Labor tracking in an increasingly complex legal environment

Labor tracking is necessary for employers to ensure they’re paying their workforce correctly, but the unique labor laws of certain cities and states throw a wrench in an organization’s practices. 

The word “complex” does not even scratch the surface of how complicated labor tracking is given the various state and local labor laws that govern sick leave, overtime, minimum wage and more, according to Traci Fiatte, chief executive officer, professional & commercial staffing at Randstad US. “If you’re not using an automated [employee] scheduling software and you have employees in multiple states, I’m not sure how you keep track of it all,” she added.

According to Workforce.com’s 2020 “HR State of the Industry” report, only 40.5 percent of respondents said they used HR software for workforce management, including time and attendance, and only 29.5 percent said they used it for compensation management. There’s still room for improvement for organizations who’ve yet to use automated software to help with labor tracking and management. 

Rely on specialized employees and software

Fiatte suggested that organizations have personnel dedicated to understanding varying laws and a payroll system that can be programmed to understand the different laws. 

For example, overtime is an area of labor law where different regulations can confuse an already complex process, and software may have the capabilities to allow managers to take overtime laws into account when they plan schedules. In most states, “overtime” is defined as anything more than 40 hours a week, but in California it’s defined as more than 8 hours worked in a day. 

“Unless you have a system to track that, you almost need a staff dedicated to manually tracking it, which I can’t imagine any large employer being able to do,” Fiatte said. “The name of the game is automation and making sure you have the right systems to help manage it.”

The biggest gap here is that while big national brands have this figured out, others may not. 

“The companies I worry for are the companies that are small enough that they may be family-owned, regionally-based or [spread across] four or five states, but they don’t have the level of sophistication to have legal teams or HR teams to be managing the variances between state laws,” Fiatte said. “It’s those companies that could be taken by surprise two years from now when they get audited, and they’ve broken a bunch of laws they didn’t know they were breaking.” 

Organizations in a situation like this can find a specialist to help them manage the dynamic and complex labor law environment, she added.

Encourage managers to stay up to date on the latest labor laws

Chuck Buiocchi, senior director of BPS operations at staffing company Kelly Services, said that at his organization they use the latest technology to ensure managers aren’t expected to know everything. They also have a group whose sole purpose is to keep the rest of the organization abreast of changing labor laws. 

Buiocchi said he would encourage managers to stay as up to date as possible on changing labor laws. While they may not become experts, keeping themselves educated is a smart thing to do.

Keep documentation 

Labor tracking helps organizations control wage costs, but that’s not the only benefit. It’ll also help any organization audited by the Department of Labor. 

“I can’t stress enough the importance of labor tracking, not only from a financial standpoint in terms of making sure people are paid properly but even in terms of the legal standpoint,” said Albert Rizzo, adjunct assistant professor at the NYU School of Professional Studies within its human capital management program.

“If the company ever gets audited by the Department of Labor, it only takes one employee to make a complaint about failure to get paid minimum wage or overtime for that to trigger an audit by the Department of Labor,” he added. “And once that audit is triggered, they could very well go after the employer and every employee to see if the employer has paid any one of those employees improperly, even if they’ve never lodged a complaint.”

Encourage straightforward conversations 

Companies must be very deliberate about payroll policies, procedures and expectations and how that information is communicated among leadership, management and employees, Buiocchi said.

“We will not allow people to work off the clock,” he said about his own organization. “We don’t trade for comp time or anything like that. We live to not only the letter but the spirit of the laws in which we operate, and we expect our leaders and our employees to do the same. And we set those expectations and we manage the performance for those who don’t meet those expectations.”

Also read: Give managers the time they need to sharpen up their all-around skills

If someone works off the clock, in this case, supervisors can have a conversation with that employee, make sure they get paid, make sure they don’t do it again and discipline them if necessary. Maybe the supervisor finds out that the direct manager of the employee is mismanaging something or overworking employees, and then it’s up to the supervisor to find a resolution for that.