider speaks for itself! Eliminate the risk, worry, and hassle of managing payroll and compliance on your own with our top-rated services. 

Top-Rated HR Consulting and Solutions for Businesses

At Horizon, our top-rated solutions are designed for businesses of every size and section – from locally owned restaurants to professional sports teams and everything in between! No matter your business needs, you can trust the pros at Horizon to develop, design, and implement the perfect solution. 

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